Recently in Recovery Audit Contractors (RACs) and Medicare Appeals Category

February 9, 2016

Medicare Appeals Delay Case Moves Forward

As many hospitals, as well as other health care providers and suppliers with pending requests for ALJ hearing are acutely aware, lengthy adjudication delays exist within the Medicare appeals process. These delays are most significant at the third level of appeal, i.e., the Administrative Law Judge (ALJ) stage of appeal.

On May 22, 2014, the American Hospital Association (AHA), together with three hospitals, filed suit in the United States District Court for the District of Columbia, requesting mandamus relief, compelling the Secretary of the Department of Health and Human Services (HHS) to act within the statutorily required timeframes. Disappointing appellants nationwide, the District Court entered a decision mandamus relief was not warranted.

However, following an appeal of the lower court's decision, on February 9, 2016, the United States Court of Appeals for the District of Columbia reversed the decision and remanded the case back to the District Court for further consideration. A copy of the February 9, 2016 order is accessible here: http://www.aha.org/advocacy-issues/legal/litigation.shtml.

For an in-depth look at the ALJ appeals adjudication backlog, please see the following articles: http://www.thehealthlawpartners.com/docs/6.6.14.pdf and http://www.thehealthlawpartners.com/docs/5.21.14.pdf.

For more information regarding Recovery Audits, please contact Jessica L. Gustafson, Esq. or Abby Pendleton, Esq. at (248) 996-8510.

December 9, 2015

AFIRM Act Seeks to Improve the Medicare Audit and Appeals Process

On December 9, 2015, Senate Finance Committee Chairman Orrin Hatch (R-Utah) and Ranking Member Ron Wyden (D-Ore.) introduced Senate Bill 2368, the Audit & Appeal Fairness, Integrity, and Reforms in Medicare (AFIRM) Act of 2015. The purpose and goal of AFIRM is to improve the Medicare audit and appeals process by reducing the burden on providers and implement reforms to the Medicare audit and appeals process.
In fiscal year 2014, the Centers for Medicare & Medicaid Services (CMS), conducted audits of more than one billion claims in an effort to curb approximately $60 billion in improper Medicare payments. This many audits has resulted in a corresponding number of appeals leading to a backlog of nearly one million claims causing a near two year backlog.
Among the many ways that AFIRM seeks to resolve this backlog are the following:
 Increase the amount in controversy limits for review by an administrative law judge (ALJ) to $1,500 or more. For cases not meeting this threshold, a Medicare Magistrate program allows senior attorneys with expertise in Medicare law and related policies to adjudicate cases in the same way as ALJs. This is intended to allow ALJs to maintain their focus on complex cases (AFIRM § 1-3).
 Establish a process whereby an ALJ can certify an appeal for expedited access to judicial review (AFIRM § 5).
 Establish a voluntary alternate dispute resolution process allowing multiple claims with similar issues of law or fact to be settled together where they are submitted by the same individual or entity (AFIRM § 6).
 Permit an adjudicator, with the consent of the appellant, to use statistical sampling and extrapolation in reaching a decision (AFIRM § 6).
 Establish a process whereby the Office of Medicare Hearings and Appeals and the Departmental Appeals Board of the Department of Health and Human Services (HHS) can refer cases to law enforcement where there is a credible suspicion of fraudulent activity (AFIRM § 7).
 Publish on the internet appeal information that includes at least the following (AFIRM § 9):
o the percentage of appeals that received fully favorable, partially favorable, and unfavorable decisions;
o the percentage of appeals that received fully favorable, partially favorable, and unfavorable decisions for each ALJ;
o for each type of service, the percentage of appeals that received fully favorable, partially favorable, and unfavorable decisions; and
o the average length of time that has passed between the initial request for review and a final decision.
 Establish alternative resolution dispute processes permitting an individual or entity entitled to a redetermination by a Medicare administrative contractor, or a reconsideration by a qualified independent contractor, to enter into an alternative dispute resolution with CMS (AFIRM § 9).
 Authorize the Secretary to designate a point of contact to oversee and undertake at least the following (AFIRM § 10):
o Develop a strategy for claim review determinations that identifies and reduces claim errors that have the largest impact on improper payment rates and are likely to negatively affect quality of care, in addition to reducing unnecessary burdens on providers of services and suppliers;
o Develop methods to ensure review contractors do not unnecessarily conduct duplicate reviews of individual claims;
o Work with review contractors to develop a uniform, consistent, and transparent review process to reduce the burden on providers of services and suppliers;
o Develop qualification standards for review contractors requiring prepayment and post-payment reviews of claims to be conducted or approved by medical doctors with knowledge of relevant Medicare laws, regulations, and program instruction;
o Verify that decisions by review contractors are consistent with Medicare laws, regulations, and program instruction; and
o Determine whether additional punitive actions against ineffective review contractors could be taken and what, if any, financial incentives or disincentives could be used to promote accuracy of a review contractor's reviews.
 Appoint a Medicare Reviews and Appeals Ombudsman who will (AFIRM § 11):
o identify, investigate and assist in the resolution of complaints and inquiries related to the Medicare audits and appeals process;
o identify trends in complaints and inquiries to provide recommendations for improvements to the claims review and appeals system;
o design a system to measure and evaluate reviewer responsiveness to addressing inquiries from providers of services and suppliers; and
o publish appeal data.
 Establish a compliance incentive program to increase the accuracy of providers of services and suppliers in addition to encouraging consistency with review guidelines, regulations and program instructions for review contractors (AFIRM § 13).
Jessica Gustafson and Abby Pendleton, founding partners of The Health Law Partners, P.C., practice in all areas of healthcare law devoting a substantial portion of their practice on Recovery Audit Contracts and Medicare audit appeals. For more information, please contact Abby Pendleton, Esq. or Jessica Gustafson, Esq., or visit The HLP website.

August 17, 2015

OIG Issues Two Reports on Fraud and Abuse in Medicare Part D

In June, the Office of Inspector General ("OIG") issued two new reports on Medicare Part D titled: Ensuring the Integrity of Medicare Part D (available here) and Questionable Billing and Geographic Hotspots Point to Potential Fraud and Abuse in Medicare Part D (available here).
In the Ensuring the Integrity of Medicare Part D report, the OIG outlines the progress it has made in addressing - and the work still needed to protect against - fraud in the Medicare Part D program. According to the OIG, Part D fraud relates to two main issues: "1) the need to more effectively collect and analyze program data to proactively identify and resolve program vulnerabilities, and prevent fraud, waste, and abuse before it occurs; and (2) the need to more fully implement robust oversight to ensure appropriate payments, prevent fraud, and protect beneficiaries." The OIG recommends that CMS take the following steps to combat fraud and abuse:
(1) require plan sponsors to report all potential fraud and abuse to CMS and/or the MEDIC;
(2) require plan sponsors to report data on the inquiries and corrective actions they take in response to fraud and abuse;
(3) expand drug utilization review programs to include additional drugs susceptible to fraud, waste, and abuse;
(4) implement an edit to reject prescriptions written by excluded providers;
(5) exclude Schedule II drug refills when calculating final payments to plan sponsors at the end of each year;
(6) seek authority to restrict certain beneficiaries to a limited number of pharmacies or prescribers;
(7) develop and implement a mechanism to recover payments from plan sponsors when law enforcement agencies do not accept case referrals;
(8) determine the effectiveness of plan sponsors' fraud and abuse detection programs; and
(9) ensure that plan sponsors' compliance plans address all regulatory requirements and CMS guidance.
In the Questionable Billing and Geographic Hotspots Point to Potential Fraud and Abuse in Medicare Part D report, the OIG addresses drug abuse in the Part D Program, including controlled substance abuse and the diversion of non-controlled substances for illegal purposes. The OIG analyzed prescription drug event records from 2006-2014. The study found that:
• Since 2006, Medicare spending for commonly abused opioids has grown faster than spending for all Part D drugs;
• Pharmacies with questionable billing raise concerns about pharmacy-related fraud schemes; and
• Geographic hotspots for certain non-controlled drugs point to possible fraud and abuse.
The OIG recommends that the Centers for Medicare and Medicaid continue "to conduct investigations of pharmacies with questionable billing when warranted and to monitor pharmacy billing" and to fully implement OIG's previous recommendations."
The publication of these two reports highlights the government's continued scrutiny on pharmacies and prescribing physicians. Pharmacies and physicians should ensure that they have effective compliance programs in place to internally combat fraud and abuse.

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May 6, 2015

MEDICARE APPEALS BACKLOG: THE AHA CONTINUES TO FIGHT FOR JUDICIAL RELIEF

The AHA has taken its first steps to appeal a lower court's refusal to intervene to address the significant appeals backlog pending at the ALJ level of appeal.

On May 4, 2015, the AHA submitted its Opening Brief to the U.S. Court of Appeals for the D.C. Circuit, alleging that the District Court erred in its decision not to issue providers' and suppliers' mandamus relief. The AHA pressed the Circuit Court to overturn the District Court's ruling, which acknowledged the repercussions of the backlog but nonetheless concluded court intervention was inappropriate. http://www.aha.org/advocacy-issues/legal/litigation.shtml

More information regarding the ALJ appeals backlog is available here: http://www.thehealthlawpartners.com/docs/6.6.14.pdf

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April 28, 2015

Electronic Case Adjudication and Processing Environment (ECAPE) Update

The appeals backlog has taken a toll not only on appellants, but also the Office of Medicare Hearings and Appeals (OMHA), tasked to adjudicate the appeals. The appeals submission and document management processes are overdue for an upgrade in order to keep up with OMHA's substantial workload. The new system to be put into place in early 2016 is the Electronic Case Adjudication and Processing Environment (ECAPE), which is a "dynamic workflow and case management system that supports an electronic, unified OMHA business process". ECAPE will allow OMHA to take advantage of the effectiveness and efficiency that electronic processing has to offer; this change will be a significant benefit for the appellants requiring information from OMHA.

What this means to us; ECAPE will provide functionality for:
• Case and workload management
• Exhibiting
• Scheduling
• Document generation
• Electronic filing of requests for hearing and supporting documents
• Enhanced management information and business intelligence
Under ECAPE, appellants will have the ability to view the entire case file. Appellants will be able to ensure that documents submitted at the lower levels of appeal are sent to the ALJ as required under the regulations. This will negate the necessity for appellants resubmitting documents, and will assist OMHA to address its storage concerns.

Slowly we will start to see these changes take place from early 2016 to Spring 2017.

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February 4, 2015

Outpatient "Observation" Battle Continues

On January 22, 2015, in the case of Barrows v. Burwell, No. 3:11-cv-1703, 2015 WL 264727 (2nd Cir., January 22, 2015), the United States Court of Appeals for the Second Circuit ruled that Medicare beneficiaries be granted the opportunity to demonstrate a Constitutionally-protected property interest to challenge their patient status designations as hospital outpatients rather than inpatients.

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July 8, 2014

ALJ Backlog May Soon Be Alleviated by Statistical Sampling Pilot

On July 8, 2014, the Office of Medicare Hearings and Appeals ("OMHA") posted to its website a new sampling pilot initiative to address large volumes of claims pending at the ALJ stage of appeal. The sampling request can be initiated by an appellant, or OMHA may offer an appellant the sampling pilot.

To be eligible for the statistical sampling pilot:
- A request for hearing must appeal a Medicare Qualified Independent Contractor (QIC) reconsideration decision.

- The appellant must be a single Medicare provider or supplier (if multiple providers or suppliers with multiple National Provider Identifiers (NPIs) are owned by a single entity, the owning entity may serve as "a single provider or supplier" provided that the owning entity agrees to accept any payment that may be due from Medicare as a single payment, or agrees to make any payment that may be due to Medicare as a single payment).

- All jurisdictional requirements for a hearing before an Administrative Law Judge must be met for the request for hearing and all appealed claims.

- The beneficiary must not have been found liable after the initial determination or participated in the QIC reconsideration.

- The claims must be currently assigned to one or more Administrative Law Judges or have been filed during the time period currently being assigned by OMHA Central Operations - at this time, that includes appeals that were filed between April 1, 2013, and June 30, 2013.

- No hearing on the claim has been scheduled or conducted.

- There must be a minimum of 250 claims and all claims must fall into only one of the following categories: (a) Pre-payment claim denials; (b) Post-payment overpayment non-Recovery Audit Contractor ("RAC") claim denials; or (c) Post-payment (overpayment) RAC claim denials from one RAC.

- There cannot be an outstanding request for Settlement Conference Facilitation for the same claims.

Appellants who are eligible and interested in the pilot must complete a written request for sampling along with a detailed spreadsheet of claims for consideration. OMHA has included template request documents which can be accessed here.

Many hospitals may be interested in evaluating whether or not initiating the pilot will be beneficial. While this may expedite the adjudication of long-awaiting appeals, the downsides of this project should also be considered prior to making a final determination to seek entry into the pilot.

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July 3, 2014

Settlment Conference Facilitation Pilot Announced

The landscape of the Medicare appeals process is quickly changing with the launch of the Settlement Conference Facilitation ("SCF") pilot program. The program is designed to be an alternate dispute resolution process where the appellant and the Centers for Medicare & Medicaid Services ("CMS") come together to discuss a potential mutually agreeable resolution of claims appealed at the Administrative Law Judge ("ALJ") level.

The settlement conference facilitator, an employee of the Office of Medicare Hearings and Appeals ("OMHA"), will oversee the process. He or she will not make determinations based on the merits of the claims nor will serve as a fact finder. Rather, the facilitator will use mediation principles to achieve the goal of reaching a mutually agreeable resolution. The facilitator may, however, help the appellant and CMS identify the relative strengths and weaknesses of their respective positions.

In the event a resolution is reached, the settlement facilitator will draft a document, signed by both parties, to reflect the agreement. As part of the agreement, the requests for an ALJ hearing for the claims covered in the settlement will be dismissed.
To determine eligibility for the SCF process, OMHA has provided guidelines available here.

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May 21, 2014

2014 PEPPER Guidelines add Target Areas to Identify Improper Billing for Short Stays May 19, 2014

The Program for Evaluating Payment Patterns Electronic Report ("PEPPER") is an electronic data report under contract with the Centers for Medicare & Medicaid Services ("CMS") that helps guide hospital's auditing and monitoring services.

In 2014, PEPPER published new target areas for Short-Term Acute Care hospitals that were identified as prone to improper Medicare payments. Significantly, 6 new target areas related to patient "status" were established (i.e., to determine whether a beneficiary was appropriately admitted as an "inpatient"). Of note, while 4 of these target areas focus on hospital stays that did not cross 2 midnights, two of the target areas focus on 2 day hospital stays. Thus, it is clear that even if a hospital stay crosses 2 midnights, hospitals will be called upon to establish that the hospitalization itself was medically necessary.

Although the Recovery Auditors (i.e., "RACs") presently are prohibited from conducting patient status reviews, Medicare Administrative Contractors ("MACs") have been tasked to conduct "Probe and Educate" medical reviews, for the purposes of determining whether CMS' new 2 midnight rule was satisfied.

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May 16, 2014

GCI Federal, Inc. Issues Suit against HHS Regarding New RAC Contracts

In December of 2013, the Centers for Medicare & Medicaid Services (CMS) issued a Request for Quotes for new Recovery Auditor (RAC) contracts. The new contracts include significant changes to payment terms. Whereas the current contracts allow payment to RACs after the first level of appeal has been exhausted (120 days), the new contracts do not allow payment until after the second level of appeal has been exhausted (120 - over 400 days).

In opposition of the modification on payment terms, CGI Federal, Inc., the Region B Recovery Auditor, submitted pre-award protests to the federal Government Accountability Office (GAO) asking for a change to the new payment terms. The GAO denied the protests on April 23, 2014.

On May 1, 2014, CGI elevated its case to the Court of Federal Claims. The suit requested the Court to order an injunction against the US Department of Health and Human Services' (HHS) implementation of the new RAC contracts and remove the delay in compensation. GCI argues that the new payment terms are inconsistent with customary commercial practices and unfairly restrict competition for the contract, rendering it "commercially impracticable" for CGI to submit a quote.

The first hearing is scheduled for June 6, 2014. The judge will grant an injunction if he or she determines that irreparable harm would be done if the contracts are awarded. If the judge does not grant injunctive relief, CGI may still proceed with its case. The A/B contract awards were expected in May or June, but could be delayed as a result of the suit.

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August 13, 2013

HLP Publishes Client Alert on 2014 IPPS Final Rule

On August 2, 2013, the Centers for Medicare & Medicaid Services ("CMS") published its highly anticipated 2014 Inpatient Prospective Payment System ("IPPS") Final Rule (the "2014 IPPS Final Rule"). The 2014 IPPS Final Rule will be effective on October 1, 2013. There are two main aspects of the 2014 IPPS Final Rule that will significantly affect the day-to-day operations of hospitals nationwide: First, the 2014 IPPS Final Rule finalizes CMS' proposal to revise its "Payment Denial Policy" and allow billing of many services under Part B following a determination that a Part A inpatient claim will be denied as not medically necessary. Second, the IPPS Final Rule changes the criteria for coverage of Part A of inpatient hospital claims.

The HLP has prepared a Client Alert outlining key provisions of this important rule.

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August 6, 2013

New Inpatient Admission Requirements, Part B Inpatient Rebilling Policy Finalized

On August 2, 2013, the Centers for Medicare & Medicaid Services ("CMS") issued its highly anticipated 2014 inpatient prospective payment system ("IPPS") Final Rule (the "Final Rule"). Within this Final Rule, CMS finalized (1) its new requirements for Medicare Part A coverage of inpatient hospital admissions; and (2) its Part B inpatient rebilling policies.

Medicare Part A Coverage of Inpatient Hospital Admissions

Under the Final Rule, CMS adopts its proposal to presume that "inpatient hospital claims with lengths of stay greater than 2 midnights after the formal admission following the order will be presumed generally appropriate for Part A payment and will not be the focus of medical review efforts absent evidence of systematic gaming, abuse, or delays in the provision of care in an attempt to qualify for the 2-midnight presumption." See Final Rule at 1842.

This is a policy shift on the part of CMS. Under its previous policy, physicians admitting beneficiaries to inpatient status were instructed to use a 24-hour period as a benchmark (i.e., admitting physicians were instructed that they "should order admission for patients who are expected to need hospital care for 24 hours or more, and treat other patients on an outpatient basis"). See Medicare Benefit Policy Manual (CMS Internet-Only Publication 100-02), Chapter 1, Section 10. However, there was no presumption of coverage tied to meeting this 24 hour benchmark.

Note that although a length of stay crossing 2 midnights could mean a 24 hour and 2 minute hospital stay, a length of stay crossing 2 midnights also could mean a 71 hour and 58 minute hospital stay.

The Final Rule also adopts CMS' proposal to require a physician's order to inpatient status before payment will be made for an inpatient claim. See Final Rule at 1789 et seq.

Part B Inpatient Rebilling

Under the Final Rule, CMS adopts its proposal to allow rebilling under Part B (following a denial of a Part A inpatient hospital claim) for many services (with certain notable exceptions, such as observation services). See Final Rule at 1653 et seq. The Final Rule retains many aspects of the Proposed Rule, including the following:

• Eventually rebilling will be limited to claims that are within 1 year of the date of service at issue; However, CMS is permitting hospitals to rebill under the timeframes set forth in Ruling 1455-R for claims eligible under the Ruling, as well as for services provided before October 1, 2013 that are denied after September 30, 2013;

• Certain services will be excluded from the opportunity to rebill, i.e. ED visits and observation services; However the Final Rule deviates from CMS' proposal in that it will allow hospitals to rebill physical therapy, occupational therapy and speech therapy services; and

• Administrative law judge jurisdiction remains limited to whether the Part A claim at issue was medically necessary.

The American Hospital Association ("AHA") has expressed its disappointment with the Final Rule as it relates to Part B inpatient rebilling and indicated its intent to proceed with its pending lawsuit against CMS related to this issue.

A more comprehensive summary will be forthcoming by way of HLP client alert. Please contact Jessica L. Gustafson, Esq. or Abby Pendleton, Esq. at (248) 996-8510 with any questions.

May 24, 2013

May 23, 2013 - CMS Announces a Revised Recovery Audit Program Map

On May 9th, the Centers for Medicare and Medicaid Services (CMS) announced the start of a procurement process for new Medicare Fee for Service Recovery Audit Program contracts. The General Services Administration issued a Request for Quotes (RFQ) seeking four A/B Recovery Auditors, one national Durable Medical Equipment auditor and one Home Health/Hospice Recovery Auditor.

On May 23rd, the CMS announced that it has completed the next step in the transition process by creating a new Recovery Audit Program map with revised jurisdictions. To see the revised map, click here.

The current RACs will continue to function throughout the transition. CMS advised that beginning in Summer 2013, there may be a decline in Additional Documentation Requests (ADRs). However, all prepayment reviews and post-payment manual therapy reviews will continue without decline.


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May 15, 2013

American Orthotic and Prosthetic Association Files Lawsuit Alleging Unlawful Changes in Medicare Standards Resulting in Unfair RAC/Prepayment Audits

On May 13, 2013, the American Orthotic and Prosthetic Association ("AOPA") filed suit in the federal district court for the District of Columbia against the Centers for Medicare and Medicaid ("CMS"), alleging that payment denials by CMS and its Recovery Audit Contractors ("RAC") are invalid. The lawsuit states that CMS rules call for denial of payment for a prosthetic device if specific documentation from the prescribing physician is not obtained by the supplier of the prosthetic device, despite the fact that other documentation shows that the device is medically necessary.

The complaint alleges that new standards issued on CMS' contractor websites in a "Dear Physician" format are void because they did not go through the rulemaking process with a public notice and comment period. The complaint also argues that CMS changed its standard - where before records of prosthetists (deemed professionals) were accepted to show medical necessity with the same deference given as that afforded to other medical records, including physician records. Further, the complaint alleges that the posting of the "Dear Physician" Letter and subsequent enforcement of it is arbitrary and capricious. Additionally, the AOPA expresses frustration with CMS' inaction and lack of enforcement against physicians who do not provide prosthetists with the required documentation. In essence, the complaint argues, the physician has no skin in the game as no incentive exists for him to provide appropriate documentation.

The full complaint can be found here.

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March 28, 2013

CMS Acquiesces to Hospital Pressure, Allows Part B Billing of Hospital Services Following Part A Denial of Inpatient Hospital Claims for Medical Necessity: Is It Enough?

Jessica Gustafson, Esq. and Abby Pendleton, Esq., co-chairs of the firm's Medicare and RAC department authored an ABA Health eSource article titled "CMS Acquiesces to Hospital Pressure, Allows Part B Billing of Hospital Services Following Part A Denial of Inpatient Hospital Claims for Medical Necessity: Is It Enough?" To view this article click here.

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