Identifying ‘60-day rule’ overpayments during routine auditing

The need to identify, report, and return Medicare and Medicaid overpayments to CMS under the “60-day rule” and the ability to understand and prepare for the risks posed by routine auditing are essential for all medical providers. At a recent Health Care Compliance Association (HCCA) webinar, Jean Acevedo, LHRM, CPC, CHC, CENTC, Senior Consultant, Acevedo Consulting, Inc., and Lester J. Perling, Esq., CHC, partner, Broad and Cassel LLP, discussed these topics and offered their recommendations.

The 60-day rule

Section 6402(a) of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) established new section 1128J of the Social Security Act, which requires providers and suppliers who submit claims to Medicare and Medicaid to report and return “identified” overpayments to CMS within 60-days or face potential liability under the federal False Claims Act. These requirements were implemented by CMS in a February 12, 2016 Final rule (81 FR 7653) (see CMS finally codifies the 60-day Parts A and B overpayment return rule, February 12, 2016; and Comments, questions, concerns? Weighing in on the 60-day overpayment Final rule, March 2, 2016).

According to Perling, the Final rule sets forth the following parameters for understanding the 60-day overpayment requirement:

  • Definition of an “identified” overpayment. Providers are responsible for overpayments that they “know or should have known”about through the exercise of “reasonable diligence.” Providers that deliberately choose not to investigate when they are made aware of the existence of potential overpayments, would be held liable under the FCA.
  • Exercising “reasonable diligence”. Reasonable diligence requires that providers (1) implement proactive compliance activities to monitor for the receipt of overpayments; and (2) undertake investigations “in a timely manner” in response to obtaining “credible information” of a potential overpayment.
  • “Timely” defined. CMS considers a “timely” investigation to be at the most six months from receipt of the credible information, except in extraordinary circumstances.
  • When does the 60-day period begin? The 60-day period does not begin to run until the provider has had a chance to undertake follow-up activities and quantify the amount of the overpayment.
  • Lookback period. The 60-day rule applies to overpayments identified within six years after they were received.
  • Repayment options. Providers may use claims adjustment, credit balance, the HHS Office of Inspector General’s (OIG) Self-Disclosure Protocol, or other appropriate processes to report or return overpayments. Regardless of the process used, the refund should include an explanation or the statistical sampling methodology used if the overpayment was extrapolated.

Routine baseline audit

Acevedo next discussed the annual baseline audit performed as part of the organization’s compliance program. She recommended that it be done under the attorney/client and work/product privileges in order to help insulate the organization from exposure.

Physical therapy case study

Acevedo next presented an audit case study of a physical therapy department. She stressed the need for the auditor (whether in-house or an outside contractor) to examine the three critical physical therapy documents: (1) the initial evaluation and plan of treatment; (2) the treatment notes; and (3) the clinician’s progress report.

In preforming the audit, she recommended that the auditor take note of the fact that health care professionals are creatures of habit and that, for example, they will either include all necessary elements in the plan of treatment, the treatment notes, and the progress report, or not (i.e., they are usually consistently good, or consistently bad at recordkeeping). She also cautioned that while this document audit may be time consuming, and it is important that the auditor be thorough and not just review the most recent treatment notes and progress reports.

If the auditor finds that therapy documents are deficient or erroneous, Acevedo suggested that the auditor STOP and do two things: (1) consider the possibility that an overpayment situation exists and the timeline that may kick in under the 60-day rule; and (2) alert the attorney and the owner of the practice. She cautioned, however, about jumping to conclusions and leaving a paper trail of written concerns that may amount to “breadcrumbs” for a government investigator or a whistleblower to follow.

Prospective v. retrospective audits

Perling stressed that whether the audit is prospective (i.e., occurs prior to submission of a claim) or retrospective (post claim submission) it does not matter as the finding of negative result or high error rate in either would potentially activate the 60-day rule requirements.

Issues to consider when auditing

Perling suggested taking the necessary steps prior to audit to create an attorney/client privilege that will be recognized and respected by any government investigator.

Perling also discussed whether the standards the auditor is relying on are authoritative or merely guidance. Perling believes that statutes and regulations are clearly authoritative, but that “not everything CMS publishes is authoritative.” For example, while CMS Manuals and Local Coverage Determinations are binding on the Medicare contractor, they are not binding on an administrative law judge. The real question, according to Perling, is “whether the Department of Justice or a whistleblower will think a standard is authoritative.”

Final thoughts

In closing, Perling and Acevedo offered three reminders: (1) educate before auditing; (2) the routine annual audit should review current compliance with standards, not past deficiencies; and (3) audits are still required for effective compliance programs. The danger, according to Acevedo, “is putting your head in the sand.”

Compliance advice offered to providers in the orthotic and prosthetic arena

There are high clinical documentation standards for orthotic and prosthetic (O&P) providers. Non-compliance with these documentation requirements can result in numerous adverse consequences for O&P providers, including: audits; recoupment of payments already received; loss of contracting and provider privileges; civil money penalties; loss of credentialing, certification, or licensure; the risk of getting on the Zone Program Integrity Contractor (ZPIC) radar, and exclusion from participation with any physician that accepts government funding, such as Medicare or Medicaid.

Understanding and applying compliance requirements in the O&P arena was the focus of a Health Care Compliance Association (HCCA) webinar offered by Tonja Wise, CHC, Corporate Compliance Manager, O&P Compliance Officer, Shriners Hospitals for Children International.

Wise’s presentation began by explaining why the O&P provider needs compliance and how O&P is different from other specialties. She then discussed the O&P provider’s obligations in the areas of documentation, provider notes, coding, and billing. Wise also noted the importance of the prescribing physician, who shares some of the documentation responsibility with the O&P provider. A summary of Wise’s major points of these topics include the following:

  • As a result of recent fraudulent activity and increased payment recoveries, O&P has become the new durable medical equipment (DME) when it comes to audits and scrutiny by the Office of Inspector General (OIG).
  • O&P suppliers that intend to bill Medicare (and Medicaid in most states) must be accredited. The Board of Certification/Accreditation (BOC) and the Association of Boards of Certification (ABC) both offer this service. Going through accreditation is good practice for ensuring that the organization meets the Medicare Supplier Standards and the accreditation standards.
  • Medical documentation must corroborate the O&P provider’s chart and justify the order written and device supplied. Documentation of the orders, delivery, use and care instructions, and safety are very specific.
  • Documentation requirements include a signed HIPAA acknowledgement; consents for treatment; a valid dispensing order prior to delivery; a signed, detailed written order prior to billing; a detailed delivery receipt; complete, comprehensive O&P provider notes; safety checks completed; and proof of patient care and instructions.
  • Provider notes should be complete, comprehensive, and compliant. This means each patient visit should have an independent, detailed note. The initial evaluation and the delivery visits are the most involved and will be the most important to the payor or auditor. These notes must outline all of the information necessary to support medical necessity.
  • It is the responsibility of the certified O&P provider to ensure that the appropriate Healthcare Common Procedure Coding System (HCPCS) codes are selected.
  • Know the federal requirements for the warranty period for O&P devices. CMS requires a 90-day warranty for all new devices. State Medicaid warranty periods may differ. The O&P provider does not need a new prescription for repairs if the provider delivered the device, unless major components are being replaced.
  • All bills should be reviewed for accuracy and consistency prior to submission. Confirm that diagnostic codes on all orders are consistent with the claim. Ensure all modifiers are included with the claim and are accurate.
  • Prescribing physicians are responsible for providing orders that meet CMS criteria for all O&P devices, documenting all medical necessity for the device being ordered, providing accurate diagnosis data (O&P providers cannot diagnose), and supplying any medical documentation necessary to support the O&P provider’s claim.

Conclusion

Wise believes that the best protection for an O&P provider is to have a robust compliance program in place to monitor coding, billing, medical necessity, and documentation. To ensure this compliance, she suggests that the O&P provider do the following:

  • Conduct annual compliance education.
  • Utilize access to O&P resources for guidance.
  • Be knowledgeable of federal, state and local requirements.
  • Be educated on payor requirements.
  • Read and understand the local coverage decisions (LCDs) and reference them frequently.
  • Be a self-auditor and audit frequently.
  • Ensure that any regulatory updates or major changes to O&P are communicated throughout the organization.

HHS is ‘slowing’, not stopping, the Medicare appeals backlog

HHS will not be able to clear the backlog of Medicare appeals by its December 30, 2020, deadline, the agency said in a report to the U.S. District Court for the District of Columbia. HHS informed the court that due to a higher number of pending appeals than anticipated, without more money or resources, the agency will not be able to meet the deadline without violating its statutory requirement to decide appeals on the merits. Richard P. Kusserow, former HHS Inspector General (IG) and current CEO of Strategic Management, LLC, noted that the HHS position is not new. He said, “They have been making that argument from the beginning of the case.”

Mandamus

In February 2016, the D.C. Court of Appeals revived a 2014 case brought by the American Hospital Association (AHA) and three hospitals asking the court to issue a writ of mandamus to compel HHS to process their long-pending Medicare claim-reimbursement appeals in accordance with statutory timelines. On remand, the district court determined that because backlog numbers were unacceptably high, there were equitable grounds for mandamus. Accordingly, the court imposed a timetable, imposing increasing backlog reduction expectations, with elimination of the backlog of cases pending at the ALJ level by December 31, 2020 (see Court sets a timeline for Medicare claims backlog, December 6, 2016).

Status

The order granting a writ of mandamus instructed HHS to file status reports with the court every 90 days. The most recent report indicates that as of March 5, 2017, there are 667,326 pending appeals at the Office of Medicare Hearings and Appeals (OMHA). HHS projections put the number of expected pending appeals at 1,009,768 by the end of FY 2021, higher numbers than those found in previous HHS estimates. Because the backlog is not a static obstacle, despite some resolution through settlement or formal adjudication, the agency has struggled to keep appeals numbers from growing. Kusserow said, “The best that they have been able to accomplish to date has been slowing the backlog development.” According to HHS, the revised projections are the result of setbacks from lower than expected provider interest in the agency’s settlement initiatives and stalled settlement discussions.

Don’t get caught in coding, the clinical matters too

Compliance officers should be careful to remember the clinical side of compliance, as well as the legal components, according to a webinar titled, “The Medical in Medical Necessity,” presented by CJ Wolf, Senior Compliance Executive at Healthicity, and sponsored by the Health Care Compliance Association (HCCA) Wolf reminded compliance officers that just because you have proper medical documentation for a service does not mean the service was provided with medical necessity.

Medically unnecessary

Wolf walked through examples of instances where Medicare or Medicaid fraud cases resulted from allegations that providers billed for medically unnecessary procedures. He used specific clinical information to describe how allegations led to fraud settlements or convictions. He pointed to examples from cardiology where physicians allegedly billed for unnecessary stress tests, ultrasounds, tests without prior examinations, peripheral interventions, and groin artery tests. More generally, Wolf noted, medical necessity may turn on specific local coverage determinations (LCDs) or requirements from a Medicare administrative contractor (MAC). As an example of this, he described a scenario where a MAC required that a provider try a conservative treatment option before a more costly treatment method could become medically necessary.

Resources

In the event that a physician is allegedly providing unnecessary medical services, compliance officers can rely on information from organizations like the Society for Vascular Surgery, the American College of Cardiology, and the American Society of Echocardiography to determine the appropriateness of services. Such organizations, in the case of cardiac services, can provide an overview of which interventions are necessary for particular situations, including those that are permissible first line treatments. Additionally, Wolf noted that the medical necessity of services is something which reaches beyond compliance and the anecdotes of providers. For example, he pointed to clinical studies published in the Journal of the American Medical Association (JAMA) regarding the frequency of appropriate or inappropriate medical interventions.