Personal service care fraud; a growing problem for Medicaid

Medicaid personal care service (PCS) fraud cases made up a “substantial and growing” portion of cases investigated by the Medicaid Fraud Control Units (MCFUs) and greater oversight is recommended by the HHS Office of the Inspector General (OIG). In a report covering the PCS work of MFCUs over fiscal years 2012-2015, the OIG found that these cases comprised over 12 percent of the total investigations and accounted for 34 percent of the convictions (OIG Report, OEI-12-16-00500, December 6, 2017).

Background

Personal care services are those services that support consist daily living activities, including bathing and dressing, meal preparation, and transportation. PCS providers assist the elderly, people with disabilities, and individuals with chronic or temporary health conditions, allowing these persons to remain living in their homes and communities. PCS are typically delivered through either an agency-directed PCS or a self-directed PCS, through which beneficiaries hire and supervise their own provider. PCS are offered either as an optional benefit through a Medicaid State plan or through demonstration projects and waiver programs. States are required to develop their requirement and qualification standards for PCS providers, resulting in widely varying requirements across the country.

Growing percentage

The OIG found that during the three-year review period, PCS fraud cases made up a substantial and increasing number of MFCU cases and outcomes. In FY 2015, such cases made up 12 percent of total investigations and over the review period, they made up 38 percent of indictments, and 34 percent of convictions. Furthermore, during the review period, indictments increased 56 percent and convictions increased 33 percent. Payments to PCS providers represented $13 billion out of $524 billion total Medicaid expenditures during FY 2015.

Recommendations and challenges

MCFUs have recommended that State Medicaid either enroll PCS attendants as Medicaid providers, or include PCS attendants in a provider registry. This would allow for the assignment of unique provider identification number to PCS attendants to include on claims for reimbursement. Some form of enrollment or registration is needed, as the inability to identify individual PCS attendants restricts the ability to identify fraudulent providers. MCFUs have suggested that enrolling PCS attendants in Medicaid would better inform them about Medicaid procedures and requirements.

MCFUs have also recommended the use of background checks for attendants. They found that the current, minimal, background check requirements could put vulnerable beneficiaries at risk. For example, a PCS attendant in Arizona pleaded guilty to theft and financial exploitation of a vulnerable adult, after having stolen checkbooks, cash, credit cards, and personal items belonging to the beneficiaries. The PCS agency checked for felony arrests and found none; the attendant had, however, numerous misdemeanor convictions and had previously lost her nursing assistant license.

The MCFUs have also recommended using additional documentation requirements, such as requiring require PCS attendants to provide detailed or standardized timesheets and to show the start and stop times for the services. The currently minimal PCS documentation means that PCS claims data may not contain the identity of the PCS attendant, the number of hours worked, or the time of day during which the services were provided.

Lastly, the MCFUs recommended that State Medicaid agencies implement a variety of controls regarding oversight of PCS providers and their services. These controls include more frequent in-home supervisory visits, training for PCS attendants and cross-reference attendant and beneficiary location. For a variety of reasons, beneficiaries may be reluctant to report abuses and more frequent in-home visits could curtail fraud.

Funding issues

The units reported that their efforts to protect beneficiaries are hamstrung by their ineligibility to receive Federal funding to investigate and prosecute complaints in nonfacility settings. Such complaints are often referred to other agencies. Those agencies often do not receive the same level of training on patient abuse and neglect that MCFU staff receives and may have severely strained resources.

Conclusions

The report found that the volume and increase of MFCU investigations and prosecutions indicates that PCS remain vulnerable to fraud. The report noted that the recommendations are similar to those made in previous reports and states that it is crucial that federal funding authority be expanded to allow MFCUs to investigate and prosecute cases of patient abuse and neglect in nonfacility settings.

Breakthrough cancer detection device gets parallel FDA, CMS review

A breakthrough cancer in vitro diagnostic (IVD) device that uses next generation sequencing (NGS) to detect genetic mutations in solid tumors took only six months from product application to FDA approval and a preliminary national coverage determination (NCD) from CMS, thanks to the Parallel Review program. Foundation Medicine’s FoundationOne® CDx™ (F1CDx) received simultaneous overlapping review by the FDA and CMS, which reduces the time necessary to marketing and coverage of innovative medical devices.

The Parallel Review program for medical devices was fully implemented in October 2016 following a pilot program (see Parallel Review program will be fully implemented and extended indefinitely, Health Law Daily, October 24, 2016). Ordinarily, CMS does not begin the NCD decision-making process until after a device has been approved or cleared for marketing by the FDA, which results in a longer wait before Medicare beneficiaries can access the device. Through Parallel Review, manufacturers receive feedback from both agencies through the clinical trial design stage, which helps them to design trials that fulfill evidentiary requirements for both steps of the process, potentially eliminating the need for additional trials.

Although the F1CDx device is a laboratory-developed test and therefore generally would not require premarket review from the FDA, Foundation Medicine requested Breakthrough Device designation for the test. The 21st Century Cures Act (P.L. 114-255) expanded the Expedited Access Pathways (EAP) program to breakthrough technologies that provide more effective treatment or diagnosis of life-threatening or irreversibly debilitating human disease or conditions (see Will the Cures Act address what ails the FDA approval process?, Health Law Daily, March 9, 2017). The FDA granted that designation because the F1CDx test has “potential to consolidate multiple companion diagnostic claims for patients and health care providers into a single test.”

Kusserow on Compliance: Controls working to prevent Medicare Advantage capitation payments after beneficiaries’ death

The OIG released a report that stated CMS policies and procedures were generally effective in ensuring that capitation payments to Medicare Advantage (MA) organizations for Medicare Parts A and B services were not made on behalf of deceased beneficiaries after their death. The Medicare Access and Children’s Health Insurance Program Reauthorization Act of 2015 requires CMS to establish policies to ensure that payments are not made for Medicare services rendered after death of beneficiaries. In prior audits, the OIG identified problems in controls to prevent these kinds of Medicare payments. In this case, the OIG conducted an audit to determine effectiveness of CMS’s policies and procedures to prevent capitation payments to Medicare Advantage (MA) organizations for Medicare Parts A and B services after individuals’ dates of death.

Details of the audit report noted that during calendar years 2012 through 2015, CMS received updated beneficiary date-of-death information and then made approximately 1.8 million adjustments to capitation payments, thereby recouping $2.96 billion from MA organizations for Parts A and B capitation payments that had been made on behalf of beneficiaries who had died.  However, the OIG found that CMS did not identify and recoup all improper capitation payments. As of March 7, 2017, CMS had not recouped $2.4 million associated with 1,817 capitation payments that were made on behalf of 978 beneficiaries. The OIG noted these improper payments represented .0004 percent of the total capitation payments made to MA organizations and .08 percent of the total adjustments that CMS made after receiving information on beneficiaries’ dates of death.

The OIG recommended CMS (1) move to recoup the $2.4 million in capitation payments made to MA organizations on behalf of deceased beneficiaries and (2) implement system enhancements to identify, adjust, and recoup improper capitation payments in the future. CMS concurred with both of these recommendations and described corrective actions that it had implemented.

 

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2017 Strategic Management Services, LLC. Published with permission.

CMS cut to 340B spending overshadows OPPS update; associations threaten suit

Reimbursement to outpatient departments in 2018 will increase $5.8 billion compared to 2017, according to the hospital outpatient prospective payment (OPPS) and ambulatory surgical center (ASC) PPS Final rule for calendar year 2018. However, CMS will drastically reduce reimbursement for drugs under the 340B Program, much to the ire of providers and associations, which have already threatened to sue. (Final rule, 82 FR 52356, November 13, 2017).

340B program 

In calendar year (CY) 2018, CMS will change its reimbursement for separately payable drugs and biologics (other than pass-through drugs and vaccines) acquired through the 340B Program from average sales price (ASP) plus 6 percent to ASP minus 22.5 percent. Rural sole community hospitals, PPS-exempt cancer hospitals, and children’s hospitals will be exempt from this policy for CY 2018. This change, said CMS, addresses recent trends of increasing drug prices and will save beneficiaries about $320 million on copayments in 2018. CMS will offset the projected $1.6 billion decrease in drug payments by redistributing this amount for non-drug items and services across the OPPS.

The 340B Program (see 42 U.S.C. §256b, as expanded by Secs. 2501, 7101, and 7102 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148)), has been controversial, as critics have accused hospitals of abusing the program (see Participants in drug delivery system testify to impacts on patient prescription drug costs, Health Law Daily, October 18, 2017). However, the American Hospital Association, the Association of American Medical Colleges, and America’s Essential Hospitals criticized the cut to 340B spending as contrary to Congressional intent and a threat to safety net hospitals (see, e.g., Testimonies focus on benefits of 340B Drug Program, Health Law Daily, October 12, 2017).

Further, said the AHA, the policy “does nothing to address the stated goal of reducing the cost of pharmaceuticals” and could cause increases in beneficiaries’ out-of-pocket costs for non-drug Part B benefits. American’s Essential Hospitals predicted that, “given their fragile financial position, essential hospitals will not weather this policy’s 27 percent cut to Part B drug payments without scaling back services or jobs.” The three associations plan legal action to stop CMS from cutting 340B spending.

OPPS update

For CY 2018, CMS increased the payment rates under the OPPS by an increase factor of 1.35 percent, which is based on the hospital inpatient market basket percentage increase of 2.7 percent, minus the multifactor productivity adjustment of 0.6 percentage point, and minus a 0.75 percentage point adjustment required by Sec. 3401(i) of the ACA.

Direct supervision requirement

42 C.F.R. Sec. 410.27(a)(1) requires therapeutic outpatient services to be furnished under the direct supervision of a physician or nonphysician practitioner. Sec. 16004 of the 21st Century Cures Act (P.L. 114-255) delayed enforcement through 2016 of this requirement for therapeutic hospital services provided by critical access hospitals and small rural hospitals with fewer than 100 beds. The CY 2018 OPPS Final rule continues the nonenforcement of the direct supervision requirement for hospital outpatient therapeutic services for CAHs and small rural hospitals having 100 or fewer beds for CYs 2018 and 2019.

Inpatient only list

Services that typically would be paid in an inpatient setting will not be paid by Medicare under the OPPS (see 42 C.F.R. Sec. 419.22(n)). These are services that require inpatient care because of (1) the invasive nature of the procedure; (2) the need for at least 24 hours of postoperative recovery time or monitoring before the patient can be safely discharged; or (3) the underlying physical condition of the patient. Effective for CY 2018, CMS will remove total knee arthroplasty (TKA) and five other procedures from the inpatient only list and will add one procedure to the list. CMS is also prohibiting recovery audit contractors from reviewing TKA procedures for “patient status” for two years to give providers time to gain experience with the procedure in the outpatient setting.

Packaging

CMS will conditionally package low-cost drug administration services assigned to Ambulatory Payment Classifications (APCs) 5691 and 5692 effective January 1, 2018. In addition, CMS assigned skin substitutes with a geometric mean unit cost (MUC) or a per day cost (PDC) that exceeds either the MUC threshold or the PDC threshold to the high cost group. For CY 2018, a skin substitute product that was assigned to the high cost group for CY 2017, but does not exceed either the CY 2018 MUC or PDC threshold for CY 2018, will be assigned to the high cost group for CY 2018.

OQR program

CMS removed six measures from the Outpatient Quality Reporting (OQR) program beginning with the CY 2020 payment determination (CY 2018 reporting). CMS stated that the removal of these measures results in a burden reduction of 457,490 hours and a saving of $16.7 million in CY 2020 for hospitals. CMS also delayed the mandatory implementation of the Consumer Assessment of Healthcare Providers and Systems Outpatient and Ambulatory Surgery Survey under the Hospital OQR Program beginning with the CY 2018 data collection.

Laboratory tests

A new exception to the laboratory date of service policy will generally permit laboratories to bill Medicare directly for advanced diagnostic laboratory tests and molecular pathology tests excluded from OPPS packaging policy if the specimen was collected from a hospital outpatient during a hospital outpatient encounter and the test was performed following the patient’s discharge from the hospital outpatient department.

ASCs

For CY 2018, payments to ASCs will increase 1.2 percent, or $4.62 billion, based on a projected consumer price index of 1.7 percent minus a multifactor productivity adjustment required by the ACA of 0.5 percentage point. For CY 2018, CMS added three procedures to the ASC covered procedures list. In addition, CMS removed three measures from ASC Quality Reporting program for the CY 2019 payment determination and later and added two measures of hospital events following specified surgical procedures for the CY 2022 payment determinations and later (see Approximate 2 percent increase in OPPS, ASC payments proposed for 2018; cuts to 340B drug discount pay, Health Law Daily, July 20, 2017).