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.
Recently in Recovery Audit Contractors (RACs) and Medicare Appeals Category
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).
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
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
• 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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
CMS Speaks: The Future for Payment of Part B Services Post-RAC Denial - CMS' Long-Term Solution Too Limiting!
On March 13, 2013, the Centers for Medicare and Medicaid Services ("CMS") concurrently issued Ruling CMS-1455-NR (the "Ruling") and a proposed rule for revising Medicare Part B billing policies in the event of Part A payment denials (the "Proposed Rule").
Since the conclusion of the Recovery Audit Contractor ("RAC") demonstration program and prior to March 13, 2013, CMS has taken the position that following a contractor's denial of a Part A inpatient hospital claim, hospitals were permitted to bill Medicare Part B for only a very limited portion of the denied services (i.e., the "ancillary services"). Moreover, these ancillary services could only be billed under Part B if such services were provided during the prior year under existing timely filing rules. Compounding the litany of financial problems created for hospitals from RAC denials, the RACs have denied an extraordinary number of short stay inpatient claims, in many cases many years following the dates of service, leaving hospitals with zero payment for services fully rendered, which the hospitals believe were reasonable and necessary under Part A. Although in many cases the RACs have determined that the services were reasonable and necessary as outpatient services, the RACs failed to provide Part B offset.
Accordingly, hospitals have had no choice but to vigorously pursue relief through the Medicare appeals process. In many cases, hospitals have argued that the inpatient services were medically necessary. Moreover, as an alternative, hospitals have argued that they are at least entitled to an offset under Part B (e.g., payment for outpatient observation services, payment for the procedure as if the patient had been an outpatient, etc.). Notably, some Administrative Law Judges ("ALJs") have agreed that to the extent the Part A denial is upheld, the hospital is entitled to Part B payment (not limited to ancillary services) and have ordered same ("Partially Favorable Decisions"). The Medicare Appeals Council likewise agrees and has issued many decisions to this effect. Although CMS has been vocal in its disagreement on this issue, in July of 2012, CMS issued a memorandum to its contractors providing instructions as to how to effectuate the Partially Favorable ALJ and MAC decisions. For the past few months, many ALJs have also started to remand cases back to the Qualified Independent Contractor ("QIC") stage of appeal as the QICs have ignored the hospitals' arguments related to the Part B offset issue. Amazingly, despite the remand orders, the QICs have been reissuing the exact same decisions made in the first instance, in essence failing to comply with the ALJ's orders and refusing to address the Part B offset issue.
CMS' position, as adopted by its contractors, has led to a significant financial impact on hospitals as well as resulted in the unnecessary unburdening of the Medicare appeals process.
CMS STEPS IN
Given pressures asserted by the hospital community, including the recent litigation over the above issues filed by the American Hospital Association and five (5) health systems, on March 13, 2013, CMS announced a new Ruling in conjunction with the release of a proposed rule to define Part B billing policies when a Part A claim for a hospital inpatient admission is denied as not medically reasonable and necessary. While this Ruling provides significant relief, CMS' continued position that outpatient observation services cannot be billed is troubling. Moreover, CMS proposed long term solution as set forth below is not palatable for the hospital community.
Ruling 1455-NR (the "Ruling") became effective immediately on March 13, 2013. The Ruling is the interim guideline until CMS finalizes the proposed rule on the issue, establishing a permanent policy. The Ruling reiterates CMS' position that the MAC and ALJ decisions discussed above are contrary to longstanding CMS policy that only allows billing for Part B ancillary services within a specified time from the dates of service (following a finding of Part A overpayment). The Ruling acknowledges that CMS is "acquiescing" to the ALJ and MAC decisions discussed above, and is applicable to all denials made (1) while the Ruling is in effect, (2) prior to the effective date of the Ruling where appeal rights have not expired, and (3) prior to the effective date for which an appeal is pending.
Summary of Billable Services under Ruling
When a Part A claim for inpatient services is denied by a Medicare contractor (not self-audit determinations or utilization review determinations) as not reasonable and necessary, the hospital may do the following:
1. Submit a Part B inpatient claim for more than just ancillary services. The hospital is entitled to bill a Part B inpatient claim for the Part B services that would have been payable had the beneficiary originally been treated as an outpatient rather than admitted as inpatient. However, CMS states that the hospital may NOT bill for those services that specifically require an outpatient status (e.g., outpatient visits, ED visits, and outpatient observation services). CMS' decision to not permit observation services is particularly problematic as many of the cases at issue involve admissions from the ER where observation services would be applicable.
2. Submit a Part B outpatient claim for reasonable and necessary services for the outpatient services furnished during the 3-day payment window prior to the original inpatient window, including ED visits and observation services.
No Duplicate Claims
In order to rebill the claims, a hospital cannot have an outstanding appeal for payment under Part A. In other words, a hospital must withdraw the pending Part A appeal or wait for an appeal decision to become final or binding before rebilling is allowed. Once a claim for Part B reimbursement is submitted, the hospital will no longer be able to pursue an appeal for the Part A claim.
Timeframe for Rebilling
While the Ruling is in effect, a hospital will have 180 days from the date of determination or dismissal of a Part A appeal to rebill under Part B. The Ruling retains the presumed date of receipt: 5 days from the date of the notice/decision unless there is evidence to the contrary.
Treatment of Current ALJ Remands
Cases that have been remanded by an ALJ will be returned to the ALJ level and adjudicated according to the new scope defined by this Ruling - namely, the ALJ may only decide if Part A inpatient billing was appropriate because the services provided were reasonable and medically necessary. According to the Ruling, it is CMS' position that the ALJ may not order Part B payment. Rather, the hospital must either withdraw the appeal from the ALJ or wait for a determination before rebilling for Part B services. This statement is particularly problematic, raising questions as to whether CMS has such authority via a memorandum ruling to essentially take away a provider's due process appeal rights. Hospitals who seek outpatient observation payment as an alternative are well advised to continue making arguments in the appeals process as such issues may need to be preserved for potential federal court cases. Patient Status (copayments, deductibles, etc.)
Under the Ruling, because a patient's status (inpatient vs. outpatient) cannot be changed after discharge, the patient will be considered an inpatient for Part B inpatient services billed, and an outpatient for Part B outpatient services billed.
Part A/B Rebilling Demonstration Terminated
The Ruling noted that the demonstration program for Part A to Part B billing, an experiment targeted at solving the problem of excessive lengths of observation care stays, is terminated since the Ruling and the permanent rule to follow are the perceived resolution to the problem.
The Ruling is only the interim solution. Also on March 13, 2013, CMS released a proposed rule to be published in the Federal Register on March 18, 2013, which would supersede the Ruling once issued as a final rule. The Proposed Rule would retain the right for hospitals to rebill under Part B for inpatient hospital services deemed not to be reasonable and medically necessary within the same scope as defined in the Ruling, but significantly narrows the circumstances for doing so. In fact, CMS readily admits that the Proposed Rule will "greatly limit the capacity in which a hospital could rebill," thus offsetting the cost to the Medicare program. The additional limitations not present in the Ruling, but introduced in the Proposed Rule are described below.
As detailed below, CMS's proposed long term solution is not a fair remedy for hospitals and must be challenged. Hospitals must take advantage of the comment period as well as continue to pursue legal recourse if necessary.
One Year from Service Limitation
The most significant problem with the proposed rule is CMS' position that Part B claims may only be filed within one (1) year of the beginning date of service, irrespective of any audit or decision on appeal. This severely restricts the availability of CMS' solution and casts doubt as to its real intention behind the Proposed Rule. If a determination is not made within one year of the beginning date of service (which will be the circumstances in most audit determinations outside of pre-payment review), a hospital will not be able to avail itself of Part B billing in the event that Part A services are found by an auditor to be not reasonable and medically necessary. CMS treats the billing as an original claim, and not as an adjustment.
Hospitals May "Self-Audit" and Rebill
Unlike the interim solution under the Ruling discussed above, the Proposed Rule would allow hospitals that discover inpatient hospital admissions to be not medically necessary in the course of utilization reviews to rebill these claims as Part B if the other requirements of the Proposed Rule are met. CMS anticipates that hospitals will increase "self-audits" and rebill under Part B, saving the Medicare program money by reducing the number of Part A claims. CMS also anticipates lower appeal volumes.
Patient Requirement and Treatment
For a hospital to be allowed to rebill services under Part B, the subject patient must be enrolled in Medicare Part B. The Proposed Rule also requires that any Part A payment collected from the patient be refunded. Additionally, the Proposed Rule contemplates requiring prior notice to patients about possible changes in deductible and cost sharing if Part A payment is denied. Patients would continue to be liable for Part B copayments, the full cost of drugs that are usually self-administered, and Part D coverage (the patient may pursue Part D reimbursement).
A patient's right to appeal a Part A inpatient admission denial is not extinguished by a hospital's submission of a Part B claim. If a patient has a pending Part A claim, the hospital may not file a concurrent Part B claim. If the patient's appeal is not decided within 12 months of the date of service, hospital will not be able to rebill under Part B.
While CMS purports to address the problem of increasing lengths of outpatient hospitalizations and resolve the piecemeal solution of MACs and ALJs ordering payment as if outpatient services were performed when it is determined that inpatient hospital services are not reasonable and medically necessary, in reality the Proposed Rule will not likely result in these solutions.
First, as noted above, in permitting hospitals to rebill claims as Part B claims if an inpatient hospital claim is denied as not medically necessary under Part A, CMS has expressly created an exception for rebilling observation services; this is not permitted. Therefore, as it is clear that RACs are continuing to aggressively deny hospital "short stay" cases, there is very little incentive for hospitals not to admit beneficiaries as outpatients and order observation services for the first 24-48 hours of each hospitalization, in cases where there beneficiary will require services that can be provided both to "outpatient observation" patients and inpatients (i.e., ongoing monitoring and assessment). This result decreases reimbursement to the hospitals, and increases costs passed along to beneficiaries and does not ensure "accurate" reimbursement.
Moreover, creating a result that ALJs are purportedly stripped of authority to issue "partially favorable" decisions raises significant due process concerns.
The one-year claims filing limitation included in the Proposed Rule would put a hospital between a rock and a hard place - it must decide whether to preemptively accept reduced payment when in fact it is very likely that an ALJ or MAC may find that inpatient hospital services were indeed medically necessary, or to risk losing all payment for medically necessary services rendered to the Medicare patient.
For the reasons described above, the Proposed Rule does not create a meaningful solution for hospitals, and will not result in more "accurate" payments being made to hospitals.
The HLP intends to submit comments to this Proposed Rule. For more information on the information addressed herein, including RACs, the Ruling or Proposed Rule, please contact Abby Pendleton or Jessica Gustafson at (248) 996-8510.
On February 19, 2013, the Department of Health and Human Services ("HHS") Office of Inspector General ("OIG") published OIG Report A-05-11-00071 (the "Report"), detailing the results of an audit to determine the adequacy of CMS' collection of Medicaid overpayments identified in certain OIG audit reports.
Under federal regulations (specifically 42 C.F.R. § 433.304), the Secretary of HHS is required to recover the federal share of any Medicaid overpayment from the responsible state - this responsibility has been delegated to CMS. The process is as follows:
• The OIG performs audits of CMS' expenditures, in this case specifically CMS' Medicaid payments
• The OIG identifies overpayments made by CMS through the Medicaid program
• Audit results are reviewed by CMS and OIG. When an audit resolution is agreed upon, CMS then takes corrective action - in the case of overpayments, often by a refund from the state or (if necessary) a negative grant award - an offset against that state's quarterly Medicaid grant
OIG Report A-05-11-00071 focuses on 152 OIG audit reports issued to 11 states (selected for their high amounts of overpayments) between the years 2000 and 2009. Five of these, handled by the Department of Justice, were excluded. The remaining 147 reports recommended an aggregate refund of overpayments totaling $1,213,085,167. Specifically, the Report reviewed CMS' collection efforts on the 147 audit reports. The report found that CMS had collected $987,481,600 in overpayments, leaving $225,603,567 outstanding. The OIG noted this was because CMS had not pursued collection in a timely manner. Notably, the uncollected amount stemmed from 10 audit reports where the states involved did not agree to refund. The discrepancy also accounted for more than $7 million reported as collected, but without adequate supporting documentation by CMS.
In its Report, the OIG made specific recommendations that, in addition to collecting the remaining overpayment, CMS act more promptly on OIG audit recommendations and implementation of corrective actions. The Report also highlighted the need for CMS to maintain better supporting documentation of its collection of overpayments in accordance with the Office of Budget Management ("OMB") Circular A-50 and CMS Standard Operating Procedures. Finally, the Report recommended educating states on properly reporting and documenting overpayments to CMS. This would involve improvement in CMS oversight as well.
CMS concurred in large part to the recommendations of OIG Report A-05-11-00071. However, it noted that the reason for delay in the 10 outstanding audit reports was due to continued review by CMS, including consideration of additional information supplied by the states involved, review of OIG supporting documentation, and internal deliberation. The OIG responded by arguing that delays of 3 to 7 years after initially concurring with the OIG's recommendations were contrary to federal statutes, regulations, and circulars, as well as CMS' own policies, in requiring timely collection of overpayments.