Current Payor Audit Mechanics and How to Defend Against Them. Role of Office of Inspector General in Federal Audits

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1 Current Payor Audit Mechanics and How to Defend Against Them Stephen Bittinger Healthcare Reimbursement Attorney NEXSEN PRUET, LLC Role of Office of Inspector General in Federal Audits Most Recent OIG FY2017 Work Plan Targets Hyperbaric Oxygen Chamber Services Skilled Nursing Care Hospice Services Medicaid States MCO Managed Drug Claims Overpayment Reporting and Collections Accountable Care Third-Party Liability Payment Collections Types of Medicare Audits Recovery Audit Contractors ( RACs ) Old news Audits focus on errors and omissions Paid a contingency fee of the recovery amount Quality Improvement Organizations ( QIOs ) Comprised of health quality experts, clinicians and consumers with focus on improving quality of care Two kinds (1) Beneficiary and Family Centered Care (BFCC-QIO) manage all individual beneficiary complaints (2) Quality Innovation Network (QIN-QIO) data driven initiatives that promote best practices for better care of beneficiaries 1

2 Zone Program Integrity Contractors ( ZPICs ): Current Biggest Threat History: In 1996, the Health Insurance Portability and Accountability Act ( HIPAA ) revised the Social Security Act and established the Medicare Integrity Program ( MIP ). MIP s primary purpose is to deter fraud and abuse by giving the Centers for Medicare and Medicaid Services ( CMS ) authority to hire outside, independent contractors for enforcement. In 1999, CMS developed Program Safeguard Contractors ( PSCs ) to: (a) support MIP; (b) stop fraud; and (c) facilitate adherence by providers. In 2003, the Medicare Modernization Act ( MMA ) implemented Medicare Fee-for-Services Contracting Reform and created the Medicare Administrative Contactors ( MACs ) over seven program integrity zones. Zone Program Integrity Contractors ( ZPICs ): Current Biggest Threat History (cont.): From 2009 through 2011, new entities called Zone Program Integrity Contractors ( ZPICs ) were created for each of the seven zones, replaced the PSCs, and were tasked with performing program integrity [fraud and abuse investigation] for Medicare Parts A, B, DME, Home Health and Hospice, and Medicare-Medicaid data matching. Note: Medicare Part C and D program integrity efforts are handled separately by a single Medicare Drug Integrity Contractor ( MEDIC ) (Health Integrity, LLC). ZPICs and MEDIC work collaboratively under the authority of the Center for Program Integrity ( CPI ) in CMS. South Carolina ZPIC = AdvanceMed ZPICs: The Reality ZPICs are targeting providers that are statistical outliers from their peers based on services billed. ZPICs are using the threat of reporting potential fraud and abuse to the OIG, DOJ, or FBI to coerce providers into submission to overly aggressive audit tactics, unfounded repayment demands, and inappropriate Medicare payment suspension or participation denial. ZPICs are shadow reporting fraud and abuse to the OIG, DOJ, and FBI during audits without notice to providers to increase the civil penalties and criminal convictions of providers. ZPICs have begun shifting their focus from Medicare Part A and Home Health and Hospice ( ) to Medicare Part B and DME providers (2011- Present). 2

3 What Constitutes Fraud by a Provider Old Standard fraudulent conduct in the facts billing for services with no qualified provider, repeated, blatant violations of supervision regulations billing under NPI of provider who did not provide service. New Standard - fraudulent pattern [Dr. Miller] submitted, or caused to be submitted, claims to Medicare for nerve block injections that were false and fraudulent because the nerve block injections were not medically indicated and necessary for the patients health per Medicare coverage guidelines. - U.S. v. Michael K. Miller (Missouri) (Plea Agreement April months and $880,000 in restitution). United Program Integrity Contractors ( UPICs ): Coming in 2018 UPICS are the newest fraud, waste, and abuse auditor that CMS is implementing in 2018 that will replace the ZPICs. UPICs formed as part of the Comprehensive Medicaid Integrity Plan (CMIP) to wrap all federally funded integrity reviews into a single audit. Formed in response to projected $119 billion increase in Medicaid spending over FY CMS awarded multiple 10-year, $2.5B IDIQ (Indefinite delivery/indefinite quantity) UPIC contracts in support of CMS audit, oversight, antifraud, waste, and abuse general budget. Contract for the Southeastern region, which includes South Carolina, has been temporarily (current administrative hold pending) awarded to SafeGuard Services, LLC, the former ZPIC in northeastern region. Objectives of the UPIC 1. Simplify and Streamline increased federal spending in UPIC program will heavily influence state control over Medicaid program 2. Identifying Fraudulent Providers UPIC will collaborate with state agencies to identify and remove fraudulent providers. 3. Shared Accountability federal and state will have shared accountability for developing and delivering cost-effective healthcare to Medicaid beneficiaries. 4. Fraud Preventions through provider screening, periodic revalidation, and temporary suspension of payments for credible allegations of fraud. 5. Oversight of Financial Policies federal will oversee state plans, waivers, and financial management for grant making to the states. 6. Strengthen Medicaid Integrity federal and state auditors will share data, coordinate audits, and collaborate with state and federal law enforcement agencies. 3

4 Implementation of the UPIC The work completed by the ZPICs and PSCs will be phased out and the UPICs will transition into the primary audit and investigation body over the next two to three years. To date, neither CMS nor UPICs have released specific timeframes for implementation of the UPICs in 2018, but we have seen them starting in other jurisdictions. From current experience with ZPIC investigations, the volume of new investigations appears to have dwindled with only extreme outliers currently receiving new notices while these contractors are preparing for the UPIC integration and role out. Impact of UPICs Despite UPIC unifications, CMS will continue with other audit programs, including RACS and QIOs. Providers will face a higher level of unified scrutiny across ALL FEDERAL PAYERS: Medicare, Medicaid, Medicare supplemental plans and all military plans, such as Tricare and VA Choice. UPICs: What to Expect We have already begun to see the UPIC program begin to operate in the Midwestern region by AdvanceMed under many of the same premises and modes of operation as they previously used under the ZPIC/PSC contracts. Expect: small initial records requests to probe for issues; larger sample records requests to be used to support stratified samples and extrapolations; and and office raids (know your rights). 4

5 Overpayments Discovered by Providers: 60-day Rule Under the Affordable Care Act, healthcare providers are required to report and return overpayments to CMS within 60 days after identification of the overpayment. Reasonable diligence standard a provider is deemed to have identified an overpayment when the provider has or should have through the exercise of due diligence determined that the provider received an overpayment and quantified the amount of the overpayment (6 month maximum from discovery). Penalties Under False Claims Act for Failure to Disclose As of March 2017, overpayments retained after that 60 day deadline are considered reverse false claims that are subject to civil and criminal penalties under the federal False Claims Act. Penalties can be imposed for between $5,500-$11,000 per claim plus treble damages for the total amount of the overpayment. (e.g., claims totaling $5,000 of reimbursement improperly held could total $550,000 in penalties and $15,000 in treble damages) Private Payer Audits Private payor medical and billing policies can be different than CMS or can default to CMS policy. The payor s website usually has a link to all medical service policies. Audits are conducted in a similar fashion to CMS when statistical outliers are identified. Private payors have Special Investigative Units ( SIUs ) that become involved if fraud is suspected. Every payer has its own unique overpayment appeal process that can usually be found in the provider manual. 5

6 Be Proactive Rise to the Level of Scrutiny Unified investigations will immediately expose any insufficiencies for all federally funded reimbursement. This increased risk necessitates providers raising their level of compliance efforts to prevent potential disaster. Compliance Strategies Compliance Team every medical entity must ensure their compliance officer and reporting team is fully educated on their duties to ensure compliance across both federal and private payor reimbursement. Compliance Plan every compliance plan (now required to be a current, living plan of action) must include a specific protocol for cross-checking Medicare and Medicaid claim data, in addition to CMS coverage guidelines, billing and coding protocols, staff hiring and training protocols, documentation guidelines, and HIPAA/HITECH. Internal Audits conduct periodic and random audits of patient records, billing documentation, services codes, provider signatures, and EOBs. Compliance Strategies (cont.) External Audits hire a third party expert to conduct annual or semi-annual baseline compliance audits. Take the advice and implement that into every day operations. Tracking make sure that all payor document requests and reimbursement denials are tracked carefully to detect and correct problems before they rise to level of external review by an auditor. Compliance Enforcement despite providers chagrin with compliance, it is more necessary than ever them to make time to participate in development and training for the compliance plan. Staff, as well as providers, must have real and apparent consequences for failure to adhere, including additional training, mandatory observation, and escalation proceedings. 6

7 Compliance Strategies (cont.) Billing and Coding hiring certified and experienced billing and coding experts to manage and monitor payor policies and billing practices is more essential than ever. Proper Documentation provide sufficient descriptions of the patients complaints, diagnoses, and treatments in the medical record. Ensure that all service billed are properly accounted for in the patients medical records. Conduct Quarterly Compliance Reviews at least once a quarter, the compliance team must review all payor coverage policies, guidelines, and handbooks. A complete new search for payor guidelines on all services must be performed to ensure adherence. Defending an Audit Communication cautious, but open, communication with investigators is essential to determine the basis for initiation of an audit and to determine the scope (both in length of time and breadth of services). Initiate communication to express cooperation and to determine investigator s motives. Self-Audit self-auditing can be one of the most effective tools to preventing fiscal collapse. Hire an independent expert to review claims targeted by the auditor to determine an objective assessment of noncompliant reimbursement and disclose overpayments prior to the auditor producing their extrapolated findings. Self-disclosure may be the only escape from the nightmare of the CMS or private payer appeal process. Defending an Audit (cont.) Corrective Actions quickly establish a thorough corrective action plan for any medical necessity or billing errors found during the self-audit. Disclose this plan to the auditor and the claims administrator collecting the overpayment disclosure. Education and Training implement the corrective actions and document the implementation process and training provided to providers and staff. Review Compliance Failure History complete an internal investigation into the origin of the reimbursement error and develop a protocol for prevention to be added to the compliance plan. 7

8 Appeals If a payor determines a significant overpayment occurred, an appeal may be necessary, especially if it a federal payor: Steps to Take: 1. Seek legal counsel regarding your rights as a provider as applied to recoupment and claims withholding; 2. Expedite appeal time to prevent early recoupment; and 3. Understand the administrative appeal process to make an informed decision on whether other strategic options outweigh the long and tedious wait to be heard by an administrative law judge ( ALJ ). Summary CMS UPIC changes are coming in Refund all identified overpayments promptly. Avoid audits by ramping up your compliance efforts and understanding policies for services billed to both federal and private payors. Be prepared to defend your business. Stephen Bittinger, Esq. sbittinger@nexsenpruet.com (o) (c)