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Articles Posted in Sleep Centers

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Sleep testing is clearly on the Office of Inspector General’s radar. A recently released report by the agency identified nearly $17 million in questionable billing for PSG services. A lawyer analyzes the OIG’s report and provides recommendations you can implement today.

In a report issued last week, the Office of Inspector General of the US Department of Health and Human Services (OIG) found approximately $16.8 million in improper Medicare billing for in-lab polysomnography (PSG) during an 11-month period in 2011. The report identified three categories of billing errors that gave rise to the alleged overpayments: inappropriate designation of the patient’s primary diagnosis on the test claim, same-day duplicate claims, and designation of an invalid National Provider Identifier (NPI) on the test claim (the NPI was deemed “invalid” if the provider’s number didn’t appear in the National Plan & Provider Enumeration System [NPPES] or if the NPPES showed the status of the number to be “inactive”).

While the total amount of the erroneous billing is a large number, the results don’t reveal widespread fraud, abuse, or intentional billing errors in the sleep testing industry. Rather the results show that only a handful of providers–about 180–displayed a pattern of questionable billing practices.

In 2011, Medicare paid almost $565 million for PSG services on just over 1 million claims. However, the report considered about 400,000 fewer claims in its review. First, the OIG excluded all claims for service filed in December 2011. These claims were unavailable at the time of the analysis. Second, the OIG excluded all claims made for the professional component of PSGs. Only the technical components and global services made it into the claim audit pool. So the audit pool consisted of 626,212 claims representing 461,363 unique Medicare beneficiaries.

Although Medicare identified a total of 7,232 unique providers who billed PSG during the 11-month review period, the OIG threw out 893 because these providers billed fewer than three claims. This left a total of 6,339 providers in the audit pool. This means that in 2011 there existed a total of 6,339 sleep labs of all types in the United States (physician-owned, hospital based, and stand-alone) that billed more than three claims to Medicare for PSG.

The OIG next identified 11 categories of “questionable” billing measures. The OIG designated three of the 11 categories as measures that address “Medicare Requirements.” The three Medicare Requirement categories are the ones referenced above (improper diagnosis code, duplicate claims, and invalid NPI). All of the $16.8 million identified as erroneously paid claims are attributable to these three categories of Medicare Requirements.

The remaining eight measures of questionable PSG billing identified in the report didn’t trigger instances of erroneous billing. Rather, these were included as instances when PSG services might be medically unnecessary, not performed, or otherwise inappropriate.

The OIG recommended that the Centers for Medicare & Medicaid Services (CMS) use all 11 measures of questionable billing to ferret out billing errors in future studies. CMS has agreed to adopt this suggestion. In correspondence to the OIG, CMS says it will use these measures to develop algorithms to detect inappropriate billing practices and to analyze the billing practices of such providers in the future.

REPORT FINDINGS The report found that of the total 626,212 claims reviewed, 21,348 contained a billing error. This represents only 3.41% of the total claims reviewed. Of these 21,348 tainted claims, almost all– 20,110 or about 96%–came from the single category of “inappropriate diagnosis coding.” By comparison, only 1,178 erroneous claims (or 0.19%) arose from same-day duplicate claims and only 109 claims (or 0.02%) came from claims with an invalid NPI.

In other words, of the total $16.8 million in improper billing found, a full $16,050,155 arose from the single category of “inappropriate diagnosis code.” As stated in the report, CMS requires an appropriate diagnosis code for payment of PSG services. Providers billing on CMS Form 1500, the appropriate outpatient hospital billing form, or the electronic equivalents should list the condition that justifies the service as the primary diagnosis code. The primary diagnosis should be the one most relevant to the service. Providers should use the ICD-9 diagnosis code until such time as ICD-10 is in effect.

Just as surprising, about 85% of the diagnosis code offenders were hospitals, even though only 53% of all PSG claims in 2011 came from hospital outpatient departments. The report remarked that these results presented a disproportionately high share of billing errors by hospital outpatient departments.

On the other hand, the report noted that only 15% of claims paid with erroneous diagnostic coding billing came from physicians and non-hospital providers, but the claims submitted by these providers represented 47% of all PSG claims in 2011. This finding prompted the report to remark that diagnostic code billing errors by non-hospital providers represented a disproportionately low share of the total erroneous billing.

PROBLEM BREADTH Although the report reviewed claims submitted by 6,339 providers, the OIG found only 180 providers–or about 3%–engaged in a pattern of improper activity. These providers were found to have submitted multiple instances of questionable billing, such as double billing, unbundling split-night services, or multiple titration studies. It can’t be said, then, that the number of providers engaging in a pattern of questionable billing for PSG is widespread.

While the number of tainted claims represented only 3.41% of all of the PSG claims examined during the review period, a full 35% of providers who billed PSGs during the period submitted at least one claim that did not meet one or more of the three Medicare Requirements listed above. This means that more than one-third of all sleep test providers who billed Medicare for PSG in 2011 engaged in at least one instance of billing an improper diagnosis code, duplicate claims, or an invalid NPI. This result does show that scattered incidents of billing errors are widespread and should be addressed by the community of sleep providers.

RECOMMENDATIONS The report’s recommendations are modest. In addition to offering the 11 questionable billing measures for use in CMS’ future audits, the OIG recommended that CMS do the following:
> implement claims processing edits to detect and deny double billing and same-day services > recover the wrong payments identified in the report, as appropriate > take action against the 180 providers identified as engaging in a pattern of questionable billing.
CMS agreed to all of these recommendations. CMS further stated it will review the list of 180 providers, determine how many to audit further, and instruct the local contractor or Zone Program Integrity Contractor to take appropriate action.

LESSONS LEARNED Sleep testing is clearly on the OIG’s radar. The rise in Medicare reimbursement for PSGs–up 39% from 2005 to 2011–has grabbed the attention of CMS. No less than four projects in the OIG’s 2014 Work Plan focus directly on sleep testing, CPAP, and CPAP resupply. The report here arose out of the OIG’s Work Plan Project examining PSG payments first announced in 2006.

Sleep test providers should check their billings for diagnosis coding and NPI numbers, along with how many tests appear on each claim for each beneficiary. But cautionary steps shouldn’t end there. For example, the report doesn’t even address the more prevalent and unforgiving audits currently being conducted by Medicare Administrative Contractors (MACs), Recovery Audit Contractors (RACs), and the Zone Program Integrity Contractors (ZPICs) on sleep test providers of all types. These audits typically focus on broad technical failures, such as a lack of specified patient information (such as body mass index) in the physician’s examination notes, failure to have a registered technician attend the test, or failure to have a boarded sleep physician interpret the test (even though the physician might be a staff member of the accredited lab where the test took place).

Likely due to cost, the OIG’s audit expressly ignored the fundamental focus of these more frequent contractor audits. For example, the report says that the OIG did not review any medical documentation to determine the medical necessity of the PSGs it reviewed. Nor did the OIG review any specific billing or documentation requirements set forth in the various Local Coverage Determinations governing Medicare sleep testing. Finally, the report states the OIG “did not analyze ownership information or other indications of physician self-referral, which may affect questionable billing for polysomnography services.” Perhaps this omission is just as well, because Medicare sleep tests referred to non-hospital sleep labs are not subject to the self-referral prohibitions under the federal Stark law.

In light of the more prevalent MAC, RAC, and ZPIC audits, providers of Medicare sleep testing should frequently audit their compliance with the medical necessity, licensure, certification, accreditation, and documentation requirements set forth in the Local Coverage Determinations applicable to such labs. Medicare providers should also prepare for additional electronic surveys of their future billings under each of the 11 measures of questionable billing published by the OIG in the Report.
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According to the US Department of Justice, Florida-based American Sleep Medicine LLC has agreed to pay the government approximately $15,300,000 to resolve allegations that it billed Medicare and other government payors for diagnostic sleep services that were not eligible for payment. The payment settles a qui tam or False Claims Act lawsuit brought against the company by relator Daniel Purnell.

The United States asserted that American Sleep submitted false claims to that Medicare and TRICARE programs during an eight year period from January 1, 2004 through December 31, 2011. The lawsuit alleges that the claims were false because the company performed sleep tests with technicians who did not hold the required credentials or certifications to perform sleep testing under Medicare guidelines. The government claimed that American Sleep knew it was billing tests with improperly credentialed technicians when it billed the government for these tests.

The False Claims Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the United States and share in any recovery. Relator Daniel Purnell received $2,601,228 as part of the settlement.

American Sleep is headquartered in Jacksonville, Florida and owns and operates 19 diagnostic sleep testing centers in the states of Alabama, California, Delaware, Florida, Illinois, Indiana, Kansas, Kentucky, Maryland, Missouri, New Jersey, Tennessee, Texas and Virginia.

In addition to the $15.3 million payment, American Sleep entered into a five-year Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services. This agreement requires the company to constantly monitor its sleep testing activities with internal and external reviewers and make progress reports to the government.
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The Office of Inspector General (“OIG“) has refused to grant a request that Boarded Sleep Physicians be permitted to dispense PAP therapy directly to their own Medicare patients.

The OIG’s Semiannual Report to Congress for the period April 1, 2012 – September 30, 2012 (the “Report“) issued on November 27, 2012, contains the following description of the proposal and its response. Basically, the OIG believes that physician dispensing of PAP is subject to abuse generally, even in the cases involving only certified sleep physicians. As such, the OIG refused to promulgate a safe harbor under the Anti-Kickback law applicable to all sleep doctors.

In addition, the OIG noted that it is not the appropriate agency to grant any exceptions or waivers under the Stark law. The OIG is authorized to consider safe harbors to the Anti-Kickback law. But the OIG is powerless to establish an exception to the Stark law even if it wanted to.

.The Report’s treatment of the request is set out in full below:

Public Proposals for New and Modified Safe Harbors

In response to the 2011 annual solicitation, OIG received the following proposals related to safe harbors:

Proposal: New safe harbor protecting remuneration associated with the distribution of durable medical equipment by physicians who have been certified by the American Board of Sleep Medicine to Medicare patients for use in the treatment of obstructive sleep apnea and a corresponding waiver of the application of the physician self-referral law.

OIG Response: OIG is not adopting the suggestion to promulgate a new safe harbor. The arrangements described are subject to abuse and should be evaluated on a case-by-case basis, such as under the advisory opinion process. Development of a physician self-referral law regulatory exception or waiver is beyond OIG’s scope of authority.
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On October 3, 2012, the OIG released its Work Plan for the FY of 2013. Throughout the week, we will be posting on various aspects of the Work Plan pertinent to our clients and our readers in the following areas:

• Hospitals • Home Health Agencies • Hospices • Evaluation and Management Services • Imaging Services • Diagnostic Testing • Sleep Testing
• Medical Equipment and Supplies
• Medicare Audits and the Appeals Processes
Check back every day for updates!
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Premier Home Care, a Durable Medical Equipment company operating in Indiana and Kentucky, agreed to pay a $578,820 settlement with the United States Department of Justice and the State of Indiana in a Whistleblower action alleging violations of the False Claims Act.

In 2008, a former employee filed suit against Premier under seal alleging that the company was not using licensed respiratory therapists to set up patients with CPAP and BiPAP. Indiana law is broad enough to include CPAP set-up’s in the definition of “respiratory care.” Only persons licensed as respiratory therapists in the state of Indiana are permitted to perform respiratory care services under Indiana law.

A joint investigation by the Office of the Inspector General of the US Department of Health and Human Services, the Department of Justice and the Indiana Attorney General’s office ensued. The complaint alleged that Premier violated the False Claims Act by certifying to Medicare that it was in compliance with Indiana’s respiratory therapy law when it used unlicensed personnel to set-up CPAP and BiPAP.

The False Claims Act allows for civil recoveries of up to three times the amount of actual damages, and allows whistleblowers to collect up to 25% of the award. Premier agreed to settle its suit for $578,820 to the United States and $21,180 to the State of Indiana, an amount representing more than twice the estimated damages to the Medicare and Medicaid programs.

You can access the Department of Justice’s Press Release story at:
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Late last month the United States Justice Department announced that Areté Sleep LLC, Areté Sleep Therapy LLC and Areté Holdings LLC (“Areté”) agreed to settle false claims allegations for $650,000. The prosecution contends that from November 2002 to December 2009 Areté’s medical equipment and sleep medicine facilities in Arizona and Texas presented false claims to Medicare. The entities allegedly submitted claims to Medicare for diagnostic sleep tests performed by unlicensed or uncertified technicians counter to Medicare rules and regulations.

Areté also allegedly presented false claims for medical devices, likely CPAP, dispensed pursuant to the same suspect sleep tests allegedly performed by uncertified technicians.

An individual relator, Amanda Drews, brought these charges against Areté under the False Claims Act. She will receive $107,250 from the settlement as her share of the recovery.

Areté filed for voluntary bankruptcy protection in January of this year. The parties agreed to pay the $650,000 settlement from the proceeds of Arete’s bankruptcy asset sale.
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The 38-count indictment charged 20 individuals with various healthcare fraud, kickback and money laundering charges related to their alleged participation in a healthcare fraud scheme involving approximately $200 million in Medicare billing for mental health services. The defendants worked with and for American Therapeutic Corporation (ATC) and Medlink Professional Management Group Inc. allegedly submitting false claims for medically unnecessary services and services that were not actually rendered. The indictment alleges that kickbacks were paid to patient brokers and owners and operators of halfway houses and assisted living facilities, in exchange for delivering patients to ATC facilities. Notably, among those included in the indictment were not only physicians, but marketers who allegedly participated in the kickback operation. Moreover, the scheme also involved American Sleep Institute (ASI), in which the defendants allegedly paid additional kickbacks for patients to go to ASI.

In a statement by Daniel R. Levinson, the HHS Inspector General, “Community mental health centers are an essential element of the nation’s health care system and serve vulnerable populations…Today’s arrests by OIG agents and our law enforcement partners show that we will not tolerate criminals who pay kickbacks for referrals of Medicare business or who bill for services that were either medically unnecessary or never provided.” Furthermore, an FBI special agent stated that “Community Mental Health Centers can no longer use phantom medical care as a front to bilk Medicare for unnecessary or nonexistent medical services…The FBI and our law enforcement partners will investigate and criminally prosecute such fraud to the fullest extent of the law.”

While the healthcare community has grown accustomed to news of arrests pertaining to fraud in the durable medical equipment and home health agency fields, this case shows that no healthcare professional is immune from law enforcement investigation and prosecution. Law enforcement officials continue to investigate relationships between healthcare-related entities and bring charges demonstrating that compliance with federal and state fraud and abuse laws remains crucial for all healthcare entities.
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Following upon the heels of September’s first-ever Advisory Opinion on sleep testing, the Office of Inspector General today issued the second and third installments of what appears to be the OIG’s Sleep Opinion Trilogy.

These new opinions generally follow the facts of the first opinion – a third party management company provides all of the equipment, technology, supplies, staff and marketing services as part of a local hospital’s performance of Medicare sleep tests “under arrangement.”

Under Opinion 10-23, the Management Company charges the hospital on a fair-market “per-test” or “per-click” basis. This all-in fee is payment for all of the services and equipment provided to the hospital by the manager, including sporadic marketing services.

Under Opinion 10-24, the Management Company charges the hospital a three-tiered, flat rate basis: (i) one fixed, annual fee for the use of the manager’s equipment, (ii) one fixed, annual fee for full-time marketing services, and (iii) one fixed, annual fee for other sleep testing services and supplies. All of these fees would be fair market value for the services and items provided, and none would take into account the value or volume of referrals or other business generated between the parties.

The OIG concluded that the first arrangement could potentially generate prohibited remuneration under the Anti-Kickback Statute and that the OIG could potentially impose administrative sanctions on the manager and hospital for operating under the arrangement.

The second arrangement, however, would pass muster, even though it too could potentially generate prohibited remuneration under the Anti-Kickback statute if the requisite intent to induce or reward referrals were present.

The difference is that the marketing services provided under the first arrangement were included in the “per-click” fee but the fees for the marketing services under the second arrangement were priced on a flat, annual basis. The OIG noted that marketing fees paid on the basis of successful orders for items or services are inherently subject to abuse. The more tests generated by the manager’s marketing efforts, the more fees the manager receives.

Note that like the original opinion, the OIG discussed the lack of “suspect characteristics” in these two new arrangements. “Suspect characteristics” would include physician or hospital ownership in the Management Company or the manager’s providing DME to the hospital, the hospital’s patients, or to persons who obtained their sleep test at the hospital lab.
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CMS published its interim final values for sleep testing yesterday, November 2, 2010, as part of Medicare’s Final Part B Physician Fee Schedule for 2011. Although the sleep code values are to be effective January 1, 2011, CMS is offering the public the opportunity to comment on these new sleep medicine values by 5:00 pm on January 3, 2011.

The published values indicate a general decrease in both the physician value and the technical aspects of sleep testing in some billing scenarios, whereas reimbursement values for the technical component in some billing scenarios increase, along with all malpractice RVU’s. (Please refer to the below links for specific values.) CMS reports that the AMA’s Relative Value Update Committee (“RUC”) identified the amounts currently payable for sleep testing to be “potentially misvalued” and reviewed changes to the values based on current practice.

CMS is waiving its usual notice and comment procedures with respect to these and other “misvalued” codes identified in the Final Rule. Instead, CMS is implementing the new values now on an interim final basis. CMS decided not to wait until next year because CMS believes that a delay in implementing revised values for these misvalued codes would not only perpetuate the known misvaluation for these services, it would also perpetuate a distortion in the payment for other services under the physician fee schedule.

CMS also said that it was impractical to solicit public comment over the summer due to the timing of the RUC’s recommendations. Persons have sixty (60) days to comment on the revised interim values published for the final physician work RVU, practice expense, and malpractice RVUs (including the direct practice expense (PE) inputs and the equipment utilization rate assumption) for these new sleep code values.

New Home Testing CPT Codes. The Final Rule published yesterday includes two new CPT Codes for home testing. These codes are to be used for unattended sleep studies. Although it is difficult to tell from the truncated narrative in the Final Rule, the difference between new Code 95800 and 95801 appears to be the addition of respiratory analysis:

CPT Code 95800: Sleep study, unattended.

CPT Code 95801: Sleep study, unattended, w/ anal [presumably respiratory analysis].

Presumably each new code requires recording of heart rate and oxygen saturation, and the respiratory analysis could presumably be either by airflow or peripheral arterial tone, but an examination of the final, full narrative of these Codes will be necessary to determine if this is the case.

The Final Rule continues to include the familiar G-Codes for home testing, G0398, G0399 and G0400. The Final Rule indicates no payments for these G-Codes, and, unlike the new Codes 95800 and 95801, the values for the G-Codes are final and not subject to public comment during the comment period. However, CMS permits local Medicare Contractors to set the RVU’s and payment amounts for these G-Code services based on the Contractor’s review.

Chart – 2011 Fee Schedule Values for Selected Sleep Codes
2011 – Final Interim Sleep Code Values
2011 – G-Codes – Addendum B
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Because Medicare payments for sleep testing has increased from $62 million in 2001 to $235 million in 2009, the OIG will review the appropriateness of payments for such testing and the factors contributing to such a steep increase in payments. Additionally, the OIG will examine the appropriateness of Medicare payments for sleep testing at sleep disorder clinics and whether or not the sleep tests procedures were in accordance with Medicare requirements.
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