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February 8, 2013

Will CMS Double Down on the Success of the Recovery Audit Program?

bloglogo2.jpgAccording to CMS, between October 2010 and December 2012, the RACs collected $3.8 billion in overpayments. As the nearby chart makes clearOverpay_Chart.jpg, the volume of amount collected each quarter has continued to increase, the result of the ever increasing number of issues approved for review by CMS as well as the RAC's increasing expertise in discovering alleged improper payments. There is little doubt that CMS considers the Recovery Audit Program to be a financial success or that it will continue to expand.

The Change to the Time in Which CMS Can Collect an Overpayment.

In May 2012, the HHS-OIG released a report entitled "Obstacles to Collection of Millions in Medicare Overpayments" detailing its findings on how well CMS and its contractors were doing in collecting previously identified overpayments. In hook.jpgresponse to the OIG's contention that CMS was not doing a good enough job collecting identified overpayments, CMS claimed that part of the problem was that its collection activities were hampered by the limitation in 42 U.S.C. § 1395gg which restricted recoveries of overpayments from providers to those overpayments made within the last 3 years, even though 42 C.F.R. § 405.980(b) permits a CMS contractor to reopen a paid claim for any reason within 1 year of the date of the initial determination and within four (4) years of the date of the initial determination if there is good cause. The OIG report recommended that CMS ask Congress to change the recovery period in § 1395gg to a period greater than the reopening period set forth in § 405.980. In § 638 of the recently enacted American Taxpayer Relief Act of 2012, the law passed to avoid the "fiscal cliff," Congress responded to the OIG recommendation by changing the recovery period in § 1395gg from 3 to 5 years, 1 year longer than the reopening period in § 405.980.

The current Scope of Work (SOW) for the Recovery Audit Contractors provides that:

The Recovery Auditor shall not attempt to identify any overpayment or underpayment more than 3 years past the date of the initial determination made on the claim.

Continue reading "Will CMS Double Down on the Success of the Recovery Audit Program?" »

December 17, 2012

Appeals of Recovery Audit Contractor Decisions are Overwhelming the Office of Medicare Hearings and Appeals

bloglogo2.jpgIf a Medicare provider's claim for payment is denied or if a Recovery Audit Contractor (RAC) determines that a past payment was made improperly, the provider may appeal the denial. Medicare provides a 5-level appeal process that begins with a request that the Medicare Administrative Contractor (MAC) make a redetermination on the claim. If that is unsuccessful, the provider may seek reconsideration from a Qualified Independent Contractor (QIC). If the QIC agrees that the denial was proper, the provider may request a hearing before an Administrative Law Judge (ALJ) in the Office of Medicare Hearings and Appeals (OMHA).

ALJ.jpgOMHA was established by § 931of the Medicare Drug, Improvement and Modernization Act of 2003. In § 931(b)(2), Congress provided that:

The Secretary shall assure the independence of administrative law judges performing the administrative law judge functions ... from the Centers for Medicare & Medicaid Services and its contractors. In order to assure such independence, the Secretary shall place such judges in an administrative office that is organizationally and functionally separate from such Centers.

There are currently 65 OMHA ALJs in 4 regional field offices. The ALJs are organized into teams and supported by OMHA attorneys, paralegals and legal assistants. While OMHA ALJs hear appeals involving, among other things, an individual's eligibility for Medicare and coverage determinations under Parts C and D, the largest part of the ALJs workload comes from Part A and B provider appeals of pre and/or post payment denials by one of Medicare's audit contractors.

The Effect of RAC Audits on the ALJ's Caseload.

up_arrow.jpgAccording to the latest appeal statistics from CMS, RACs issued payment denials for 903,372 claims in fiscal year 2011 and providers filed 56,620 appeals in fiscal year 2011. According to statistics maintained by OMHA, it received 132,446 appeals in fiscal year 2012. Out of the 132,446 appeals filed, 40,386 or 30.5% were filed from RAC denials by Part A hospitals. By comparison, Part A hospitals filed just 1,545 appeals in FY 2011.

The increase in ALJ appeals is certainly not unexpected as a result of the nationwide expansion of the RAC program in 2010. The increased caseload has already impacted the ALJ's ability to comply with the regulatory mandate set forth at 42 C.F.R. §405.1006 that appeals to the ALJ be decided within 90 days. There is little doubt that as more and more appeals reach the ALJs, providers will experience ever increasing delays in decisions by the ALJs. While some delay may be acceptable, a restrictive CMS policy regarding the payment of reasonable and necessary Part B services provided by a hospital to a beneficiary may cause such an increase in the level of ALJ appeals as to make timely decisions by an ALJ impossible and deprive a provider of the legally required prompt resolution of its appeal.

Appeals for Payment of Part B Outpatient Services Will Further Delay ALJ Decisions

Continue reading "Appeals of Recovery Audit Contractor Decisions are Overwhelming the Office of Medicare Hearings and Appeals" »

November 2, 2012

Does Medicare Always Have To Pay A Hospital For Services Provided?

Thumbnail image for bloglogo2.jpgDepending on a doctor's opinion as to the severity of a patient's medical condition, a hospital may either provide the patient with services after he or she is admitted to the hospital (inpatient services) or without the patient being admitted (outpatient services). Although many of the services are the same, the hospital is paid more if the patient is admitted than if the services are provided on an outpatient basis.

During the last few years, CMS' Recovery Audit Contractors (RACs) have determined that millions of dollars paid to hospitals for inpatient treatment should be refunded to CMS because although the patient needed the medical services provided, the services should have been provided on an outpatient basis. Although most people might think that the result of the hospital's mistaken classification would simply be for the hospital to repay Medicare the difference between the amount it was paid for inpatient services and the amount that it would have been paid for the services on an outpatient basis, CMS has a different view. According to CMS, because the hospital submitted a bill for what was later determined to be unnecessary inpatient services, the hospital is entitled to no payment for its services.

lawsuit.jpgOn November 1, 2012, the American Hospital Association and four individual hospitals filed a lawsuit in the United States District Court for the District of Columbia against Kathleen Sebelius, the Secretary of the Department of Health and Human Services, in an attempt to overturn this unreasonable policy and to force CMS to pay hospitals for the legitimate outpatient services provided. While the hospital's position is undoubtedly fair and reasonable, their lawsuit may not succeed.

Will CMS' Broad Power to Administer the Medicare Program Defeat the Hospitals?

There is no doubt that Congress has given CMS broad powers to enact rules and regulations governing the operation of the Medicare Program. CMS has used that cfr.jpgauthority to promulgate thousands of regulations and policies to govern, among other things, who is eligible to participate in the Medicare program, what benefits the program will provide, the amounts to be paid for services and what hospitals and other providers must do to be paid. According to 42 C.F.R. § 424.32(a)(1), in order for a hospital or provider to be paid:

A claim must be filed with the appropriate intermediary or carrier on a form prescribed by CMS in accordance with CMS instructions.

Continue reading "Does Medicare Always Have To Pay A Hospital For Services Provided?" »

October 16, 2012

Will Recovery Audits Drive Away Medicare Providers? - Part I

bloglogo2.jpgOften overlooked in performance evaluations of the various contractors employed by the Medicare program to ensure program integrity, is the cost incurred by providers in responding to contractor requests for information related to billed claims and provider costs in appealing improper contractor denials. In light of the ongoing debate about whether reduced Medicare payments mandated by the Patient Protection and Affordable Care Act will drive providers from the Medicare program, an analysis of the administrative costs incurred by providers as the result of Medicare program integrity activity is in order.

data.jpgWith the exception of the data collected by the American Hospital Association (AHA) through its RAC Trac initiative, I am not aware of any other data tracking administrative costs incurred by providers in connection with Medicare program integrity activities. As far as I know there is no aggregate data of the costs incurred by any identified group of Medicare providers in connection with pre and post payment reviews conducted by the MACs or the costs incurred by Medicare providers in responding to document or other information requests by ZPICs or their PSC predecessors.

The RAC Trac Data

According to the American Hospital Directory, there are about 4,219 hospitals in the United States. About 2,200 of those hospitals provided data to the AHA during the first half of 2012 on the costs associated with RAC activities. About 75% of the hospitals reported that RAC activity had some impact on their operations, the single largest impact being increased administrative costs. Approximately 45% of the hospitals spent less than $3,300 per month because of RAC audits while about 8% of the hospitals spent over $33,300 per month on RAC activities. In terms of employee time, the hospitals reported that about 315 hours of employee time per month was devoted to RAC activities. In addition to internal costs, the hospitals reported that they spent about $33,000 per month on external resources required to address RAC issues. The AHA report on the RAC Trac survey data for the 1st quarter of 2012 is available here, and the 2nd quarter results are available here.

Continue reading "Will Recovery Audits Drive Away Medicare Providers? - Part I " »

October 8, 2012

What Concerns the OIG About MACs and RACs

Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for bloglogo2.jpgLast week the Department of Health and Human Services Office of Inspector General released its fiscal year 2013 Work Plan describing the issues it intends to investigate during the fiscal year beginning October 1, 2012. In the section of the Work Plan devoted to Parts A and B of Medicare, the OIG identified its concerns with the operation of the Medicare Administrative Contractors (MAC) and the Medicare Recovery Audit Contractors.

The OIG's Concerns With the Performance of the MACs

OIG seal.jpgIn addition to being concerned about CMS' ability to adequately monitor and assess the performance of the various MACs, the OIG is concerned with whether the MACs have consolidated all Part A and Part B edits within their jurisdiction, have developed and tested final edits, implemented and used initial, local system, and medical review edits and evaluated edit effectiveness. On a related subject, the OIG is also concerned about Part B claims that were suspended for manual prepayment review on the basis of system edits but on which the reviews were not conducted. According to the OIG, because manual review is more timely and costly to the contractor, some suspended claims might not be reviewed but paid inappropriately. In sum, the OIG believes that the MACs may be paying too many improper claims.

The OIG's Concern With the Performance of the RACs

Records.jpgAs opposed to its concern with the MACs' performance in specific areas, the OIG Work Plan does not identify any specific concern with the performance of the RACs. Rather, the Work Plan states that the OIG intends to "review the extent that Recovery Audit Contractors (RAC) identified improper payments, identified vulnerabilities, and made potential fraud referrals in 2010 and 2011." The OIG will also review CMS' actions in resolving RAC-identified vulnerabilities, addressing potential fraud referrals, and in evaluating RAC performance in 2010 and 2011. Apparently the OIG does not believe that the problems with the RAC program identified by the American Hospital Association, the American Medical Association and other professional organizations as well as some members of Congress warrant investigation.

The Concerns of Others With the Performance of the RACs

Since its inception, the structure of the RAC program has been the subject of considerable unfavorable comment by Medicare providers. In an April 3, 2012 letter, the leaders of 35 professional organizations representing doctors expressed their opposition to CMS' plan to have RACs conduct prepayment reviews because "[t]he program's contingency fee structure inappropriately incentivizes the Recovery Auditors to conduct "fishing expeditions" that are exceedingly burdensome for physician practices" and because "[t]hey [Recovery Auditors] are incapable of efficiently or accurately conducting prepayment review."

Continue reading "What Concerns the OIG About MACs and RACs" »

October 1, 2012

Evaluation and Management Codes - The Newest Audit Target

bloglogo2.jpgOver the past couple of weeks there has been considerable press attention to the fact that over the last 10 years bills submitted by doctors to CMS for evaluation and management services have increasingly used E/M Codes 99214 and 99215 in place of lower cost 99211 and 99212 codes, coupled with the possibility that the increased use by hospitals and doctors of Electronic Health Record (EHR) software as the result of the CMS EHR incentive program, has resulted in increased fraudulent billing by providers. Although press reports conflate the two issues, they do not appear to be related.

Reports on Evaluation and Management Billing

report.jpgIn May 2012, the HHS OIG released a report entitled "Coding Trends of Medicare Evaluation and Management Services" in which it analyzed Evaluation and Management coding for (1) established patient office visits, (2) subsequent inpatient hospital care, and (3) emergency department visits. It found that the use of codes 99214 and 99215 increased 17% between 2001 and 2010, the use of codes 99232 and 99233 increased 6 and 9 percent, respectively between 2001 and 2010, and the use of code 99285 rose 21 percent, increasing from 27 to 48 percent of billings during the same period.

On September 15, 2012, the Center for Public Integrity released a study entitled "How doctors and hospitals have collected billions in questionable Medicare fees." This article purports to report on the Center's analysis of data obtained from CMS on Evaluation and Management billing as well as how the widespread adoption of EHR may be contributing to fraudulent upcoding by hospitals and doctors.

monitor.jpgOn September 21, 2012, the New York Times published an article entitled "Medicare Bills Rise as Records Turn Electronic" referencing both the May OIG report and the Center for Public Integrity article. The Times' article, which purported to analyze CMS data from the American Hospital Directory, pointed out the same trends as the earlier reports, but attributed the difference to hospitals converting from paper records to EHRs. The Times article apparently prompted a strong letter from the Secretary of Health and Human Services and the Attorney General to the CEO's of five hospital trade associations. In their letter of September 24, 2012, the Secretary and Attorney General warned against the use EHR software to commit healthcare fraud and threatened prosecution for fraudulent billing. The American Hospital Association responded the same day as did the Association of Academic Health Centers.

Continue reading "Evaluation and Management Codes - The Newest Audit Target " »

September 11, 2012

Palomar Medical Center v. Sebelius - Update

bloglogo2.jpgIn a July 21, 2012 post I discussed the case of Palomar Medical Center v. Sebelius which raised the question of whether the "good cause" requirement set forth in 42 CFR § 405.986(a) governing a RACs reopening of a claim paid more than one year earlier could be challenged by a provider during the administrative appeal process or in federal court. The answer, at least in the Ninth Circuit, is no.

In a unanimous decision filed on September 11, 2012, the Ninth Circuit held that CMS correctly interpreted its regulations that preclude an appeal of a RAC's decision to reopen a paid claim, that the regulations were reasonable and that because the decision to reopen cannot be appealed, federal courts do not have jurisdiction to review a RAC's decision to reopen a paid claim. In sum, the Court rejected every argument advanced by Palomar.

In my July 24th post I discussed the decision in St. Francis Hospital v. Sebelius in which a District Court in the Eastern District of New York came to a contrary result. According to the Ninth Circuit, the different result in St. Francis Hospital is based on the Constitutional due process argument advanced by St. Francis but abandoned by Palomar at an earlier stage of the litigation.

Is the "GOOD CAUSE" Fight Over?

As I suggested in my earlier post, I think the argument that the regulations permit a provider to litigate the question of good cause is extremely weak and expect that other Courts that consider the issue will come to the same conclusion as the Ninth Circuit. At this point, I believe that any hope of raising this issue is dependent upon a finding that by denying a provider the right to litigate the good cause requirement, the regulations deny the provider due process, a question not considered or decided by the Ninth Circuit.

Continue reading "Palomar Medical Center v. Sebelius - Update" »

August 22, 2012

Who are the Medicare Auditors?

Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for bloglogo2.jpgCMS has entered into contracts with numerous auditing companies to review provider billing for various purposes. As time goes by, it is more and more likely that billings submitted by almost every Medicare provider will be subject to review by one or more of these audit contractors. Set forth below is a brief description of the auditing functions of the various CMS auditors.

Medicare Administrative Contractors

auditor.jpgAccording to Chapter 3 of the Medicare Program Integrity Manual (PIM), in addition to their claims processing functions, Medicare Administrative Contractors (MACs) have the authority to review any claim prior to payment. MACs have the discretion to select target areas because of:

  • High volume of services;
  • High cost;
  • Dramatic change in frequency of use and/or
  • High risk problem-prone areas

What this means is that a MAC, unlike a RAC, does not have to obtain CMS' approval of what procedures it will subject to prepayment review. Also, there is currently no limitation, other than the MACs discretion, as to how many Additional Document Requests (ADR) a MAC may make.

If the MAC feels that a certain procedure is being miscoded or that there is no medical necessity for a procedure, it will conduct a prepayment review of each claim submitted for extended periods of time. This means the provider will be subject to ongoing requests for records and suffer a substantial negative impact to its current cash flow.

Recovery Audit Contractors

A demonstration Recovery Audit program was authorized by § 306 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 and conducted from March 2005 to March 2008, in six states, to determine if Recovery Auditors could effectively be used to identify improper payments for claims paid under Medicare Part A and Part B. The Tax Relief and Health Care Act of 2006 made the program permanent and expanded it to cover the entire country. To implement the program, CMS divided the country into four regional areas.

The RACs are responsible for identifying improper payments for:

  • Items or services that do not meet Medicare's coverage and medical necessity criteria.
  • Items that are incorrectly coded and
  • Services where the supporting documentation submitted does not support the ordered service.

keyboard.jpgAutomated reviews conducted by the RACs typically focus on DME, physician and outpatient claims and do not require the production of additional records by the provider. Complex reviews, which do involve the production of additional medical records by the provider, involve coding issues, Diagnosis Related Group (DRG) validations and medical necessity reviews. CMS must approve the issue a RAC wants to review and has imposed limits on the number of medical records a RAC may request. Each RAC has established a website that lists, among other things, the claims that have been approved for audit.

CMS recently announced that a three year RAC pre-payment review demonstration project will begin on August 27, 2012. CMS conducted an Open Door Forum on August 9, 2012 to discuss the operation of this new program. The transcript of the Open Door Forum can be found here

Continue reading "Who are the Medicare Auditors?" »

August 17, 2012

What's Wrong with the RAC's Contingent Fees? - Part 2

Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for bloglogo2.jpgIn Part 1 of this post, I provided a brief history of the evolution of the Medicare and Medicaid RAC programs and highlighted provider concerns with the contingent fee part of the program. In this post, I will discuss why I believe that the contingent fee process developed by CMS does not comply with the Fifth Amendment to the United States Constitution and why, if this argument is presented in a proper case, there is a significant possibility that a Federal Court will issue an injunction stopping the program and order the return of the money paid to CMS in response to RAC demands.

The Fifth Amendment to the United States Constitution

Among other protections afforded by the Fifth Amendment to the United States Constitution is the guarantee that the Federal Government may not deprive any person of life, liberty, or property, without due process of law. A basic tenet of due process is conceptualized in the Latin phrase "nemo iudex in causa sua" which translates to "no one should be a judge in his own cause."

supreme_court.jpgThe United States Supreme Court has considered on a number of occasions the circumstances under which the receipt of money by a judge or other decision maker violates due process. It has held that a litigant's right to due process is violated when the mayor of a town receives a portion of the fines he imposes while acting as a judge. It has also held that a litigant's right to due process is violated where fines imposed by a mayor while acting as a judge represent a significant portion of his town's revenue, even though the mayor did not directly receive any part of the fine. In a recent decision, the Court held that due process required a justice of the West Virginia Supreme Court to not participate in an appeal involving a company in which the company and its CEO had contributed significant amounts of money to the justice's campaign for election to the court. This quotation from the Supreme Court's opinion in Tumey v. Ohio succinctly sums up why money perverts due process:

Every procedure which would offer a possible temptation to the average man as a judge to forget the burden of proof required to convict the defendant, or which might lead him not to hold the balance nice, clear, and true between the State and the accused denies the latter due process of law.
Why the Contingent Fee Arrangement between CMS and the RACs Violates Due Process

corrupt1.jpgThe structure of the program created by CMS gives to the RACs the sole and unreviewable authority to create, from a previously paid claim, a provider overpayment and the right to demand payment from the provider. It is through these actions, taken solely by the RACs, that the RACs create their income. If they want to make more money, they create more overpayments; if they want to make less, they find fewer overpayments. In my opinion, this direct link between the RAC's income and its decision as to whether a specific claim was improperly billed might lead them not to hold "the balance nice, clear, and true between the State [CMS] and the accused [provider]" as the Tumey Court noted and why the RAC program denies the latter due process of law.

Continue reading "What's Wrong with the RAC's Contingent Fees? - Part 2" »

August 14, 2012

What's Wrong with the RAC's Contingent Fees? - Part 1

Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for bloglogo2.jpgTo date, most of the discussion about the RACs has revolved around the merits of an individual claim and the repayment demand appeal process, including whether the RACs have to establish good cause at an ALJ hearing to justify the reopening of a claim more than 1 year old.

Fifth_amd.jpgPart 1 of this post provides a brief history of the evolution of the Medicare and Medicaid RAC programs and highlights provider concerns with the contingent fee part of the program. In Part 2, I will discuss why I believe that the contingent fee process developed by CMS does not comply with the Fifth Amendment to the United States Constitution and why, if this argument is presented in a proper case, there is a significant possibility that a Federal Court will issue an injunction stopping the program and order the return of the money paid to CMS in response to RAC demands.

A brief history of RAC contingent fees.

In § 306(a) of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, Congress directed CMS to 1124695_per_cent_2.jpgconduct a project to demonstrate the use of recovery audit contractors in identifying underpayments and overpayments under Parts A and B of Medicare and to recoup overpayments. Congress further provided that payment may be made to the RACs on a contingent basis from amounts they recovered. In § 302 of the Tax Relief and Healthcare Act of 2006, 42 U.S.C. § 1395ddd(h), Congress made the recovery audit program permanent and directed it be expanded to all fifty (50) states by January 1, 2010. Congress also directed that the RACs be paid on a contingent basis out of funds recovered by the RACs from overpayments, and in such amounts as the Secretary specified for the identification of underpayments.

Continue reading "What's Wrong with the RAC's Contingent Fees? - Part 1" »

August 9, 2012

Are the Costs Incurred in Appealing a Repayment Demand Recoverable? - Part 2

Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for bloglogo2.jpgPart 1 of this post provided information on the number of appeals being filed by providers from RAC repayment demands and, for those appeals already decided, the extraordinary success providers have had in getting RAC decisions overturned. In some cases, the Equal Access to Justice Act (EAJA) opens the door to the recovery of the fees and costs incurred by the provider in prosecuting the appeal if the provider prevailed in an "adversary adjudication" before an ALJ, and if the position of CMS was not "substantially justified."

What is an "adversary adjudication?" - Handron v. Secretary Department of Health and Human Services

Psychologist.jpgIn 2003, Dr. Handron, a psychologist, received a demand to repay $604,038 from a Medicare contractor because his documentation did not support the services billed. The amount to be repaid was extrapolated from a nurse's review of 2,500 of Dr. Handron's claims. Dr. Handron retained counsel and after losing his initial appeal, appealed to an ALJ. The ALJ determined that of the 2,500 claims reviewed by the nurse, Dr. Handron had been overpaid only $5,434.48 and that because the statistical sampling procedure used by the contractor was unreliable, the extrapolation was invalid. Although the ALJ requested that a representative of the contractor or CMS appear as a non-party participant at the hearing, none did so. However, again at the ALJ's request, CMS did provide the ALJ with documents related to the sampling procedure and extrapolation used by the contractor.

After prevailing on the vast majority of the claims in his appeal, Dr. Handron filed an application for fees and expenses under the EAJA. The ALJ, the Medicare Appeals Council and the District Court all denied Dr. Handron's claim based upon a HHS regulation found at 45 CFR § 13.3 that defines an "adversary adjudication" as one in which CMS is represented by counsel at the ALJ hearing. The Third Circuit disregarded the regulation and held that:

[C]ongress chose language that left open the possibility that the government's position could be represented in some other manner and by someone other than a lawyer. This indicates Congress's recognition that the position of the United States can be represented in many ways and its desire to grant judges some discretion in determining whether particular action "represents" the government's position. It does not suggest that the government's position can only be represented at a hearing if a government representative physically stands before the decision-maker... Accordingly, we have little doubt that some forms of written advocacy submitted to an ALJ can constitute a representation of the government's position, so as to make an agency proceeding an "adversary adjudication" for purposes of the EAJA.

images (1).jpgAlthough Dr. Handron won the attorney battle, he lost the war when the Court held that something more than the provision by CMS of the claim files and documents explaining the statistical sampling methodology was required to make his ALJ proceeding an "adversary adjudication." The Court held that for an ALJ proceeding to be an adversary adjudication, the Government must engage in:


Continue reading "Are the Costs Incurred in Appealing a Repayment Demand Recoverable? - Part 2" »

August 6, 2012

Are the Costs Incurred in Appealing a Repayment Demand Recoverable? - Part 1

Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for bloglogo2.jpgAccording to the latest statistics from CMS, between October 1, 2010 and September 30, 2011, Part A providers filed 27,158 appeals from RAC repayment demands while 20,406 appeals were filed by Part B providers and an additional 9,056 appeals were filed by DME companies. The FY 2011 budget of the Department of Health and Human Services estimated that in FY 2011, Medicare ALJs would receive 282,000 non-RAC appeals and an additional 54,000 RAC specific appeals. Because of delays in the nationwide implementation of the RAC program, the Department's FY 2012 budget estimates that only 41,000 RAC specific appeals will be filed with the Office of Medicare Hearings and Appeals by September 30, 2012. In FY 2011, CMS reports that of the Part A appeals decided, 6,226 were favorable to the provider, 14,352 Part B appeals were decided favorably and 3,930 DME appeals were favorably decided. CMS did not, however, provide the total number of appeals decided in any category, so it is impossible to calculate the provider's "win" percentage from the CMS data.

In addition to CMS, the American Hospital Association, through its RACTrac Initiative, has been compiling data on the impact of RAC audits on its members. In its 1st Quarter 2012 report, the AHA reports that its data shows that through the first quarter of 2012, reporting hospitals have appealed 61,729 RAC repayment demands. Of the appeals decided so far, the hospitals have won 75% of the appeals, but 71% of all the appeals are still awaiting a decision.

Continue reading "Are the Costs Incurred in Appealing a Repayment Demand Recoverable? - Part 1" »

July 31, 2012

Have RAC Pre-Payment Reviews Finally Arrived?

Thumbnail image for Thumbnail image for Thumbnail image for Thumbnail image for bloglogo2.jpgOn July 25, 2012, CMS modified the text of its announcement of the Recovery Audit Pre-payment Review demonstration by changing the start of the demonstration from summer 2012 to August 27, 2012. CMS also announced that it will hold a Special Open Door Forum on an as yet unannounced date in August.

The history of the demonstration

implement-emr-1.jpgCMS first announced the Pre-payment Review demonstration on November 15, 2011. In a Fact Sheet released that day, CMS stated that the demonstration would begin on January 1, 2012 and last three years. During the demonstration, Recovery Auditors will review provider billing before payment is made for selected claim types chosen by CMS in FL, CA, MI, TX, NY, LA, IL, PA, OH, NC and MO and deny payment if they decide the billing is improper. The initial claim types selected by CMS for review were:

  • MS-DRG 069 Transient Ischemia;
  • MS-DRG 312 Syncope & Collapse;
  • MS-DRG 377 G.I. Hemorrhage W MCC;
  • MS-DRG 378 G.I. Hemorrhage W CC;
  • MS-DRG 379 G.I. Hemorrhage W/O CC/MCC;
  • MS-DRG 637 Diabetes W MCC;
  • MS-DRG 638 Diabetes W CC; and
  • MS-DRG 639 Diabetes W/O CC/MCC


Continue reading "Have RAC Pre-Payment Reviews Finally Arrived?" »

July 24, 2012

A Court Agrees to Consider the GOOD CAUSE Issue - St. Francis Hospital v. Sebelius

Thumbnail image for Thumbnail image for bloglogo2.jpgIn an earlier post, I discussed the case of Palomar Medical Center v. Sebelius presently pending before the Ninth Circuit Court of Appeals. In Palomar, the District Court agreed with CMS that pursuant to the regulations governing administrative appeals, Palomar could not raise and an ALJ could not decide whether "good cause" existed for the RAC to reopen a claim paid more than one year earlier. After hearing oral argument, the Ninth Circuit issued an order inviting the submission of amicus (friend of the court) briefs on the questions of (1) whether the regulations bar administrative review of a RACs compliance with the "good cause" standard and (2) if the regulations do bar administrative review, may the federal courts enforce RAC compliance with the "good cause" requirement. According to CMS, the response to the second question is no because a federal court can only review a "final decision" of an agency and there has been not yet been a final decision on this question. The amicus brief submitted by the AMA and supplemental briefs submitted by the parties may be found on this webpage established by the Ninth Circuit.

St. Francis Hospital v. Sebelius

1334532_ambulance.jpgAs part of the RAC demonstration project, Connolly Consulting reopened 225 paid claims submitted by St. Francis Hospital and then demanded, through St. Francis' fiscal intermediary, Empire Medical Services (now NGS), repayment of $1.2 million dollars. St. Francis appealed each claim and as of the time it filed its Complaint in federal court, had won 104 of its appeals with 15 appeals still pending before an ALJ. Like Palomar, St. Francis sought to raise before the ALJ and the Medicare Appeals Council the RAC's compliance with the "good cause" standard and like in Palomar, the ALJ and Medicare Appeals Council refused to consider this issue based on 42 CFR 926(l).

Continue reading "A Court Agrees to Consider the GOOD CAUSE Issue - St. Francis Hospital v. Sebelius" »

July 21, 2012

Does "GOOD CAUSE" mean anything? - Palomar Medical Center v. Sebelius

Thumbnail image for bloglogo2.jpgPalomar Medical Center v. Sebelius involves a claim paid more than one year before it was reopened during a RAC audit. After losing the first two appeals, the hospital convinced an ALJ that the RAC had not shown it had good cause to reopen the claim. However, when the Medicare Appeals Counsel (MAC) reviewed the ALJ's decision, it concluded, based on its interpretation of the relevant regulations, that the ALJ had no authority to review the RAC's decision to reopen the claim.

68918_law_education_series_3.jpgThe relevant regulations, which are not easy to make sense of, appear in Title 42 of the Code of Federal Regulations (CFR). 42 CFR § 405.980(b) provides that: A contractor may reopen an initial determination or redetermination on its own motion--

  • (1) Within 1 year from the date of the initial determination or redetermination for any reason.
  • (2) Within 4 years from the date of the initial determination or redetermination for good cause as defined in §405.986.
  • (3) At any time if there exists reliable evidence as defined in §405.902 that the initial determination was procured by fraud or similar fault as defined in § 405.902
. According to 42 CFR § 405.986(a), "good cause" is established when:
  • (1) There is new and material evidence that--
  •    (i) Was not available or known at the time of the determination or decision; and
  •    (ii) May result in a different conclusion; or
  • (2) The evidence that was considered in making the determination or decision clearly shows on its face that an obvious error was made at the time of the determination or decision.
42 CFR § 405.980(a)(5) provides that:
  • The contractor's, QIC's, ALJ's, or MAC's decision on whether to reopen is binding and not subject to appeal.

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