Kusserow on Compliance: OIG Reports $5B Return as Result of Its Efforts

The HHS Office of Inspector General (OIG) is required to issue semi-annual reports to Congress regarding the results of its efforts. On December 10, 2014, it released its second half of fiscal year (FY) 2014 report that included a summary of accomplishments for the entire year. The report included a lengthy list of achievements by the OIG. One of the major accomplishments claims was $4.9 billion improperly spent federal health care dollars having been returned to the government as result of the OIG’s oversight and investigation efforts conducted during the year. This was broken down to $834.7 million in program audits and about $4.1 billion in investigative work that included $1.1 billion as states’ shares of Medicaid restitution. The OIG also reported $15.7 billion in estimated savings resulting from legislative, regulatory, or administrative actions that were supported by report recommendations. Some other statistical accomplishments noted included a number of enforcement actions:

  • 4,017 individuals and entities were excluded from federal health care programs
  • 971 criminal actions against individuals or entities that engaged in crimes against HHS programs
  • 533 civil and administrative cases, including false claims and unjust-enrichment lawsuits filed in federal district court and civil monetary penalties administrative matters, which included both OIG-initiated actions and provider self-disclosures.
  • Participation in Department of Justice (DOJ) Strike Force efforts resulting in the filing of charges against 228 individuals or entities, 232 criminal actions, and $441 million in investigative receivables

Other highlights from the report included findings that:

  • The OIG conducted congressionally mandated reviews of the implementation of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) that include the Health Insurance Exchanges, also called Marketplaces, and found that not all internal controls implemented by the federal, California, and Connecticut Marketplaces were effective in ensuring that individuals were enrolled in qualified health plans (QHPs) according to federal requirements.
  • The Exchanges were unable to resolve 2.6 million of 2.9 million inconsistencies from October through December 2013, most commonly as citizenship and income issues.
  • Medicare inappropriately paid $6.7 billion for claims for evaluation and management (E/M) services in 2010 that were incorrectly coded and/or lacked documentation, representing 21 percent of Medicare payments for E/M services that year. A further note on this was that E/M services are 50 percent more likely to be paid for in error than other Part B services.
  • Medicare and beneficiaries could save $12 billion during calendar years (CYs) 2012 through 2017 if CMS reduces hospital outpatient department payment rates for ambulatory surgical center (ASC)-approved procedures to the same level as ASC payment rates. When outpatient surgical procedures that do not pose significant risk to patients are performed in an ASC instead of an outpatient department, the payment rates are generally lower.

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 © 2014 Strategic Management Services, LLC. Published with permission.

CMS Puts Off Incentive Reward Program Changes, Tightens Enrollment Rules

New rules designed to ensure that fraudulent entities and individuals do not enroll in or maintain their enrollment in the Medicare program have been finalized by CMS. The agency had also intended to increase the potential reward amount under the Incentive Reward Program (IRP) for information on individuals and entities engaging in sanctionable conduct in the Medicare program. However, based on adverse industry comments and the complexity of implementation, CMS chose not to finalize the proposed IRP provisions at this time. This Final rule will publish in the Federal Register on December 5, 2014.

Enrollment Rule Changes

The Final rule implements the following changes regarding provider/supplier enrollment:

  • Denial based on Medicare debt. Denial of enrollment will be allowed if the provider, supplier, or owner was previously the owner of a provider or supplier that had a Medicare debt existing when its enrollment was voluntarily terminated, involuntarily terminated or revoked and (1) the owner left the provider or supplier that had the Medicare debt within one year of that provider or supplier’s voluntary termination, involuntary termination, or revocation; (2) the Medicare debt has not been fully repaid; and (3) CMS determines that the uncollected debt poses an undue risk of fraud, waste, or abuse. This denial based on Medicare debt can be averted if the enrolling provider, supplier, or owner satisfies the CMS claim collection criteria set forth in 42 C.F.R. §401.607 and agrees to a CMS-approved extended repayment schedule for the entire outstanding Medicare debt or repays the debt in full.
  • Felony conviction. Denial of enrollment or revocation of Medicare billing privileges will be allowed if, within the preceding 10 years, the provider or supplier, or any owner or managing employee, has been convicted of a federal or state felony offense that CMS determines to be detrimental to the best interests of the Medicare program and its beneficiaries.
  • Pattern or practice of bad claims. Revocation of Medicare billing privileges will be allowed if the provider or supplier has a pattern or practice of submitting claims that fail to meet Medicare requirements.
  • Ambulance suppliers. The ability of ambulance companies to “back bill” for services furnished prior to enrollment will be limited. Currently, physicians, non-physician practitioners, physician and non-physician practitioner organizations, diagnostic testing facilities and suppliers of durable medical equipment, prosthetics, orthotics, and supplies cannot bill for services furnished prior to the later of the date the supplier filed a Medicare enrollment application or the date the supplier first began furnishing services at a new practice location. CMS is simply expanding this rule to include ambulance suppliers.
  • CAP limitation. The ability of revoked providers and suppliers to submit a corrective action plan (CAP) will be limited to situations where the revocation was based on 42 C.F.R. §424.535(a)(1), i.e., noncompliance with enrollment requirements, the enrollment application, or failure to pay user fees. The provider and supplier will have only one opportunity to correct all deficiencies through the CAP.
  • Submission of remaining claims. All revoked providers and suppliers will be required to submit all of their remaining claims within 60 days after the effective date of their revocation.

Incentive Reward Program

On April 29, 2013, CMS published a Proposed rule to revise the provider enrollment requirements and the IRP provisions (see CMS releases proposed rule on Medicare Incentive Program, provider enrollment, April 29, 2013). Under the Proposed rule, the reward would be increased from 10 percent of the overpayments recovered or $1,000, whichever is less, to 15 percent of the final amount collected applied to the first $66 million for the sanctionable conduct. The Proposed rule also specified that CMS would not will not give a reward for the same or substantially similar information that was the basis of a payment under the federal False Claims Act (31 U.S.C. sec. 3729 et seq.) or any state False Claims Act. The tip would need to provide sufficiently specific information to start a review or investigation by CMS, and the reward would go to the first person to give specific information on a provider or supplier.

CMS received a number of adverse comments regarding these proposed changes, including the following:

  • The significantly increased reward amount would lead to many reports containing irrelevant or erroneous information that would ultimately impose a heavy burden on CMS and its contractors.
  • The proposal to limit reward eligibility to the first reporter of information could create “shoot first, ask questions later” situations leading to tension between providers and patients.
  • The proposal would encourage whistleblowers to first report their concerns to CMS instead of using established internal compliance reporting methods created within Medicare provider organizations.
  • Does CMS have the resources in place to handle the large influx of tips and complaints that the proposal will generate?

In response to these concerns and due to the complexity of implementation, CMS chose not to finalize the proposed IRP provisions contained in its Proposed rule, but indicated that it may finalize them in the future.

Cost and Impact

According to CMS, savings from most of the finalized provider enrollment provisions cannot be quantified. However, with regards to the limitation on ambulance supplier back-billing, CMS believes that this provision will result in a transfer of $327.4 million per year from ambulance suppliers to the federal government. In addition, CMS believes that the requirement for revoked providers and suppliers to submit remaining claims within 60 days of revocation will limit Medicare’s vulnerability to fraudulent claims and allow for a more focused medical review. The agency believes this will likely lead to some future savings to the federal government.

The Secretive Business of Providing Health Care Coverage

As Massachusetts was considered a ground-breaking state in offering universal health care to its residents, so too, is it ground-breaking in health cost transparency. As of October 1, 2014, Massachusetts health insurers are now required to provide price information to consumers through online cost estimator tools that compare the price and out-of-pocket costs of certain health care services, procedures, or hospital admissions.

The Massachusetts Healthcare Cost Containment and Quality Improvement law, which was passed in 2012 (Chapter 224 under the Acts of 2012), allows beneficiaries the opportunity to choose providers and obtain information about medical procedure costs, giving patients advance planning capabilities. The online tools will specifically help consumers with high deductible plans or those who have to pay co-insurance.

This is great news for Massachusetts residents, but what about the rest of us? Cost transparency, or the lack of it, is a nationwide problem.

Case Study

The Miami-Dade school district is self-insured and bears the financial burden of covering its own employees. The district superintendent claimed to know what the district pays for health claims, but after school board meetings in 2013 and 2014 in which board members raised concerns over increasing health costs for teachers, it became clear that the superintendent was still in the dark about how much the district pays to any one hospital or provider for a given service. The district uses Cigna for its employee health benefits.

According to the Kaiser Family Foundation (KFF), the district absorbed an additional 4 percent in health care costs in 2014. Teachers’ salary increases have not been matching up to their premium costs, and their health contributions remain largely the same. The head of the district’s teachers’ union has asked the school district to investigate how the cost savings from consistent teacher pay rates were being applied and what other factors might be contributing to the increasing health premiums.

The union leader’s questions will most likely go unanswered. Although the Miami-Dade school district is subject to Florida’s open records laws, its insurance carrier, Cigna, has refused to share contracted prices. This keeps the district and its employees from making informed, financially wise choices and allows insurers to drive up premiums.

ACA Transparency Efforts

In April 2014, CMS sent letters to the American Medical Association and the Florida Medical Association announcing its intention to release Medicare data in the form of the number and type of health care services that providers delivered and the amounts Medicare paid for those services in 2012. CMS explained that the release of information was in response to recent Freedom of Information Act (FOIA) requests. Provisions under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) include ACA section 10331, which mandates that the Secretary of HHS create a physician-compare internet website to make information on physician performance available to the public. Another provision, ACA section 10332, allows certain entities to access Medicare claims data in order to review the data and issue performance reports about individual providers.

With an increased focus on transparency, the answer to why Miami-Dade school district employees, or the rest of the nation for that matter, must be kept in the dark about health care costs remains a secret.

Kusserow on Compliance: CMS Announced New Rules to Protect Against Fraud and Abuse

CMS has announced new rules that strengthen oversight of Medicare providers and protect taxpayer dollars abusive practices. The rules are designed to prevent physicians and other providers with unpaid debt from re-entering Medicare, remove providers with patterns or practices of abusive billing, and implement other provisions. CMS has removed nearly 25,000 providers from Medicare; and the new rules are designed to block readmission for those who had engaged in improper practices. CMS noted that it had been a common practice for some providers to game the system and dodge rules to get Medicare dollars by exiting and then returning anew to the program. The new Final rule should make it far more difficult for those removed from the program for improper practices to return to the system. Removing providers from Medicare has had a real impact on savings; CMS notes its predictive analytics technology in the Fraud Prevention System has identified providers and suppliers who were ultimately revoked with a result of preventing $81 million in inappropriate claims from being paid. The rules include a provision that amends 42 CFR 424.520(d), Effective date of Medicare billing privileges for  physicians, nonphysician practitioners, and physician and nonphysician practitioner organizations, to include ambulance suppliers, based in part on the elevated risk ambulance suppliers pose to the Medicare program. CMS believes this change will save more than $327 million annually.

CMS cites the new rule as one of many it is using as a result of new authorities created by the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) to address Medicare fraud, waste, and abuse. In its announcement of this new action, CMS noted that it has in place temporary enrollment moratoria on new ambulance and home health providers in seven areas in the country where fraud has been the biggest problem. This has been coupled with targeting resources in those areas, including use of fingerprint-based criminal background checks.

Key Features of the CMS Rule Changes

  1. Deny enrollment to providers, suppliers and owners affiliated with any entity that has unpaid Medicare debt, so as to prevent those that have incurred substantial Medicare debts from exiting the program and then attempting to re-enroll as a new business to avoid repayment of the outstanding Medicare debt.
  2. Deny or revoke the enrollment of a provider or supplier if a managing employee has been convicted of a felony offense that CMS determines to be detrimental to Medicare beneficiaries. Recently implemented background checks will provide CMS with more information about felony convictions for high risk providers or suppliers.
  3. Revoke enrollments of providers and suppliers engaging in abuse of billing privileges by demonstrating a pattern or practice of billing for services that do not meet Medicare requirements.

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.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2014 Strategic Management Services, LLC. Published with permission.