Don’t Take ZPICs’ Extrapolation Calculations at Face Value! Can Their Results Be Readily Reproduced? When Defending These Cases, We Address These and Other Deficiencies in the Contractor’s Actions

(July 14, 2010): Imagine a ZPIC, PSC, or RAC hands you a claims analysis rife with alleged errors, an indecipherable list of statistical formulas, and an extrapolated recovery demand that will cripple your practice or clinic.  What steps should you take to analyze their work?  Based on our experience, providers can and should carefully assess the contractor’s actions, use of formulas and application of the RAT-STAT program when selecting a statistical sample and extrapolating the alleged damages based on the sample pulled.  Over the years, we have challenged the extrapolation of damages conducted by Medicare contractors around the country, covering tens of thousands of claims.  Regardless of whether you are providing Partial Hospitalization, Evaluation and Management, Home Health, Physical Therapy, Surgical or other services, it is imperative that you work with experienced legal counsel and statistical experts to analyze the statistical sampling and extrapolation steps taken by the contractor. Should you succeed in invalidating the extrapolation, the whole games changes.  The question is – “How can you go about fighting an extrapolation calculation?”

One method is to show that the contractor’s auditor failed to identify a Statistically Valid Random Sample (SVRT).  Among the first steps is you should take is to retain experienced legal counsel to review the Medicare contractor’s actions.  Notably, there are a multitude of legal arguments which may be asserted (depending on the specific facts in your case).  Our firm has worked with several outstanding statistical experts over the years, each of which has a proven track record of analyzing the contractor’s actions and identifying any flaws made by the ZPIC or PSC when extrapolating damages.    

Notably, Section 3.10.4.2 of CMS’ Medicare Program Integrity Manual establishes that the contractor is obligated to fully document the statistical methods an auditor employs:

“The PSC or ZPIC BI [Benefit Integrity] unit or the contractor MR [Medical Review] unit shall identify the source of the random numbers used to select the individual sampling units. The PSC or ZPIC BI unit or the contractor MR unit shall also document the program and its algorithm or table that is used; this documentation becomes part of the record of the sampling and must be available for review.”  (emphasis added)

“The PSC or ZPIC BI units or the contractor MR units shall document all steps taken in the random selection process exactly as done to ensure that the necessary information is available for anyone attempting to replicate the sample selection.”  (emphasis added)

ZPIC and PSC statisticians must be able show their work to the extent that a reviewer can attempt to “replicate” their actions and determine whether or not the steps taken were consistent with accepted principles and practices of statistical sampling.  The failure of a ZPIC or PSC statistician to fully and properly document his actions may serve as the basis for seeking to invalidate the extrapolation. The calculation of a valid statistical sample and the extrapolation of damages by ZPIC and PSC statistician is a highly complex process. After handling many extrapolated damages cases, we have found that few ZPIC or PSC statisticians fully meet their obligations to document the steps taken and / or conduct the process in a proper fashion, consistent with accepted statistical sampling procedures.  Should your practice or clinic find that it is facing an extrapolated Medicare audit, it is strongly recommended that you engage qualified, experienced counsel to represent you in the process.  Your legal counsel can then engage a qualified statistician to assess the contractor’s actions.

Should you have any questions regarding these changes, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

Texas Psychiatrist Indicted and Arrested

(July 9, 2010):  On June 14, 2010 the U.S. Attorney’s Office for the Western District of Texas announced that a Federal Grand Jury had returned a 99-count indictment against a pain management physician who operated clinics in San Antonio and El Paso.  The physician was charged with 21 counts of health care fraud, 20 counts of false statements relating to health care fraud matters, 21 counts of mail fraud, 16 counts of wire fraud, 4 counts of unlawful distribution of a controlled substances and 16 counts of money laundering.  The indictment alleges that the physician “caused to be submitted claims for reimbursement of peripheral nerve injections, facet injection procedures and Level Four office visits–typically involving 25 minutes of face-to-face time between patient and physician–which never were performed.”  Instead, the U.S. Attorney’s Office alleges that the physician performed “prolotherapy” on his patients — a procedure that Federal health care benefit programs do not reimburse. 

Notably, an indictment is merely a charge and is not considered to be evidence of guilt. In issuing this indictment, the Texas HEAT task force, comprised of Federal prosecutors and investigative agencies,  have continued to ramp up efforts to investigate and prosecute allegations of health care fraud.  Notably, the use of “prolotherapy,” a relatively new therapeutic approach, has been supported by some of the best known clinics and physicians in the country. 

While this case has yet to fully develop, it again points out that health care providers must take care when utilizing new approaches, despite the fact the therapeutic technique may be considered to be state-of-the-art.  Unfortunately, Medicare may take years to recognize and cover some techniques.  In the mean time, it is essential that providers take care when coding and billing for procedures that may not clearly qualify for coverage under applicable Medicare and / or contractor guidance.

Should you have any questions regarding these changes, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

PPACA Creates a Minefield for CMHCs Who Fail to Promptly Return an Overpayment

(July 9, 2010):  Does the failure of a CMHC to promptly return a Medicare overpayment warrant liability under the False Claims Act (FCA)?  Congress thinks so.  The Patient Protection and Affordable Care Act (PPACA) creates new obligations under the FCA whereby a Medicare provider (such as a CMHC) who fails to timely report and refund an overpayment may be subject to substantial damages and penalties.

Section 6402 of the PPACA requires Medicare providers, including physicians and partial hospitalization providers, among others, to a) return and report any overpayment, and b) explain, in writing, the reason for the overpayment.

This law creates a minefield for CMHCs.  First, CMHCs and other Medicare providers have only 60 days to comply with the reporting and refund requirement from the date on which the overpayment was identified or, if applicable, the date any corresponding cost report is due, whichever is later.  Of course, the PPACA does not actually explain what it means to “identify” an overpayment. 

Nonetheless, the PPACA makes this reporting and repayment requirement an “obligation” under the FCA.  Pursuant to the Fraud Enforcement and Recovery Act of 2009 (FERA) amendments to the FCA, an individual or entity may be liable if he or it “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.”  Thus, CMHCs who fail to meet their 60 day “obligation” may be subject to monetary penalities of up to $11,000 per claim, and treble damages.

Should you have any questions regarding these changes, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

 

What is Causing the Spike in Partial Hospitalization Overpayment Actions?

(June 29, 2010): Are Partial Hospitalization Programs (PHPs) and Community Mental Health Centers (CMHCs) being unfairly targeted in the Administration’s push to identify and recover allegedly improper Medicare payments?

May 2010, the Office of the Inspector General of the HHS (HHS-OIG) published an assessment of the Program Safeguard Contractors (PSCs) overpayment collections that identified only 2 overpayment referrals for partial hospitalization claims in 2007.  These referrals accounted for only $403,935 of approximately $835 million in overpayment referrals — less than 0.1% of the total.  Yet, we are aware of far more overpayment cases involving CMHCs (many of which are in the Southern region) making their way through the administrative appeals process right now. 

After carefully reviewing the data, it is our belief that CMS has taken action to address HHS-OIG’s unimplemented recommendations regarding the agency’s concerns about partial hospitalization claims.   Dating as far back as 1998, HHS-OIG has pushed for stronger oversight of these programs.  For at least the last three years (2007, 2008, and 2009), HHS-OIG’s compendium of unimplemented recommendations has included dramatic findings as to the scope of supposed partial hospitalization program billings and the potential savings that could be derived from focusing on this area.  For instance, in 2007 and 2008, the agency reported:

“’Partial hospitalization’ services, which may be provided by both hospitals and community mental health centers, have been particularly troublesome…. We estimated that payment error rates for partial hospitalization in community mental health centers were as high as 92 percent.”  (Emphasis added).

HHS-OIG estimated that ensuring the appropriateness of Medicare payments for mental health services would yield $725 million in savings in 2007.  This figure increased to $1.44 billion in 2008 and 2009.

Again in 2009, HHS reiterated its findings, saying,

“We believe that CMS still needs to monitor partial hospitalization services provided by community mental health centers, which we consider particularly vulnerable.  We will continue to monitor CMS’s efforts to ensure that mental health services are medically necessary and reasonable and are accurately billed.”  (Emphasis added).

While neither CMS nor HHS-OIG have commented on the “spike” in cases brought against CMHCs, it appears clear that partial hospitalization claims are currently being reviewed by contractors around the country for possible overpayments. 

To be clear, we take exception with these findings.  After representing many CMHCs around the country, it has become apparent that many of the reviewers conducting reviews of partial hospitalization claims have little or no experience assessing these specialized services.  As a result, we are quite concerned that CMHCs are now being targeted.  We strongly recommend that CMHCs conduct periodic reviews of both applicable LCD provisions and their billing practices to ensure that partial hospitalization services are being appropriately ordered, documented and billed.

Should you have any questions regarding these changes, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

Counsel for HHS-OIG Discusses the Impact of Health Care Reform on Enforcement with Congress

(June 22, 2010):  In his testimony last week before the Health and Oversight Subcommittees of the House Committee on Ways and Means, Lewis Morris, Chief Counsel to the Inspector General (HHS-OIG) of Health and Human Services (HHS), emphasized the increasing speed and intensity of HHS-OIG’s multi-pronged health care fraud enforcement efforts.  Morris’ testimony reinforces the need for Community Mental Health Centers (CMHCs) and Partial Hospitalization Programs (PHPs) to aggressively prepare for a knock on the door from HHS-OIG or one of its many enforcement partners.

Morris highlighted numerous new enforcement tools available under the Patient Protection and Affordable Care Act (PPACA), paying particular attention to innovations in data access and use.  These measures include consolidating and sharing data across agencies, as well as deploying new technology that allows “investigators to complete in a matter of days analysis that used to take months with traditional investigative tools.” 

He further praised the enhanced accountability measures contained in PPACA, such as HHS-OIG’s ability to impose civil monetary penalties for “failing to grant [upon reasonable request] timely access to HHS-OIG for investigations, audits, or evaluations.”  Notably, PPACA Section 6408 provides for a penalty of $15,000 per day for failure to grant access. 

Morris’ testimony also reminded the health care community that:

• PPACA allows the HHS Secretary to suspend payments to providers or suppliers based on credible evidence of fraud.  At the same time, it expands the types of conduct constituting Federal health care fraud offenses under Title 18.
• HHS-OIG has improved access to information from entities directly or indirectly involved in providing medical items or services payable by any Federal program.

Perhaps most significantly: 

• Medicare and Medicaid program integrity contractors (i.e., ZPICs and PSCs) are required to provide performance statistics, “including the number and amount of overpayments recovered, number of fraud referrals, and the return on investment of such activities.” (emphasis added).

While not surprising, it is nonetheless disconcerting that ZPICs and PSCs are essentially being “graded” based on the “amount of overpayments recovered,” along with the number of enforcement actions handled and referred to law enforcement.  Based on these performance measures, is there any real difference between ZPICs and RACs?  While RACs may be compensated directly based on the amount of overpayments collected (and ZPICs are not), it is crystal clear that the government’s expectations of ZPICs are quite similar.  Now, more than ever before, it is essential that CMHCs and PHPs implement effective compliance measures.

Should you have any questions regarding these changes, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

President Obama Publicizes Measures to Fight Health Care Fraud. . . Again. . .

(June 8, 2010):  For those of you who missed the first two dozen pronouncements (okay, perhaps a little exaggerated, but still . . . we the message when Congress made it a False Claims Act violation to hold onto a mere overpayment for more than 60 days), President Barack Obama has again expressed his concern about health care fraud in a national Town Hall video teleconference with Senior Citizens across the country.  He took this opportunity to further publicize his “national campaign to combat fraud and misinformation” regarding the Medicare program and the Affordable Care Act.

As President Obama reiterated, the current Administration is committed to fighting health care fraud.  To that end, the following steps have been taken:

The President has directed HHS to cut the improper payment rate, which tracks fraud, waste and abuse in the Medicare Fee for Services program, in half by 2012.

 The Administration has helped support a renewed partnership between the Federal government and state Attorneys General. Secretary Kathleen Sebelius and Attorney General Eric Holder today sent a letter to state Attorneys General urging them to vigorously prosecute criminals who seek to steal from seniors and taxpayers and pledged the support of federal officials for state efforts.

 A nationwide series of anti-fraud summits hosted by the Departments of Justice and Health and Human Services will bring federal, state and local officials together with representatives from the private sector to discuss tactics to fight fraud. The first summit will be held in Miami with additional summits in Los Angeles, Las Vegas, Detroit, Boston, New York, and Philadelphia.

 A redoubling of efforts by U.S. Attorneys nationwide to coordinate with state and local law enforcement to prevent and prosecute fraud. Today, Attorney General Holder called on U.S. Attorneys to hold regular forums with local officials to discuss how to better crack down on criminals who commit fraud.

 Notably, the current administration’s focus on health care fraud enforcement is reminiscent of the major initiatives rolled out during the President Clinton’s terms in office.  As you may recall, Attorney General Reno named “Health Care Fraud” as the Department of Justice’s “#1” white collar priority.  While many voters tend to associate Republicans with “pro-law enforcement” and “anti-fraud” measures, the Democrats have clearly led in the area of health care fraud enforcement.  While the government’s review of Medicare billings have been broad-based, CMHCs in Florida, Louisana, Texas and Tennessee appear to be expecially hard hit.  Partial hospitalization claims have been (and are continuing to be) audited by  ZPICs and PSCs througout the South.  Regrettably, in many cases we have found that the contractors’ audit findings have been severely flawed, failing to properly the LCD’s provisions, missing key information in the medical records submitted by the CMHC for review and asserting conclusions that are unsupported by any evidence in the case.    As a result, CMHCs have been forced to appeal the ZPIC / PSC denial decisions through the administrative appeals system, a time-consuming and expensive process.

In any event, the message is quite clear – the current administration has been, and will continue to be, extremely aggressive in its efforts to identify and pursue both alleged overpayments and instances of health care fraud.  Unfortunately, with recent changes to the False Claims Act and the Federal Anti-Kickback Statute, incidents that might have otherwise qualified as a mere overpayment may be viewed quite differently today by Federal prosecutors. CMHCs and other health care providers should diligently work to ensure that their operations, coding and billing activities fully comply with statutory and regulatory requirements.

Should you have any questions regarding these changes, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

 

 

 

 

Owner of Texas Behavioral Health Counseling Clinic Pleads Guilty to Medicare Fraud

(June 5, 2010):  Early last week, the U.S. Attorney’s Office in Houston, Texas announced that a plea agreement had been reached with the owner of a behavioral counseling center in Houston.  The owner pled guilty to (1) conspiracy to commit health care fraud, (2) health care fraud and (3) aggravated identity theft, all arising out of the defendant’s alleged role in a health care fraud scheme in which Medicare and Medicaid were fraudulently billed for psychiatric counseling services.

According to the government, the owner of the behavioral counseling company misrepresented himself as a doctor in psychology (Ph.D.) when, in fact, he had merely purchased a doctoral degree online and then supposedly awarded himself several bogus professional certifications in counseling.

The government further alleged that the defendant unlawfully acquired Medicaid beneficiaries’ information, including names, addresses and Medicaid numbers which were then used to file false claims for reimbursement by Medicare and / or Medicaid for group therapy sessions and psychiatric counseling sessions that were not provided to the beneficiaries.  

The defendant also allegedly billed for services that were supposedly provided by qualified, licensed professionals, when in fact the provider of the services was not licensed or qualified to bill for the mental illness services provided.

While the defendant pled guilty to the charges, he has not yet been sentenced.  The case was investigated by agents working for HHS-OIG and the Texas MFCU.

What should CMHCs learn from this case?

First and foremost, both Federal and State investigative agencies are actively reviewing clinics and other organizations involved in the provision of behavioral health and counseling services. CMHCs must be vigilant in their efforts to ensure that services billed fully comply with applicable statutory and regulatory services governing the coverage, coding and billing of partial hospitalization program claims and other services provided to Medicare and Medicaid beneficiaries.

Second, as part of your compliance efforts, it is important that you regularly review and verify the credentials and licensure status of your physicians, counselors and therapists. While none of you may intend to engage in the type of conduct described above, you may nevertheless find that your clinic has improperly billed for services due to the actions of one or more of you treating personnel.  Professional licenses may have lapsed, been placed on suspension or even revoked without your knowledge.  It isn’t enough to merely check a physician’s or professional therapist’s licensure status when they are hired.  Licensure checks should be routinely conducted as a part of your compliance efforts.   

Responding to a Search Warrant of Your CMHC.

(June 1, 2010)  I.   Introduction:   Like most honest health care providers, the CMHCs that we work with believe that “search warrants” are only executed by the government in connection with the investigation of nefarious characters and criminals.  Unfortunately, that just isn’t the case.  The Federal government has increasingly utilized search warrants as a first-strike investigative tool.  In fact, the execution of a search warrant may very well be the first notice a CMHC has that their practice or clinic is under investigation.

Allegations of wrongdoing may arise from a wide variety of sources. CMHCs may have been reported by disgruntled current or former employees, dissatisfied patients, or others familiar with the practice’s operations.  Notably, recent criticism aimed at RACs for their failure to identify and refer possible criminal wrongdoing to the government for further investigation may have generated a new period of significant enforcement.  It appears that Zone Protection Integrity Contractors (ZPICs) around the country have recently intensified their activities, going well beyond the typical overpayment audits normally seen.  We have seen a marked increase in the number of unannounced site visits, Medicare suspension actions and Medicare number revocation cases.  We fully anticipate the number of criminal referrals to DOJ to increase as well.

In assessing this issue, it is important to remember that prior to obtaining a search warrant, an Assistant U.S. Attorney has gone before a Federal Magistrate and has shown “probable cause” that a crime has been committed or is being committed.  Once issued, the search warrant may greatly help DOJ build its case.  Search warrants are preferable to subpoenas and other investigative tools because:

CMHCs will likely be caught completely off-guard, thereby reducing the possibility that documents may be lost, destroyed or otherwise be missing before it can be secured as part of the investigation.  In executing a search warrant, the government can preserve the documentation and electronic evidence to the greatest extent possible.

The government may use the execution of a search warrant as an opportunity to segregate possible witnesses and see if they can interview the employees and obtain statements before the clinic and its employees have an opportunity to obtain counsel.

The combination of force and surprise will have an enormous psychological effect on your employees.  There will be absolutely no question about the seriousness and gravity of the government’s investigation.  This is often very intimidating, often resulting in significant damage to the practice, ranging from employee resignations to adverse publicity and media attention.

Finally, the scope of the search warrant will likely be sufficiently broad that the CMHC will have a difficult time determining the focus of the government’s investigation.

Once a search warrant is executed, the issue becomes how to best respond.  The purpose of this advisory is to provide an overview of the Federal search warrant process so that your interests can be protected.

II.   Responding to a Federal Search Warrant:

   A.         Before the search.

If the government were to execute a search warrant on your practice today, would you be ready?  Have your employees been briefed on how to respond if Federal agents show up at your clinic?  If your answer to either of these questions is “no,” you should take immediate steps to better ensure that you are ready if this event were to occur.  Understandably, no CMHC likes to think that they would learn of an investigation in such a fashion.  Nevertheless, it occurs practically every day.  You should work with your attorney to draft procedures for responding to a search warrant that are tailored for your clinic. 

   B.         At the time of a search.

Please remember that these steps are not all inclusive.  Upon the execution of a Federal search warrant, you should immediately contact your attorney so that the specific facts and circumstances of your situation can be fully assessed and taken into consideration.  In responding to a search warrant, you should:

Avoid taking any actions that could be misconstrued by the government as an obstruction to their search.  That does not mean that you cannot ask questions – merely that you should not obstruct their search.

 Try and ensure that patient care activities are not jeopardized. Typically, law enforcement will be sensitive to these issues and will try to avoid direct patient care areas.  Nevertheless, you may need to bring this issue to their attention.  You may find that legal counsel can often work with law enforcement to resolve an unreasonable intrusion in this regard.

 Ask for a copy of the search warrant and give it to your lawyer.  Your lawyer will try and prevent them from seizing any documents or items that appear to be outside of the scope of their warrant.  Importantly, search warrants are supposed to provide a specific description of the information or items to be search.  If a search warrant is ambiguous overly broad, your counsel may choose to seek to quash to the search.

 Regarding the search warrant itself, your lawyer will try and note the issuance date of the warrant and the date it was executed. Additionally, counsel will ask to check the identification of the leading agent handling the search, along with the identification of any other participating agencies (e.g. IRS, HHS-OIG).

 While your lawyer may request to see the affidavit upon which the search warrant is based, you should not be surprised if it was sealed by the Court and cannot be obtained. If counsel has not yet arrived, call your lawyer to discuss whether there may be any grounds to object to the search.  Should you object, inform the lead agent of your objection. Should the search continue, record the date and time of their arrival and departure.

 If they will allow it, try and accompany agents on the search.  Try to note which areas were searched and which documents or items were seized.  

 You may have documents that qualify as attorney-client privileged materials.  Should agents try to take documents that may be considered privileged, you should immediately object and notify the agents that the documents they are seizing are privileged.

 Try and obtain a receipt from the agents for any items or documents that are seized. When possible, get copies of original documents before they are removed.

C.  Handling employee issues.

The execution of a search warrant is an extremely stressful situation and can create confusion and stress on a practice’s employees. You should quickly move to restore order and re-assure employees that the situation is under control.

While a search warrant can be used to seize documents or other items, it cannot be used to force employees to participate in an interrogation.  Due to the many sensitivities in this area, it is strongly recommended that you have counsel advise employees of the situation.  While the government cannot force employees to answer questions, you must take care when you are briefing employees on the situation. While you must not tell employees that they are not allowed to talk with an agent, it is appropriate to tell employees that they have no obligation to answer any questions.  While individuals have a Fifth Amendment privilege against self-incrimination, your practice or clinic does not enjoy such a privilege.

When possible, send employees home for the day or have them work in another part of the facility.  Finally, you should notify employees that any questions regarding the location of certain records should be directed to a specific management official so that any inquiries can be properly and consistently handled.

  D.  After the search.

Document retention issues should be carefully handled. It is our view that all document destruction should immediately stop, even if the activity would be consistent with pre-search document retention policies used by the CMHC.  Once an investigation is initiated, you should diligently work to avoid even an appearance that obstruction of justice may be occurring. 

Questions?  Call Robert W. Liles, Esq. at (202) 298-8750 for additional information.

Should you have any questions regarding these changes, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

The Latest Threat to CMHCs – Medicaid Integrity Contractor Audits and Investigations

(May 11, 2010):  Over the years, our Firm has represented a significant number of Community Mental Health Clinics (CMHCs) around the country.    While the patient, services offered and payor mix varies from client to client, almost all our clients provide services of some sort which are reimbursable by Medicaid.  As CMHCs and other health care providers are now finding, the level of scrutiny now being placed on Medicaid billings has significantly increased within the last year.

 The purpose of this series of articles is to provide an overview of the Medicaid Integrity Contractor (MIC) program.  Over the next week, we will be providing an overview of this latest enforcement effort by Federal and State authorities.

 I.  Background:  The Deficit Reduction Act of 2005 was signed into law in February 2006.  Among tis provisions, this legislation created the Medicaid Integrity Program (MIP) in Section 1936 of the Social Security Act (Act).   Section 1936 of the Act required that the Centers for Medicare and Medicaid Services (CMS) set up contracts with private, outside contractors, Medicaid Integrity Contractors (MICs), for the purpose of performing four key program integrity functions:

 Review provider actions.

• Audit Medicaid claims submitted by providers.
• Identify overpayments.
• Provide education on program integrity issues.

 Section 1936 of the Act also required that CMS: 

• Provide support and assistance to States in their efforts to combat Medicaid fraud.
• Periodically publish a Comprehensive Medicaid Integrity Plan (CMIP).

 Importantly, the MIP represents the first major, coordinated effort by the Federal government to address Medicaid fraud and abuse.  CMS received an initial $5 million in Fiscal Year 2006 and $75 million in Fiscal Year 2009 (and thereafter) to fund these enforcement activities.  Notably, these enforcement efforts were meant to supplement, not supplant, existing efforts by both Federal and State to combat Medicaid fraud. 

 Operationally, the MIP is centrally managed by the Medicaid Integrity Group (MIG).  The MIG reports directly to the “Director of the Center for Medicaid and State Operations.”  The MIG includes:

 Office of the Group Director (serves as primary point of contact in CMS for Medicaid fraud and abuse issues).

Division of Medicaid Integrity Contracting (responsible for the procurement, oversight and evaluation of Medicaid contractors who are conducting audits and identifying overpayments).

Division of Field Operations (works directly with the provider audit contractors).

Division of Fraud Research and Detection (provides research, statistical and data support for both the MIP and the states.  Identifies current and emerging fraud trends).

In 2008, the MIG began work on a “MIG Data Engine,” the first national database of Medicaid claims.  This has enabled the Federal government to conduct complex data mining reviews and has facilitated the identification of health care providers who are “outliers.”   Working with State Medicaid Fraud Control Units (MFCUs), HHS-OIG and DOJ have ramped up the intensity of Medicaid audits and investigations to never before seen levels.  

Over the next week, we will examine the types of MIC contractors established under the MIP.  We will also discuss steps you should take NOW to prepare for an audit.  Finally, we will discuss a number of points you should how you should consider if your clinic or practice is subjected to a Medicaid audit.

Should you have any questions regarding these changes, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

           

HHS-OIG Reports that Four Types of Errors Accounted For 95% of the Net Improper Medicaid Overpayments

(April 20, 2010): The Department of Health and Human Services, Office of Inspector General (HHS-OIG) recently released its report “HHS-Analysis of Improper Payments Identified During the Payment Error Rate Measurement Program Reviews in 2006 and 2007 (A-06-09-00079).” As set out in the report, four types of medical review errors accounted for 95% of the net improper Medicaid overpayments during 2006 and 2007.  A breakdown of the findings set out in the report is detailed below:

HHS-OIG examined a total of 1,356 medical review errors and 202 data processing errors. 

 Medical Review Errors:

 Of the medical review errors analyzed by HHS-OIG, the agency found that four types accounted for 78% of the errors and 95% of the net improper Medicaid overpayments. The four error types included:

                         Top Four Types of Medical Review Errors

• Insufficient documentation (37.4%),
• No documentation (25%),
• Services that violated State policies  (12.9%), and
• Medically unnecessary services (2.4%).

 The 1,356 medical review errors included 23 service categories, six of which accounted for 67 percent of the errors and 95 percent of the net improper Medicaid overpayments. The six service categories included:

                         Top Six Types of Service Categories Involved

• Nursing facilities,
• Inpatient hospitals,
• Home and Community-Based Services waivers,
• Intermediate care facilities for the mentally retarded,
• Prescribed drugs, and
• Physician.

 Data Processing Errors:

 Of the 202 data processing errors HHS-OIG analyzed, four types accounted for 78 percent of the errors and 64 percent of the net improper Medicaid overpayments. The four error types included:

•  Pricing errors,
• Non-covered services errors,
• Rate cell errors for managed care claims, and
• Errors in the logic edits of claim processing systems.

 The 202 data processing errors represented 18 service categories, six of which accounted for nearly 73 percent of the errors and 79 percent of the net improper Medicaid overpayments. The six service categories included:

•  Inpatient hospitals
• Nursing facilities,
• Capitated care,
• Prescribed drugs,
• Physicians, and
• Outpatient hospital.

 Estimated Financial Impact (Federal Only):

 For 2006, CMS estimated that the Federal share of the improper payments paid was $6.6 billion.  This increased considerably, to $18.6 billion in 2007 (Federal share only).  HHS-OIG has recommended that CMS provide States with similar analytical data to help them address these improper payments.

Liles Parker Commentary:

 With the passage of the recent Health Care Reform Bill, CMS has been authorized to expand the RAC program to Medicaid.  Now, more than ever before, it is essential that providers carefully analyze their operations, coding and billing practices in order to ensure that Medicaid billings meet applicable regulatory and statutory requirements.

Should you have any questions regarding these changes, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

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