10/28/2015

1

FFS Medicare / Medicaid

Commercial Payers

The predictability of racing without the majesty of horses

AUDITS

John K Hall, MD, JD

Chief Clinical Officer

Disclaimer

• I am not providing legal advice.

• Information is presented for educational purposes only.

– Most slides contain only quotations from the public domain

• The opinions expressed are not necessarily those of Optum, its parent or subsidiary companies.

• You should always obtain competent legal counsel prior to pursuing any course of action.

2

10/28/2015

2

What we see

Reviewers

• Contractors

• OIG

• DoJ

3

Time Frames• Pre-1599 (prior to 10/1/13)• 1599- Probe & Educate (10/1/13- today)• Post-1599 (depends on 1633-P)

Who are the contractors?

• MAC

• RAC

• Comprehensive Error Rate Testing (CERT)

4

10/28/2015

3

What does the CERT error mean?

• It’s only a denial

• “Favorable appeals after the cutoff date for determining the error would have reduced the reported error rates:

– from 7.8 percent to 7.2 percent for FY 2009 and

– from 10.5 percent to 9.9 percent for FY 2010. “

• ”In FY 2009

– 1,092 of the 2,060 appealed CERT claim payment denials were overturned (53%)”

• “FY 2010

– 1,557 of the 3,256 appealed CERT claim payment denials were overturned (48%)”

5

REVIEW OF CERT ERRORS OVERTURNED THROUGH THE APPEALS PROCESS FOR FISCAL YEARS 2009 AND 2010

Historic “error” rates

6

Medicare Fee-For-Service 2010 Improper Payment Report

10/28/2015

4

7

REVIEW OF CERT ERRORS OVERTURNED THROUGH THE APPEALS PROCESS FOR FISCAL YEARS 2009 AND 2010

2010

8

Medicare Fee-For-Service 2010 Improper Payment Report

10/28/2015

5

2010 Breakdown

9

“For inpatient hospital claims, medically unnecessary services errors are often related to hospital stays of short duration where services could have been rendered at a lower level of care.”[emphasis added]

Medicare Fee-For-Service 2010 Improper Payment Report

2010- Inpatient Hospital Contribution

10

Medicare Fee-For-Service 2010 Improper Payment Report

10/28/2015

6

What OIG says about CERT

“We recommend that CMS develop a reliable methodology for adjusting the Medicare FFS error rate, incorporating the outcome of appeal decisions for CERT claim payment denials, to make CMS’s estimate of the value of reported errors more accurate.”

[emphasis added]

11

REVIEW OF CERT ERRORS OVERTURNED THROUGH THE APPEALS PROCESS FOR FISCAL YEARS 2009 AND 2010

OIG Audit- Your Worst Day

• We conducted this performance audit in accordance with generally accepted government auditing standards… We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

• Overpayments occurred primarily because the Hospital did not have adequate controls to prevent the incorrect billing of Medicare claims and did not fully understand Medicare billing requirements.

• The designation of financial or management practices as questionable, a recommendation for the disallowance of costs incurred or claimed, and any other conclusions and recommendations in this report represent the findings and opinions of OAS. Authorized officials of the HHS operating divisions will make final determination on these matters.

[emphasis added]

12

10/28/2015

7

Why the expert?

• Auditors accept a hospital's ability to find errors

– But not its ability to confirm accuracy

• Every audit contains this statement:

– in accordance with generally accepted government auditing standards

13

Who is the expert?

• We subjected these claims to a focused medical review to determine whether the services met medical necessity and coding requirements. Each case that was denied was reviewed by 2 Clinicians—one of them being a physician. We continue to stand by those determinations.

• NMH believes that the determinations made by OIG and its outside medical review contractor,[redacted], are inaccurate for the reasons detailed below and will appeal these denials. [Office of Inspector General Note-We redacted the name of the medical review contractor from the Hospital's comments. ]

• [T]he document entitled Medical Professional Reviewer Report that the OIG provided to UCMC clearly indicates that Maximus Federal Services, Inc., the OIG's medical review vendor, frequently referred to information not available to UCMC's physicians at the time the admission decisions were made.

14

Compliance Review Of Northwestern Memorial Hospital For 2011 AND 2012

Medicare Compliance Review Of University Of Cincinnati Medical Center For Calendar Years 2010 And 2011

10/28/2015

8

How good is the expert?

• The ALJ fully favorable rate varied substantially across Medicare program areas. [T]he fully favorable rate was the highest for Part A hospital appeals at 72 percent. [emphasis added]

• One QIC added that it approaches appeals expecting to uphold prior-level decisions unless the evidence to reverse is compelling.

15

Improvements Are Needed At The Administrative Law Judge Level Of Medicare Appeals

Variation in outcome

• Tufts complied with Medicare billing requirements for 9 of the 117 inpatient claims we reviewed. However, Tufts did not fully comply with Medicare billing requirements for the remaining 108 claims...

• For 35 of the 98 sampled claims, the Hospital incorrectly billed Medicare Part A for beneficiary stays that did not meet Medicare criteria for inpatient status and should have been billed as outpatient or outpatient with observation services.

• For 5 out of 170 selected claims, the Hospital incorrectly billed Medicare Part A for beneficiary stays that should have been billed as outpatient or outpatient with observation services.

• The Hospital complied with Medicare billing requirements for 211 of the 216 inpatient and outpatient claims we reviewed. However, the Hospital did not fully comply with Medicare billing requirements for the remaining five claims

• One claim had no inpatient order.

16

10/28/2015

9

Time Limits?

• Reopening: The claims from 2009 are eligible for reopening under the “similar fault” provisions of the reopening regulations at 42 CFR part 405, subpart I… Although OIG is not alleging that the Hospital engaged in fraud, its improper billings are sufficient to establish “similar fault” under current Medicare guidance). Therefore, there is no time limit that would prohibit the reopening of the claims questioned in this report.

• Recovery: The Hospital is not “without fault” with respect to the claims questioned in the report and, therefore, recovery is not time-barred under section 1870(b)… We questioned the claims in this report on the basis of criteria drawn from statutory, regulatory, and manual provisions with which the Hospital is expected to be familiar. Therefore, the Hospital is not “without fault” with respect to our findings above.

17

Medicare Compliance Review Of St. Vincent’s Medical Center For Calendar Years 2009 And 2010 42 CFR § 405.902 and 70 Fed. Reg. 11420 and 11450 (March 8, 2005)

What exactly is this similar fault?

According to CMS (as cited by OIG):

Similar fault means to obtain, retain, convert, seek, or receive Medicare funds to which a person knows or should reasonably be expected to know that he or she or another for whose benefit Medicare funds are obtained, retained, converted, sought, or received is not legally entitled.

18

42 CFR § 405.902

10/28/2015

10

Extrapolation

• Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), mandates that before using extrapolation to determine overpayment amounts to be recovered by recoupment, offset or otherwise, there must be a determination of:

– sustained or high level of payment error, or

– documentation that educational intervention has failed to correct the payment error.

• By law, the determination that a sustained or high level of payment error exists is not subject to administrative or judicial review.

19

Medicare Program Integrity Manual Chapter 8

Extrapolation- responses

• While the OIG may argue that it is not a Medicare contractor and that therefore, this section of the Social Security Act is inapplicable, such an argument is without merit since it will be a Medicare contractor, not the OIG, that will be charged with implementing the OIG' s recommendation to recoup the extrapolated overpayment.

• Ignoring the amount of Part B reimbursement corrupts the validity of the extrapolation… The fact that OIG admits that the overpayment findings are inaccurate and overstated makes the application of extrapolation in this category particularly troubling. Thus, the only firm conclusion that can be drawn is that OIG's extrapolation is substantially overstated. [emphasis added]

20

10/28/2015

11

Observation is not a safe alternative

• For 22 of the 73 sampled claims, the Hospital incorrectly billed Medicare for observation hours resulting in incorrect outlier payments… For the remaining 8 errors, the patient’s condition did not warrant observation services.

• The services were denied because it has been determined the units of service are in excess of the medically reasonable daily allowable frequency.

• This patient spent three nights in the facility which was billed as observation services. Services were billed incorrectly and should have been inpatient after the patient stayed over the second midnight.

21

Outpatient is at risk

• For all of the 160 sampled claims for Lupron injections, the Hospital incorrectly billed HCPCS code J1950. Specifically, of the 160 claims sampled, the Hospital billed 154 of these claims using a multiple of J1950 for the use of the 3.75 mg dosage of Lupron, although the 7.5mg dosage was administered.

• We agree that the medical record does not provide a basis to question the clinical practices of the Hospital’s physicians, and we have, therefore, removed language in the report that would suggest that Lupron was prescribed off-label.

• Hospital response: Based on the guidance that was issued during that time period and other circumstances when a drug is available in lower dosages to use a multiple of the J code when multiple dosages of the drug is administered, SHRS billed in accordance with the HCPCS published… The OIG is applying interpretations and guidance that was not available at the time the services were rendered.

22

Compliance Review Of Singing River Hospital For Calendar Years 2008 Through 2010

10/28/2015

12

It’s not just hospitals…

• Physicians did not always correctly code nonfacility places of service on Part B claims submitted to, and paid by, Medicare contractors nationwide. We determined that Medicare contractors potentially overpaid physicians approximately $33.4 million for incorrectly coded services…

• We recommend that CMS direct its Medicare contractors to: �

– initiate, in accordance with CMS policies, the immediate recovery of $7.3 million in potential overpayments from physicians who incorrectly coded physician services performed in ASCs

• monitor the recoveries from the 87 physicians…

– recover, in accordance with CMS policies, the additional $19 million in potential overpayments

• CMS concurred with each recommnedation. It is currently recovering the payments identified.

23

Incorrect Place-Of-Service Claims Resulted In Potential Medicare Overpayments Costing Millions

You might not be involved to owe money…

WHAT WE FOUND

• Payments that the Medicare contractors for Jurisdiction 15 made to hospitals for 86 of the 641 inpatient and outpatient claims for replaced cardiac medical devices were not correct. These incorrect payments resulted in overpayments of $547,553 that the hospitals had not identified, refunded, or adjusted by the beginning of our audit.

WHAT WE RECOMMEND

• We recommend that CGS:

– recover the $547,553 in identified overpayments

24

Medicare Overpayments In Jurisdiction 15 For Unreported Cardiac Device Credits

10/28/2015

13

Greatest Hits

25

• By not exercising sufficient control and oversight of its medical review vendor to ensure that CMS policy was adhered to in the review of UCMC claims, we believe that the OIG failed to meet the requirements set forth in the Government Auditing Standards section for quality control

• The OIG failed to demonstrate that it has a system of quality control in place to ensure that its contracted vendor complied with applicable standards for medical review. Accordingly, the medical review vendor's results are flawed and should not be relied on or adopted by the OIG.

Medicare Compliance Followup Review Of Tufts Medical CenterMedicare Compliance Review Of St. Vincent’s Medical Center For Calendar Years 2009 And 2010

What should you do?

• Primary prevention

– Transparent robust prcesses

– Address compliance concerns

– Review annual workplans and address expected areas of concern

• Retain skilled counsel

• Manage the relationship

• The OIG does not have the authority to deny claims

• The Department of Justice does not have the authority to deny claims

26

10/28/2015

14

References• Medicare Overpayments In Jurisdiction 15 For Unreported Cardiac Device Credits, Department Of Health And Human Services Office Of

Inspector General, October 2014 A-05-13-00029

• Compliance Review Of Baystate Medical Center For Calendar Years 2008 And 2009, Department Of Health And Human Services Office

Of Inspector General Medicare, September 2011 A-01-11-00500

• Compliance Review Of Singing River Hospital For Calendar Years 2008 Through 2010, Department Of Health And Human Services Office

Of Inspector General Medicare, July 2012 A-04-11-03069

• Compliance Review Of Northwestern Memorial Hospital For 2011 And 2012, Department Of Health And Human Services Office Of

Inspector General Medicare, March 2015 A-05-13-00051

• Improvements Are Needed At The Administrative Law Judge Level Of Medicare Appeals, Department Of Health And Human Services

Office Of Inspector General, November 2012 Oei-02-10-00340

• Review Of Cert Errors Overturned Through The Appeals Process For Fiscal Years 2009 And 2010, Department Of Health And Human

Services Office Of Inspector General, March 2012 A-01-11-00504 [Cms Response Was Feb 2012]

• Medicare Fee-for-service 2012 Improper Payments Report

• Medicare Compliance Review Of Sanford Usd Medical Center In Sioux Falls For Calendar Years 2010 And 2011, Department Of Health

And Human Services Office Of Inspector General, April 2013 A-07-12-05032

• Medicare Compliance Followup Review Of Tufts Medical Center, Department Of Health And Human Services, Office Of Inspector

General, June 2013 A-01-12-00527

• Medicare Compliance Review Of Sanford Medical Center In Fargo For Calendar Years 2010 And 2011, Department Of Health And Human

Services Office Of Inspector General

• Medicare Compliance Review Of University Of Cincinnati Medical Center For Calendar Years 2010 And 2011, Department Of Health And

Human Services Office Of Inspector General June 2014 A-05-12-00080

• Compliance Review Of The University Of Colorado Hospital For Calendar Years 2008 And 2009, Department Of Health And Human

Services Office Of Inspector General Medicare May 2012 A-07-11-05009

• Medicare Compliance Review Of St. Vincent’s Medical Center For Calendar Years 2009 And 2010, Department Of Health And Human Services Office Of Inspector General December 2013 A-04-12-08013

• Incorrect Place-Of-Service Claims Resulted In Potential Medicare Overpayments Costing Millions, Department Of Health And Human Services Office Of Inspector General, May 2015 A-01-13-00506

27

THANK YOU.Questions?

Contact Information

John K Hall, MD, JD, MBA

610-550-5983

johall@ehrdocs.com

10/28/2015

15

©2015 Executive Health Resources, Inc. All rights reserved.

No part of this presentation may be reproduced or distributed.Permission to reproduce or transmit in any form or by any meanselectronic or mechanical, including presenting, photocopying,recording and broadcasting, or by any information storage andretrieval system must be obtained in writing from Executive Health Resources. Requests for permission should be directed to INFO@EHRDOCS.COM.