Kusserow on Compliance: Court will not reconsider order to clear Medicare claims appeals backlog

On December 15, 2016, HHS asked the U.S. District Court for the District of Columbia to reconsider its December 5 order requiring the agency to clear the Medicare appeals within four years, stating it would not be able to meet the requirements under the schedule recently ordered without “substantial new resources and authorities.”  The court rejected this argument, as it had already been presented by HHS and considered by the court in reaching its order.  Unless HHS appeals the Court’s decision in American Hospital Association v. Burwell (U.S. District Court for the District of Columbia, January 4, 2017), this will conclude the 2.5 year litigation initiated by the American Hospital Association (AHA) and several hospitals.   Plaintiffs challenged the failure of HHS to meet statutory timeframes related to adjudication of Medicare claims appeals. The Court adopted the plaintiffs’ proposed timetable for clearing the backlog, requiring a 30% reduction of the current backlog of cases pending at the administrative law judge (ALJ) level by December 31, 2017, a 60% reduction by December 31, 2018, a 90% reduction by December 31, 2019, and a 100% reduction by December 31, 2020.

A failure to meet the deadlines would mean that claimants may move for default judgment in their favor. HHS is further obligated to submit a report every 90 days on its “progress in reducing the backlog and includ[ing] updated figures for the current and projected backlog, as well as a description of any significant administrative and legislative actions that will affect the backlog.” The HHS Secretary argued that the timetable would require her to “make payment on Medicare claims regardless of the merit of those claims.”  The Court responded by noting that HHS has already violated Medicare statute by not complying with statutory deadlines for Medicare appeals and the timetable provides a reasonable period for “proper claim substantiation.”  “If the Secretary fails to meet the [court ordered] deadlines, plaintiffs may move for default judgment or otherwise enforce the writ of mandamus.”

Tom Herrmann, JD, who served over twenty years as a former ALJ and executive in the Office of Counsel to the Inspector General, observed that health care providers and suppliers with pending appeals will welcome the court action requiring HHS to take steps to comply with the statutory deadlines for resolution of appeals.  He explained that governing law and regulations require an ALJ to hold a hearing and render a decision within 90 days of a party’s filing of an appeal with Office of Medicare Hearings and Appeals (OMHA).  However, they have been unable to meet this deadline, resulting in a backlog of 1 million pending appeals.  A Government Accountability Office (GAO) report last June was highly critical of the HHS appeals process and the failure to meet deadlines, and the OMHA moratorium on accepting new appeals requests in order to catch up has not worked.

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.

Kusserow on Compliance: Court rules against HHS and orders end of Medicare claims appeal backlog

The U.S. District Court for the District of Columbia has ordered HHS to eliminate pending Medicare claims appeals and outlined a schedule for reducing the backlog. Failure to meet these deadlines will permit claimants to move for default judgment in their favor. This would apply to Medicare appeals that have been pending at the administrative law judge (ALJ) level without a hearing for more than a year. DHHS is obligated to submit a progress report every 90 days on reducing the backlog. This action is the latest in the 2.5 year pending litigation initiated by the American Hospital Association (AHA) and several hospitals.  The Office of Medicare Hearings and Appeals (OMHA) has been unable to comply with the 90-day statutory deadline for appeals, resulting in a backlog of almost 1 million pending appeals.  Last June, the Government Accountability Office (GAO) reported the failure to meet statutory deadlines for the resolution of appeals, noting they had fallen years behind in the backlog. Following this, the OMHA placed a moratorium on accepting new appeals requests in order to catch up on pending appeals, which did little to reduce the backlog.

Dr. Cornelia Dorfschmid is a leading expert on dealing with Medicare claims appeals and has been assisting clients with these kinds of issues for 25 years. She noted that as a result of the actions by the Federal Court, the appeal process may begin to function again as it was expected to do. If a provider has a concern about demand letters coming from government agencies or their contractors, she offers the following advice on how to deal with them:

  1. Correct interpretation of the projected estimate. The first step in assessing the exposure to a demand letter is to determine whether the estimate was projected from a random sample that was based on the correct interpretation and application of the various medical documentation requirements and payer coverage rules. If the medical review, the application of coverage criteria, and case-by-case review findings can be challenged in an appeal or a quality assurance process, the overpayment estimate derived from the sample would not be tenable.
  2. Statistically valid random sample. A demand for overpayments must be generated from a statistically valid random sample; and if it not then the validity of the projection of the total overpayment estimate is difficult to defend.
  3. Confidence and precision.   If each sampled case was reviewed correctly and the sample was a statistically valid random sample, acceptable confidence (i.e, degree of certainty that the sample correctly depicts the universe) and precision (i.e., range of accuracy) are the third piece needed for a quality estimate of the total overpayment in the universe.

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.

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Copyright © 2016 Strategic Management Services, LLC. Published with permission.

Kusserow on Compliance: Most civil fraud recoveries in 2015 were from health care costs

The Department of Justice (DOJ) reported obtaining more than $3.5 billion in settlements and judgments from civil fraud cases in fiscal year 2015. Significantly, $1.9 billion in recoveries came from the health care industry sector as result of investigations of situations in which: (1) unnecessary or inadequate care was provided; (2) kickbacks to health care providers to induce the use of certain goods and services were paid; or (3) goods and services paid for by Medicare, Medicaid, and other federal health care programs were overcharged. This was over half of the total amount recovered across all sectors and up from about 40 percent in 2014. The cumulative amount recovered from health care fraud cases since January 2009 was reported to be $16.5 billion.

Some of the highlighted cases from 2015 included the following:

  • Two of the largest recoveries were from dialysis services provider, DaVita Healthcare Partners, Inc., who paid $450 million to resolve a civil fraud case.
  • Hospitals were involved in nearly $330 million in settlements and judgments this past year. By far the biggest enforcement effort involved nearly 500 hospitals for implanting cardiac devices in Medicare patients contrary to criteria established by CMS that resulted in settlements of $250 million, including $216 million recovered in the past fiscal year.
  • Hospitals settling false claims involving Stark violations include Adventist Health System for $115 million; North Broward  Hospital District for $69.5 million; and Georgia hospital system Columbus Regional Healthcare System for $25 million plus contingent payments up to an additional $10 million.
  • Claims involving the pharmaceutical industry accounted for $96 million in settlements and judgments. Daiichi Sankyo Inc., paid $39 million to resolve allegations of false claims and paying kickbacks to physicians to induce them to prescribe Daiichi drugs. AstraZeneca LP and Cephalon Inc. paid $26.7 million and $4.3 million, respectively, in separate settlements for underpaying rebates owed under the Medicaid Drug Rebate Program. In another settlement, PharMerica Corp., agreed to pay $9.25 million to resolve allegations that it solicited and received kickbacks from Abbott Laboratories in exchange for promoting drugs for nursing home patients.
  • In the largest failure of care settlement with a skilled nursing home chain in the department’s history, Extendicare Health Services Inc. agreed to pay $32.3 million to resolve allegations for billing Medicare for deficient nursing services and for medically unreasonable and unnecessary rehabilitation therapy services. The DOJ took action in ongoing litigation against additional nursing home chains and rehabilitation centers based on similar allegations of false claims for medically unreasonable or unnecessary rehabilitation therapy.

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.

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Copyright © 2015 Strategic Management Services, LLC. Published with permission.

 

Kusserow on Compliance: DOJ “incident to” rule enforcement effort defeated in jury trial

For what may be the first time, the Department of Justice (DOJ) has tried to employ criminal prosecution to the “incident to” billing aspect of outpatient services. This effort led to a defeat for the government and is likely to have considerable impact on future DOJ actions that follow this avenue of prosecution in the future.

“Incident to”

Incident to” billing is a way of billing outpatient services (rendered in a physician’s office located in a separate office, an institution, or a patient’s home) provided by a non-physician practitioner (NPP) such as a nurse practitioner (NP), physician assistant (PA), or other non-physician provider. When and under what circumstances such billing may occur has been the subject of considerable confusion.

The case

After a five-week long criminal trial in the U.S. District Court for the Eastern District of Virginia, a prominent Washington, D.C. area physician was found not guilty of 41 counts of fraud, which alleged that the clinician created a fraud scheme to defraud Medicare and TRICARE programs, along with commercial insurers. During the trial, charges were also dropped. The final claims going to the jury alleged improper billing for: (1) unnecessary surgeries to remove skin cancer; (2) services performed by medical assistants “incident to” the surgeon’s services (see 42 C.F.R. § 410.26) and billed under the surgeon’s provider number rather than the supervising practitioner’s number; and (3) consultation services by an independent contractor physician, which were billed at amounts higher than permitted under laws related to diagnostic testing.

The jury unanimously acquitted the physician. The defense counsel noted that the trial was one of the DOJ first attempts to bring criminal charges in order to enforce its interpretations of Medicare’s “incident to” and “anti-markup” regulations. CMS recently issue clarifying guidance on the “incident to” rule that explained that, as a condition for Medicare Part B payment, all “incident to” services and supplies must be furnished in accordance with applicable state law. The definition of auxiliary personnel was also clarified to require that the individual furnishing “incident to” services must meet any applicable requirements to provide such services, including licensure, imposed by the state in which the services are furnished.

In some cases, the physician or practitioner supervising the service is not the same individual treating the patient in general. CMS is finalizing a proposal to specify that, in those cases, only the supervising physician or practitioner may bill Medicare for “incident to” services. Additionally, CMS is finalizing a proposal to require that auxiliary personnel providing “incident to” services and supplies cannot have been excluded from Medicare, Medicaid, or other federal health care programs, or have had their enrollment revoked for any reason at the time that they provide such services or supplies.

As with other enforcement actions by the government in the various areas of health care, it is advisable for anyone involved with “incident to” services to review their practices in light of CMS rules, regulations, and advisory guidance on the subject.

Rita Isnar, J.D., is a Senior Vice President at Strategic Management Services, LLC.

 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 © 2015 Strategic Management Services, LLC. Published with permission.