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.

 

 

 

 

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.

You’ve Got to be Kidding. . . More Medicare Audits on the Way?

(March 11, 2010): According to the White House, President Obama has announced that he intends to back bipartisan plans to stamp out waste in government-run medical programs for the elderly and needy.  The White House said the new effort to root out improper payments in the Medicare and Medicaid programs could double taxpayer savings over the next three years to at least $2 billion.

“We cannot afford nor should we tolerate this waste of taxpayer dollars,” the White House said.   The government believes that approximately $54 billion was lost through improper Medicare and Medicaid payments in 2009. Medicare is the government-run program covering elderly Americans and Medicaid is for the country’s poorest.

President Obama is seeking to crack down on waste and fraud as his administration strives to secure an overhaul of the $2.5 trillion healthcare system to contain costs and expand coverage to tens of millions of more Americans.  The action endorses Republican-backed proposals on alleged health care wrongdoers.

The plan will offer private auditors a share of the money that they recoup in order to encourage them to work harder to uncover improper payments under Medicare and Medicaid.   President Obama is also expected to back bipartisan legislation to expand the ability of government agencies to undertake these so-called payment recapture audits by providing more funds.

As many owners and managers will readily attest, CMHCs appear to have been targeted by PSCs and ZPICs in past audit initiatives.  Once again, this points to the importance of sefl-assessment and an effective compliance strategy.  Asked to comment on this new “risk” to CMHCs, Robert W. Liles, Esq., Managing Partner at Liles Parker, Attorneys and Counselors at Law, responded:

 ”Our firm has represented a number of CMHCs and has analyzed various approaches to documenting partial hospitalization program services.  While approaches vary from client to client, the CMHCs we have assessed have clearly endeavored to comply with applicable LCD documentation requirements.  Unfortunately, PSCs and ZPICs appear to be implementing their own views regarding what is required, well beyond the four corners of the CMS-authorized provisions set out under the LCD.  Fortunately, when faced with the facts, ALJs have applied a reasonable approach and most of the claims at issue have been found to be payable.  We strongly recommend that CMHCs review their documentation practices to lessen the likelihood that ZPICs and other third-party reviewers will be able to argue that the claims don’t qualify for coverage.”

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.

Ever Wonder Why so Many CMHCs are Being Audited by the Government?

 (February 17, 2010): HHS-OIG has alleged that $1.44 billion in “savings” could be achieved by ensuring the appropriateness of Medicare payments for partial hospitalization services.

The last few years have been tough for Community Mental Health Centers (CMHCs) around the country.  Many CMHCs have found themselves the subject of Medicare post-payment audits by Program SafeGuard Contractors and / or Zone Program Integrity  Contractors (ZPICs).  Others have been placed on pre-payment review by PSCs, effectively cutting-off Medicare reimbursement until the contractors could decide if their claims for partial hospitalization program (PHP) services qualify for coverage and payment.  Some areas, such as South Florida and Louisiana have been hit especially hard.

Many of our CMHC clients have asked – “Why us, all we are trying to do is take care of a population who has no where else to turn?”  One reason may be because the government appears to believe that Medicare is being improperly billed for partial hospitalization services – to the tune of $1.44 billion.

For the third straight year in a row (2007, 2008 and 2009), the Department of Health and Human Services, Office of Inspector General (HHS-OIG) has reported that it found that Medicare has improperly paid for inappropriate outpatient mental health services.  According to HHS-OIG, “[b]illing abuses involving beneficiaries who are unable to benefit from psychotherapy demonstrate a special need for enhanced program and beneficiary protections.”  Furthermore, HHS-OIG indicated that beneficiaries with mental illness sometimes do not receive all the services that they need, so both underutilization and overutilization problems exist.

HHS-OIG is pointing its finger specifically at providers of partial hospitalization services.  HHS-OIG doesn’t hesitate to allege that partial hospitalization services, which may be provided by both hospitals and community mental health centers, “have been particularly vulnerable to payment errors.” According to the HHS-OIG, “[w]e have estimated that Medicare payment error rates for partial hospitalization in community mental health centers were as high as 92 percent.” In its 2009 “Compendium of Unimplemented Office of Inspector General Recommendations,” HHS-OIG noted that in 2003, miscoded and undocumented services accounted for 26% and 19%, respectively of all Medicare mental health services.  Finally, medically unnecessary services and services that violated the “incident to” rule each accounted for 4% of all Medicare mental health services in 2003.  The “incident to” rule allows a physician to bill for mental health services performed by his or her staff if the services are rendered incident to the physician’s professional services.

Based on the foregoing, HHS-OIG recommends that the Centers for Medicare & Medicaid Services (CMS) ensure that mental health services are medically necessary and reasonable; are accurately billed and are ordered by authorized practitioner by using a comprehensive program of targeted medical reviews, provider education, improved documentation requirements, and increased surveillance.  This, according to HHS-OIG, will result in a savings of $1.44 billion.

While CMS agreed with the HHS-OIG’s findings and recommendations, HHS-OIG declared that there are still significant unallowable payments.  As HHS-OIG stated, “[w]e believe that CMS still needs to monitor partial hospitalization services provided by community mental health centers, which we consider particularly vulnerable.”  As a result, HHS-OIG indicated that it will continue to monitor CMS’s efforts to ensure that mental health services are medically necessary and reasonable and are accurately 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.

Expansion of Medicare’s “HEAT” Strike Force

(February 1, 2010):  On December 15, 2009 Assistant Attorney General Lanny A. Breuer of the Criminal Division of the Department of Justice (DOJ) and United States Department of Health and Human Services (HHS) Secretary Kathleen Sebelius announced the expansion of Medicare Fraud Strike Force teams to Baton Rouge, Brooklyn and Tampa in a effort to target individuals and health care companies that fraudulently bill the Medicare program.

The joint DOJ-HHS Medicare Fraud Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing.  After expanding to Baton Rouge, Tampa and Brooklyn, Strike Force Fraud Strike Force will be operating in a total of seven cities in the United States: Miami, Los Angeles, Detroit, Houston, Brooklyn, Tampa and Baton Rouge.

The Strike Force started in March 2007 in Miami (Phase One), Los Angeles (Phase Two), Detroit (Phase Three), Houston (Phase Four), and Brooklyn (Phase Five).  Since that time, the Strike Force has obtained indictments of more than 460 individuals and organizations that collectively have falsely billed the Medicare program for more than one billion dollars.

During the press conference related to the expansion to the three cities, DOJ also publicized five indictments that were unsealed on December 15, 2009 in Miami, Detroit and Brooklyn, following the arrests of twenty-five individuals in Miami, four individuals in Detroit and one in Brooklyn. In addition, Strike Force agents also executed four search warrants at businesses and homes in Coconut Creek, Fla.; Miami and Brooklyn.

The DOJ press announcement also noted that individuals charged in the indictments that were unsealed were accused of various Medicare fraud crimes, including conspiracy to defraud the Medicare program, conspiracy to launder money, money laundering, criminal false claims, making false statements and receiving kickbacks.

According to the DOJ indictments, the defendants participated in schemes to submit claims to Medicare for products and services that were in fact medically unnecessary and oftentimes, never provided. In the Detroit cases, DOJ alleged that the defendants participated in a scheme whereby they paid pay kickbacks to patients who received instructions from the clinic owners and patient recruiters to feign symptoms to justify expensive testing, including nerve conduction studies. In Brooklyn, the two defendants are alleged to have billed Medicare for durable medical equipment, including expensive shoe inserts reserved for diabetes patients, when in fact much cheaper and over-the-counter shoe inserts were provided to beneficiaries who often didn’t need them. In Miami, 15 individuals, including doctors and nurses, are charged in connection with fraudulent claims to Medicare for home health services. In another case in Miami, individuals are charged for their various roles in running a medical clinic that purported to provide injection and infusion treatments to HIV/AIDS patients and submitted fraudulent claims Medicare for such services, which were often medically unnecessary and/or never provided.

Collectively, the DOJ announced that the physicians, company owners, executives and others charged in the indictments are accused of conspiring to submit approximately $61 million in false claims to the Medicare program.

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.

 

Overview of the Recovery Audit Contractor (RAC) Program

(January 28, 2010): Prior to HIPAA’s passage in 1996, CMS relied heavily on fraud detection efforts by Carriers (Part B) and Fiscal Intermediaries (Part A) to identify providers suspected of engaging in wrongful coding and billing practices

Among its far-reaching provisions, HIPAA established the Medicare Integrity Program (MIP).  This program was established in an effort to strengthen CMS’ ability to reduce fraud and abuse in the Medicare program.  Pursuant to this program, CMS began transferring the responsibility for detecting and deterring Part A and Part B fraud and abuse to Program Safeguard Contractors (PSCs).  Over the last decade, PSCs have aggressively pursued alleged Medicare overpayments from CMHCs and other health care providers around the country. Notably, PSCs are now in the process of being replaced around the country by ZPICs (Zone Program Integrity Contractors).

Despite the successes achieved by PSCs, Congress believed that additional measures to safeguard the Medicare Trust Funds were needed.  As part of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), Congress directed HHS to conduct a three year demonstration project examining the use of  Recovery Audit Contractors (RACs) to detect and correct improper payments.

The demonstration project began with two types of RACs – Medicare Secondary Payor (MSP) RACs and Claim RACs. CMS instructed the MSP RACs to focus on finding improper payments made by Medicare that other health insurance companies should have paid while Claim RACs were instructed to identify improper payments made for services that did not qualify for payment.

Examples of services not qualifying for payment included: (1) those that were not medically necessary, (2) those that were incorrectly coded, (3) those with no documentation or insufficient documentation to support the level of service coded by the provider, (4) duplicate claims.

Initially, the Claim RAC program was limited to three states (California, Florida, and New York).  Medicare expenditures for these states were among the highest in the country.  Based on the program’s early achievements, the demonstration project was expanded to include three additional states. In light of the successful results achieved, Congress included provisions in the Tax Relief and Health Care Act of 2006 to make the RAC program permanent.

Although RACs are compensated to identify both overpayments and underpayments, the amount of overpayments recovered in the demonstration program vastly overshadowed the amount of underpayments. Approximately 96% ($992.7 million) of the improper payments were overpayments, with only approximately 4% ($37.8 million) of the improperly paid claims being identified as underpayments. Broken down by type of error, the RAC found that claims were:

• 0.86% were denied based on “medically unnecessary” services.
• 34.66% were denied based on incorrect claims coding.
• 7.76% were denied based on insufficient documentation.
• 16.72% were denied based on other reasons.

The nationwide expansion of the RAC program has been completed. CMS has contracted with four RACS, each of which will have their own jurisdiction matching the DME Medicare Administrative Contractors’ jurisdictions. The contractors include:

• Region A: Diversified Collection Services, Inc. (Livermore, CA): — Covering CT, DE, DC, ME, MD, MA, NH, NJ, NY, PA, RI and VT.

• Region B: CGI Technologies and Solutions, Inc. (Fairfax, VA): — MI, OH, IN, KY, IL, WI and MN.

• Region C: Connolly Consulting Associates, Inc. (Wilton, CT):  Identified as working in 15 states – WV, VA, NC, SC, GA, FL, AL, LA, TN, AR, TX, OK, NM, CO, plus the territories of Puerto Rico and the US Virgin Islands.

• Region D: Health Data Insights, Inc. (Las Vegas, NV):  AK, AR, CA, HI, IA, KS, MO, MT, ND, NE, NV, OR, SD, UT, WA, WY, Guam, American Somoa and Northern Marianas.

To date, most CMHCs who have contacted our Firm in connection with a Medicare audit have been subjected to reviews by PSCs or ZPICs, not by a RAC.  Nevertheless, the day may come when RACs do, in fact, focus on partial hospitalization program claims.

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.

 

Recent Changes in Recoupment Limitations and the Impact on ZPIC / PSC Medicare Overpayment Appeals Cases  

(January 22, 2010):  CMS has recently published its Final Rule addressing limitations on the recoupment of alleged overpayments by its contractors.  This Final Rule finalizes (at least for now) how contractors are to proceed when pursuing recoupment actions.   “Recoupment” is defined as the recovery of a Medicare overpayment by reducing present or future Medicare payments and applying the amount withheld against the debt.

Under existing regulations, providers may challenge recoupment through either the rebuttal or appeals process.  Prior to passage of the Medicare Modernization Act (MMA), CMS could recoup overpayments, regardless of whether the provider or supplier had filed an appeal.  With CMS’ Final Rule in place, limitations have been set on the ability of its contractors to pursue a recoupment action.  As the Federal Register states:

“This final rule defines the overpayments to which the limitation on recoupment applies, how the limitation works in concert with the appeals process, and sets time limits for recouping overpayments, specifically providing 41 days for a provider or supplier to file the first level of appeal before the contractor can begin recoupment and providing the provider or supplier 60 days to appeal at the second level before the contractor can begin recoupment” (74 Fed. Reg. 47458, 47458 (Sept. 16, 2009)).

Notably, a Medicare contractor may freely initiate recoupment on an overpayment once a reconsideration decision has been rendered, regardless if an Administrative Law Judge (ALJ) appeal is filed.

Should a provider elect to delay recoupment, the amount owed will be subject to the Medicare interest rate. This amount varies but is generally quite high. For example, as of 07/17/09, it was 11.25%. As such, it is especially important that providers consider the following:

(1) If an overpayment determination is overturned past the reconsideration level of appeals, CMS is liable for interest on recouped overpayments that has accrued.(2) If a provider or supplier takes advantage of the limitation on recoupment and ultimately loses an appeal, it will still be liable for all interest accrued since the original determination, along with the overpayment.

With so much at stake, it is vital that health care providers and suppliers fully understand the nuances of the overpayment appeals and recoupment process.   By timely filing appeals or  rebuttals, providers can effectively delay  recoupment  but unfortunately cannot avoid it altogether. Ultimately, CMS’ final rule will make it more important than ever that health care providers undergoing overpayment review get qualified legal advice to help guide them through the process.

Over the last year, our Firm has handled the administrative appeals of literally thousands of Medicare claims denied as a result of post-payment Medicare audits by Program SafeGuard Contractors (PSCs) and / or Zone Program Integrity Contractors (ZPICs). 

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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