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Articles Posted in Recovery Audit Contractors (RACs) and Medicare Appeals

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On Thursday, August 2, 2018, the Centers for Medicare & Medicaid Services (“CMS”) released its 2019 Inpatient Prospective Payment System and Long-Term Care Hospital Prospective Payment System Final Rule (the “2019 IPPS Final Rule”).[1]   With the goal to reduce unnecessary administrative burden on physicians and other qualified practitioners, the 2019 IPPS Final Rule revises the requirement that an inpatient hospital admission order be present in the medical record as a condition of Medicare payment.  Specifically, the 2019 IPPS Final Rule amends the regulations at 42 C.F.R. § 412.3(a) to remove the language stating that a physician order must be present in the medical record and be supported by the physician admission and progress notes in order for the hospital to be paid for the inpatient hospital services under Medicare Part A.  See p. 1390 et seq.

Significantly, CMS made no changes to the 2-midnight rule in its 2019 IPPS Final Rule.  Under the 2-midnight rule (codified at 42 C.F.R. § 412.3), an individual is considered an inpatient if formally admitted as an inpatient pursuant to an order for inpatient admission.  Unless an exception applies, an inpatient admission is generally appropriate for payment under Medicare Part A when the admitting physician expects the patient to require hospital care that crosses 2 midnights.  Therefore, although CMS removed the requirement for an inpatient hospital admission order to be present in the medical record as a condition of payment, an inpatient hospital admission order is still relevant and necessary.  The inpatient hospital admission order reflects the determination by the ordering physician or other qualified practitioner that inpatient hospital services are medically necessary, and it initiates the inpatient hospital admission for the purposes of 2-midnight rule compliance.

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

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Relief will (eventually) be granted to Medicare appellants.  After a years-long battle, on December 5, 2016, the U.S. District Court of the District of Columbia granted mandamus relief to the American Hospital Association (“AHA”) and its co-plaintiffs.

The Court requested that the parties propose actions the Secretary could take to address the backlog of pending appeals.  The AHA proposed three particular interventions, and, in the alternative, proposed a timetable by which the Secretary would be required to achieve reductions in the backlog.

The three proposed interventions included the following: (1) offer reasonable settlements to certain broad groups of providers and suppliers; (2) for some subset of disputed Medicare claims, defer providers’ duty to repay the Secretary and toll the accrual of interest on those claims awaiting adjudication beyond the statutory deadlines; and (3) impose financial penalties on Recovery Audit Contractors for high reversal rates by Administrative Law Judges (“ALJs”).

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Following a lengthy dispute process and significant delays, on October 31, 2016, CMS awarded new Medicare Fee-for-Service RAC contracts to the following contractors:

  • Region 1 – Performant Recovery, Inc.
  • Region 2 – Cotiviti, LLC
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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.

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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:

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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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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: https://www.thehealthlawpartners.com/docs/6.6.14.pdf
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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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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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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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