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

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The Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”) became effective October 24, 2018. ERKA makes it a criminal offense to knowingly and willfully offer, pay, solicit or receive any remuneration (i.e., anything of value), directly or indirectly, overtly or covertly, in cash or in kind, to induce a referral (or in exchange for a referral) to a lab, clinical treatment facility or recovery home.  Unlike the Federal Anti-Kickback Statue, ERKA applies to all payor sources.

Notably, the broad language of the ERKA permits the federal government to monitor arrangements intended to generate business for any laboratory, clinical treatment facility or recovery home for services payable by a federal health care program or commercial health insurers.  ERKA includes certain exceptions, as well as “preemption” language tied to the Federal Anti-Kickback Statute.

It is important that labs, clinical treatment facilities (i.e., a medical setting, other than a hospital, that provides detoxification, risk reduction, outpatient treatment and care, residential treatment, or rehabilitation for substance use, pursuant to licensure or certification under State law), and recovery homes, critically examine current compensation arrangements with employees and contractors, as certain types of payment arrangements will now be prohibited.

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On November 1, 2018, the United States District Court for the District of Columbia issued a Memorandum Opinion, ordering the Medicare appeals backlog to be eliminated by FY 2022.

Specifically, the court ordered that the Department of Health and Human Services (HHS) achieve the following reductions from the current backlog of 426,594 pending appeals:

– 19 percent reduction by the end of FY 2019

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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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