Audits of Texas and Oklahoma Home Health Agencies are on the Rise — Is Your Compliance Plan Current and Effective?

(August 16, 2011):   

I.        Overview:  Over last few years, the government’s reliance on private contractors to both identify overpayments and potential instances of fraud has greatly increased.  Health Integrity is the Zone Program Integrity Contractor (ZPIC) awarded the contract for Zone 4 (Texas, Oklahoma, Colorado and New Mexico) by the  Centers for Medicare and Medicaid Services (CMS).

II.      Home Health Agencies are Currently Being Scrutinized:  As home health agencies in Texas and Oklahoma can readily attest, Health Integrity is carefully examining home health claims billed to Medicare.  Home health agencies may be subjected to the following actions by Health Integrity:

• Unannounced site visits – leading to probe samples, statistically relevant samples and other actions. Failure to cooperate can lead to revocation from the Medicare program.  Notably, there are no statutory restrictions preventing contractors from showing up unannounced and requesting to see documentation related to Medicare claims.  Should Health Integrity show up at your home health agency, you will likely find that Health Integrity’s auditors are both to-the-point and professional in their dealings you and your staff.  Our clients have generally found that Health Integrity’s reviewers have researched an agency’s billing practices before they arrive.  When they show up, they will already have a listing of the claims-related records to be pulled.   ZPICs have been known to show up with their own scanner or copier.  This has led to problems for providers later on because they failed to receive a copy from the contractor before they left.  Should a ZPIC ask you to make copies, the contractor will often identify a handful to take with them and ask that you forward the other within a set period.
• Unannounced interview of home health patients and their families – Health Integrity is actively conducting interview of home health patients and their families in an effort to determine whether a patient was truly “homebound” during the claim period(s) at issue.
• Pre-payment audit – the number of home health agencies and other providers placed on pre-payment  review appears to have significantly increased over the last six months
• Post-payment audit – Health Integrity is actively conducting post-payment audits of Texas and Oklahoma home health agencies and are extrapolating alleged damages identified in these post-payment audits.
• Suspension – exercise caution when using Electronic Medical Records EMR) software – some software programs are better than others.  Avoid any program which minimizes the need for individualization and the documentation of patient-specific observations.  As always, it is important that home health agencies properly document the medical necessity of skilled care.  In some instances, ZPICs have expressed concern that the patient records generated appeared to be “cloned.”
• Medicare number revocation – take care if your home health agency is subjected to a site visit.  As a participating provider, you have an obligation to cooperate with the ZPIC’s review. Should you fail to cooperate, a ZPIC can recommend to CMS that your Medicare number be revoked. This is a very real threat and should not be discounted.  This becomes even more complicated if the ZPIC’s representatives go beyond mere claims-related questions and appear to be seeking information which could subject you (in your individual capacity), to possible civil and / or criminal liability.   Remember your obligations as a participating provider but call your attorney.  
• Referral for criminal investigation and prosecution  – ZPICs are actively referring cases to HHS-OIG and DOJ for formal civil and criminal review.

III.        Primary Reasons of an Audit:  We currently represent a number of home health agencies around the country in connection with post-payment audits and the appeal of overpayment assessments levied by Health Integrity and other ZPICs.  Our clients often ask why their home health agency was targeted by the ZPIC for audit.  After handling many of these cases, the following reasons for targeting have been cited by the ZPIC or ultimately learned when handling the case:

• Predictive Modeling / Data Mining –  As Chapter 2, Sec. 2.3 of the MPIM details: “Claims date is the primary source of information to target abuse activities.”  Data mining may have been used to examine a home health agency’s “error rate.”  This would provide the provider’s history of repeated overpayments   or improperly filed claims.  
• Complaints –  These can include “complaints” filed by beneficiaries, physicians, other providers (such as competitors), disgruntled current and former employees.
• Referrals –  ZPIC audits may be generated based on referrals from other CMS contractors (other ZPICs, PSCs, RACs, MACs, QA Staff), State MFCUs, Offices of the U.S. Attorney, or other Federal agencies.  Notably, it appears that private payors are now also referring cases to the government.
• Reports –  HHS-OIG and GAO regularly issue reports addressing areas of concern.
• State Licensing Boards –State Medical Boards, Nursing Boards, Pharmacy Boards and other regulatory entities responsible for handling State licensing responsibilities regularly hear or learn of improper actions by providers.  This information may be shared with one or more Federal agencies and ultimately be referred to the ZPIC handling a certain zone.

IV.        Reducing Your Risk of Audit:  While many home health agencies believe that their Compliance Plan is satisfactory, it has been our observation that many of the plans currently in place are little more than copies taken from a sample off of the internet.  Unfortunately, many providers view Compliance Plans as mere paperwork, rather than as a useful “tool” to be used by the organization on an ongoing basis. When properly constructed, an effective Compliance Plan can both improve the quality of patient care rendered and assist a provider in its efforts to fully comply with applicable statutory and regulatory requirements.  Therefore, it is imperative that you take steps to ensure that your Compliance Plan takes into account each of the unique risks faced by your home health agency.

To be clear, although there are a number of steps you can take to reduce the likelihood of a ZPIC audit, there is no way to entirely eliminate the risk.  Nevertheless, the development, implementation and consistent application of an effective Compliance Plan can greatly reduce an organization’s potential liability.  In many respects, an effective Compliance Plan is similar to a flu shot.  Although a flu shot cannot prevent you from getting sick, it will hopefully reduce the severity of your illness should you catch the flu.  Similarly, if you have implemented and diligently adhered to an effective Compliance Plan, you could still be audited by a ZPIC, a Recovery Audit Contractor (RAC) or by a law enforcement agency, such as the Department of Health and Human Services, Office of Inspector General (HHS-OIG).  However, as a compliant home health agency, an auditor is much more likely to find that your billing practices comply with applicable coverage requirements.

Robert W. Liles is an attorney with Liles Parker, Attorneys & Counselors at Law.  Mr. Liles has extensive experience representing home health agencies and other providers in connection with the appeal of post-payment audits conducted by ZPICs, Program Safeguard Contractors (PSCs) and RACs.  Mr. Liles has conducted “gap analyses” of many provider organizations and has worked with these providers to implement effective Compliance Plans.  Should you find that your organization is being audited, feel free to call give him a call for a complimentary consultation.  He can be reached at: (202) 298-8750.  

HHS-OIG has Found that More than Half of All Power Wheelchairs Claims Paid by Medicare are Improper — Suppliers Need an Effective Compliance Plan Now More than Ever.

(July 16, 2011):  Despite continuing efforts by many Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) companies to address and remedy long-standing compliance risks, the Department of Health and Human Services, Office of Inspector General (HHS-OIG), reported this month that more than one-half of the billings for power wheelchairs by Durable Medical Equipment (DME) suppliers were improper during the period audited. 

I.          Scope of the Problem:

            As HHS-OIG’s July 2011 report details, approximately 61% of the power wheelchairs billed to Medicare during the period reviewed were either medically unnecessary or lacked sufficient documentation for HHS-OIG to determine medical necessity.   Collectively, these improper billings accounted for $95 million of the $189 million paid by Medicare for power wheelchairs.

II.         Types of Problems Noted:

              In reviewing these Medicare power wheelchair claims, HHS-OIG conducted a random sample of 375 claims.  HHS-OIG’s review included both standard and complex wheelchairs.  Based on records submitted by DME suppliers, HHS-OIG found that:

• 9% of all power wheelchairs were medically unnecessary
• 52% had claims with insufficient documentation to determine medical necessity.

             A number of specific problems are outlined in HHS-OIG’s July 2001 report.  Two of the most significant concerns included:

• Some Medicare patients received power wheelchairs when only a manual wheelchair, cane, or walker was needed.
• Many of the claims were for power wheelchairs appeared to be justified and medically necessary based on suppliers’ records. However, when HHS-OIG examined the corresponding ordering physicians’ records, most of these same power wheelchairs were found to be either:
  • Medically unnecessary, or
  • Insufficiently documented, or
  • Undocumented.

              Essentially, the suppliers’ records were either unsupported, or, in some cases, were contradicted by the related ordering physicians’ medical documentation.

III.     Summary of HHS-OIG’s Findings:

              HHS-OIG’s July 2011 report is especially significant in light of the fact that the agency previously issued two prior reports based on the same sample of power wheelchairs.  While the earlier reports noted that there significant coding and documentation requirements, this recent report focuses on supplier compliance deficiencies.

             Summarizing its findings among the three reports, HHS-OIG noted that 80% of the power wheelchair claims sampled did not meet Medicare’s documentation and / or coverage requirements. HHS-OIG concluded its report by saying:

“Although CMS has taken steps since 2007 to decrease errors among suppliers of power wheelchairs and other DME, Medicare has paid significantly more in recent years for power wheelchairs than it did in 2007. These increases may indicate that CMS continues to pay for power wheelchairs that are not medically necessary and/or have claims that do not meet documentation requirements.”

IV.        Practical Impact of HHS-OIG’s Findings:

              As a participating provider, power wheelchair suppliers have an obligation to ensure that their claims fully comply with Medicare’s coverage and billing requirements.  Unfortunately, as HHS-OIG’s report reflects, most of the power wheelchair claims paid by Medicare have not met these requirements. 

              From a practical standpoint, HHS-OIG’s findings are not new – both physicians prescribing power wheelchairs and the suppliers of this equipment have repeatedly failed to either meet Medicare’s documentation requirements or show that this equipment is medical necessity for the care of the patient and that less expensive assistive devices (such as a cane, walker or manual wheelchair) are insufficient to meet the patients’ medical needs.  As a result, these claims have been regularly examined by various government law enforcement agencies (e.g. HHS-OIG, the Federal Bureau of Investigation and the U.S. Department of Justice) and CMS’ contractors (e.g. Zone Program Integrity Contractors (ZPICs), and DME Medicare Administrative Contractors (DME MACs)).  With the release of this report, suppliers will likely find their practices under yet additional scrutiny.

            Both physicians who prescribe power wheelchairs and DMEPOS suppliers who fill these prescriptions must ensure that their practices fully comply with applicable statutory and regulatory requirements.  As discussed below, the completion of a “gap” analysis is an essential element of an effective Compliance Plan.  

V.         Conducting a Gap Analysis:

             From a compliance standpoint, unless they have recently done so, all power wheelchair suppliers should immediately conduct a gap analysis to determine whether their practices fully comply with applicable statutory and regulatory requirements. Gap analyses are routinely used in practically every industry to assist Compliance Officers and others in identifying corrective actions that need to be taken in order to bring an entity’s practices to an acceptable baseline of compliant operations.  Gap analyses conducted by health care providers must analyze two aspects of their practices in order to ensure compliance.  These include:

Requirement #1:  A review of their documentation, coding and billing practices.  Additionally, the evidence must reflect that the power wheelchair billed was medically necessary and appropriate.

Requirement #2:   A review of the supplier’s business practices to ensure that the supplier is not committing violations of the Federal Anti-Kickback, Stark or other statutory enforcement requirements.

             This article focuses on the first set of requirements set out above.

            Every gap analysis begins with a review of applicable statutory and regulatory provisions.  Additionally, suppliers must assess Medicare’s latest guidance covering documentation, coding and billing requirements.  In addition to issuances by CMS, Local Coverage Determinations (LCD’s), Local Medical Review Policies (LMRP’s) must be reviewed so that specific regional directives are also identified. 

            Upon completing a complete analysis of the regulatory landscape, suppliers must next conduct a baseline assessment of its existing documentation, coding and billing practices. At this point in the process, a supplier can compare its practices with the government’s requirements. This process is often referred to as a “gap” analysis. In this fashion, a supplier is able to use this performance measurement tool to determine the extent to which action must be taken to bring the supplier’s practices up to the desired level of compliance.        

VI.        CMS’ Power Wheelchair Requirements:

             As an initial starting point, power wheelchair suppliers should examine the “Face-to-Face Examination Checklist” that has been issued by CMS in MLM Matters Number SE1112.  As the guidance reflects, Power Wheelchairs are one of several devices collectively classified as “Power Mobility Devices” (PMD) which qualify for coverage under Medicare Part B.

             CMS defines a PMD as a covered item of DME that includes a Power Wheelchair or a POV that a beneficiary uses in the home. Effective May 5, 2005, CMS revised its national coverage policy to create a new class of DME identified as Mobility Assistive Equipment (MAE), which includes a continuum of technology from canes to power wheelchairs.

            A.        Ordering / Treating Physician Requirements.

           Regardless of how they are described, prescribing or ordering physicians are the proverbial “front-line” in the claims process. These physicians are responsible for determining whether a PMD is medically necessary and appropriate.  If so, the physician must: 

• Provide the power wheelchair supplier with supporting documentation consisting of portions of the medical record essential for supporting the medical necessity for the PMD in the beneficiary’s home. In order to document the need for a PMD there are a few specific statutory requirements that must be met before the ordering physician can issue a written prescription for the equipment: 

“1. An in-person visit between the ordering physician and the beneficiary must occur. This visit must document the decision to prescribe a PMD.   

2. A medical evaluation must be performed by the ordering physician. The evaluation must clearly document the patient’s functional status with attention to conditions affecting the beneficiary’s mobility and their ability to perform activities of daily living within the home. This may be done all or in part by the ordering physician. If all or some of the medical examination is completed by another medical professional, the ordering physician must sign off on the report and incorporate it into their records.  

3. Items 1 and 2 together are referred to as the face-to-face exam. Only after the face-to-face examination is completed may the prescribing physician write the prescription for a PMD. This prescription has seven required elements and is referred to as the seven-element order which must be entered on the prescription only by the physician.  

4. The records of the face-to-face examination and the seven-element order must be forwarded to the PMD supplier within 45 days of the completion of the face-to-face examination. 

5. CMS’ National Coverage Determination requires consideration as to what other items of mobility assistive equipment (MAE), e.g., canes, walkers, manual wheelchair, etc., might be used to resolve the beneficiaries mobility deficits. Information addressing MAE alternatives must be included in the face-to-face medical evaluation.”  (MLM SE 1112, page 2 of 7). 

• Once the above requirements have been met, an ordering physician can properly issue a prescription for a PMD.

             B.        Ordering / Treating Physician Requirements.

           As MLM SE 1112 reflects, the following checklist is not to be used as a substitute for a patient’s underlying medical records.  Having said that, the checklist serves as a helpful tool for verifying that an ordering physician’s documentation (as reflected by the patient’s medical records) are both complete and sufficient to meet Medicare’s coverage requirements.  The following information should be fully documented in the patient medical records:

Documentation of “History” Component

The medical record for the patient includes the following history:

_____ Signs/Symptoms that limit ambulation;

_____ Diagnoses that are responsible for these signs/symptoms;

_____ Medications or other treatment for these signs/symptoms;

_____ Progression of ambulation difficulty over time;

_____ Other diagnoses that may relate to ambulatory problems;

_____ How far the patient can ambulate without stopping and with what assistive device, such as a cane or walker;

_____ Pace of ambulation;

_____ History of falls, including frequency, circumstances leading to falls, what ambulatory assistance (cane, walker, wheelchair) is currently used and why it is not sufficient; 

_____ What has changed in the patient’s condition that now requires the use of a power mobility device;

_____ Reason for inability to use a manual wheelchair; such as assessment of upper body strength;

_____ Why does the patient need a power wheelchair rather than each level of mobility assistive equipment (a cane, walker, optimally configured manual wheelchair, scooter)?

_____ What are the reasons that the patient should not or could not use a cane, walker, optimally configured manual wheelchair or power operated vehicle (scooter) in the home to satisfy their needs? and

_____ Description of the home setting, including the ability to perform activities of daily living in the home, as well as the ability to utilize the PMD in the home.

Documentation of Examination Component

The physical examination is relevant to the patient’s mobility needs and the medical record for the patient contains:

_____ Weight and Height

_____ Musculoskeletal examination

• Arm and leg strength and range of motion;

_____ Neurological examination

• Gait

• Balance and coordination

• If the patient is capable of walking, the report should include a documented observation of ambulation (with use of cane or walker as appropriate).

VII.    Conclusion:

            DMEPOS suppliers have an obligation to ensure that power wheelchairs billed to Medicare fully meet the program’s documentation, coding and billing requirements. To that end, it important that suppliers carefully examine both their relationships with prescribing suppliers and the documentation of medical necessity associated with any claims billed to Medicare.  Importantly, this isn’t merely a paper-only exercise which requires that you “document” medical necessity – a patient must actually require this type of assistive device.  Therefore, the documentation must accurately reflect a patient’s diagnosis, signs / symptoms and clinical limitations which limit ambulation and necessitate the use of a power wheelchair.

Liles Parker attorneys have extensive experience representing health care providers in connection with ZPIC audits and advising providers on compliance issues.  Should you have questions, please call us for a complimentary initial consultation.  We can be reached at:  1 (800) 475-1906.

Texas Physicians are Starting to Level the Playing Field in Their Dealings with the Texas Medical Board.

(June 21, 2011):  Last week, Texas Governor Rick Perry signed legislation aimed at bringing modest medical reform to the rules governing investigations of physicians by the Texas Medical Board (“TMB” and / or the “Board”). The Board is the state’s regulatory body that licenses and disciplines physicians and other health care professionals. House Bill 680 (HB 680), which takes effect on September 1, 2011, is seen as a hard-fought victory by Texas physicians. To their credit, the Association of American Physicians and Surgeons (AAPS), a professional association of physicians in all types of practices and specialties, has reportedly been one of the strongest advocates for reform measures such as this in Texas and across the country.

I.          Important provisions of HB 680:

The primary purpose behind HB 680 concerned reforming the complaint process filed with the Board. Among other provisions, several of the most important changes to the Board’s rules included the following:

• The Board may no longer accept “anonymous” complaints. An “anonymous”  complaint is one which lacks sufficient information to identify the source or the name of the person who filed the complaint. Sec. 154.0535 of the Texas Occupations Code.
• Requires the names and addresses of insurance companies and their agents, third party administrators and pharmaceutical companies who file complaints to be given to the physician subject to the complaint. Furthermore, unless the notice would jeopardize the investigation, the Board must notify the physician of those complaining parties no later than the 15th day after the date the complaint is filed. Sec. 154.0535
• Establishes a seven (7) year statute of limitations on complaints, unless the complaint dealt with care provided to a minor. In that case, the Board may not review or proceed on a complaint after the later of either:
  • The date the minor is 21 years of age; or
  • The seventh anniversary of the date of the care. Sec. 154.051
• Allows the physician to have his Informal Settlement Conference (ISC) hearing with Board officials to be recorded, thereby reducing any potential abuse of power. These recordings become part of the physician’s investigative file and may not be released to third parties unless authorized under other provisions of the Occupations Code. Sec. 164.003.
• Requires that the Board dispose of a contested case by issuing a final order based on an administrative judge’s (ALJ) findings of fact and conclusions of law.  Importantly, the Board may not change an ALJ’s “Findings of Fact” or “Conclusions of Law” or vacate or modify the ALJ’s order. Nevertheless, the Board still retains its sole authority and discretion to determine the appropriate action or sanction. The ALJ may not make any recommendations regarding these latter decisions. Sec. 164.007(a) and (a-1).
• Extends the timeframes the Board has to complete a preliminary investigation of a complaint and notify a physician of an ISC from 30 to 45 days. Sec. 154.057(b)
• Allows the Board to propose and institute a “remedial plan” to resolve the investigation of a complaint. This plan may not contain a condition that either revokes, suspends, limits or restricts a physician’s license or other authorization to practice medicine. Furthermore, the plan may not contain a provision that assesses an administrative penalty against a physician. However, the Board may assess a fee against a license holder participating in a remedial plan in an amount necessary to recover the costs of administrating the plan. Sec. 164.0015
• Prevents “remedial plans” to be used in certain cases.  For example, “remedial plans” may not be imposed to resolve complaints concerning:
  • A patient’s death;
  • The commission of a felony;
  • A matter where the physician engaged in inappropriate sexual behavior or contact with a patient or became financially or personally involved in an inappropriate manner with a patient; or
  • An appropriate resolution that may involve a medicine. Sec. 164.0015
• Bars the issue of a remedial plan to resolve complaints against a physician if the license holder has previously entered into a remedial plan with the Board for the resolution of a different complaint. Sec. 164.0015
• Allows remedial plans to become public information. Furthermore, in civil litigation matters, these plans constitute a settlement agreement under Rule 408[1], Texas Rules of Evidence. Sec. 164.002(c) and (d).

II.         Several Provisions of Earlier Legislative Efforts Were Not Included in HB 680:

HB 680 is an important step in the right direction for medical board reform. However, the Bill falls short of earlier legislation that had been introduced in the State. Many of the provisions in HB 680 were taken from Texas HB 1013 which had passed the Texas House 147-0 on May 10, 2011. HB 1013 was allegedly drafted to provide legal due process protections for physicians and require for administrative transparency and accountability by the Board.  Important proposed reforms covered by HB 1013 which were not incorporated in HB 680 include:

• Eliminating “confidential” complaints. With a “confidential” complaint, the Board knows the name of the person or group who files the complaint but keeps that name confidential from the physician subject to the complaint. The physician would have received a copy of the complaint containing the name of the person filing the complaint. Only patients and the patients’ relatives would have been exempted from disclosure.
• Prohibiting conflicts of interests by Board members. The provision stems from instances where Board members served as witnesses to medical malpractice cases while serving simultaneously serving on the Board, without disclosure to the public or to the physicians subjected to the Board’s review/discipline.
• Allowing the Board to only use actively practicing physicians as experts, who would be allowed to review the accused physician’s record, but without knowing the particular name of that physician.
• Assigning ISC panel members randomly.
• Entitling physicians, like attorneys, to a right to a jury trial if their license would be revoked.
• Making the Board annually disclose a list of those individuals who participated on its ISC panels, as well as how often.

Despite having 87 sponsors to the bill, HB 1013 was reportedly blocked from being heard in the Texas Senate.

III.        Conclusion:

As previously discussed, when the Board is unable to resolve a case, the case is then referred to an ALJ at the State Office of Administrative Hearings. Like many States, prior to the passage of HB 680, the Board did not have to accept the “Findings of Fact” or “Conclusions of Law” issued by an ALJ assigned to hear a case.  HB 680 now requires the Board to accept the ALJ’s decisions on whether a physician has committed a violation.  This single change is a huge “win” for Texas physicians. 

While Texas physicians are far better off today than they were prior to enactment of HB 680, it is important that they familiarize themselves with their obligations under the Texas Medical Practice Act.  The TMB remains strong and is known for the stringent positions it takes. 

Liles Parker attorneys have extensive experience representing physicians and other health care professionals in investigations and disciplinary actions taken by State Medical Boards.  Need assistance?  Call us for a complimentary initial consultation.  We can be reached at:  1 (800) 475-1006 

 

When it Rains, it Pours . . . DME Suppliers are Facing Even More Regulations — An Effective Compliance Program is Important Now, More than Ever Before.

(April 6, 2011):

I.          Background:

On September 15, 2010, the Inspector General of the Department of Health and Human Services (HHS-OIG), Daniel Levinson, testified before the House Committee on Energy and Commerce, Subcommittee on Health regarding waste, fraud, and abuse in the Medicare program, with a specific focus on durable medical equipment and supplies. Mr. Levinson noted that, over the last three decades, HHS-OIG has detected “significant levels” of fraud and abuse related to durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). These concerns have resulted in steadily increasing oversight of DMEPOS suppliers by HHS-OIG and Medicare contractors. Perhaps most significantly, these concerns have led to the passage and implementation of a host of new statutes and regulations designed to deter and punish DMEPOS-related waste, fraud, and abuse. For instance, the Affordable Care Act (“ACA,” also informally referred to as “Health Care Reform Act” ) was signed into law by President Obama on March 23, 2010.  ACA has dramatically expanded the regulatory authority of the Centers for Medicare and Medicaid Services (CMS) as it relates to DMEPOS suppliers. In his testimony before the Subcommittee on Health, Mr. Levinson remarked,

“The ACA provides the Secretary with new authorities and imposes new requirements consistent with OIG’s health care integrity strategy and recommendations. These include promoting data access and integrity; requiring actions to strengthen provider enrollment standards; promoting compliance with program requirements; and enhancing program oversight, including requiring greater reporting and transparency.” (emphasis added).

As set out below, each of these new regulatory measures (many of which have only recently become effective), will have a substantial impact on the way in which DMEPOS suppliers are reviewed and evaluated by Medicare contractors and by law enforcement authorities.

II.         Pre-Enrollment and Revalidation Screening Procedures:

The ACA empowered CMS to classify newly-enrolling or revalidating providers based on their perceived risk of fraud and then link those classifications to various types of screening procedures. This new rule, which went into effect on March 25, 2011, creates three categories of risk into which providers will be sorted: (1) Limited, (2) Moderate, and (3) High. The risk level with which a provider is designated is commensurate with the extent and nature of the pre-enrollment or revalidation screening procedures. Under the new rule, currently enrolled, revalidating DMEPOS suppliers have been assigned to the “Moderate Risk” category,[1] while newly-enrolling DMEPOS suppliers (including currently-enrolled DMEPOS suppliers who are adding another location) will be deemed “High Risk.”[2]

(a)        Overview of Available Screening Procedures.

The following screening procedures are currently available to CMS:

• Licensure Requirements – DMEPOS suppliers are required to comply with all applicable licensing, certification, or accreditation requirements in the state where they are located. Medicare contractors are responsible for reviewing state licensing board data every month to ensure that DMEPOS suppliers remain licensed, certified, or accredited.
• Database Checks – Medicare contractors check various databases to ensure that current and prospective supplier information is accurate. CMS contractors check databases maintained by the Social Security Administration (used to verify an individual’s Social Security Number), the National Plan and Provider Enumeration System (NPPES) (used to verify the national provider identifier (NPI)), HHS-OIG’s “List of Excluded Individuals or Entities,” and the General Service Administration’s “Excluded Parties List System.”
• Site Visits – The Medicare Program Integrity Manual (MPIM) permits contractors to conduct site visits to determine if a DMEPOS supplier is “operational”[3] or to ascertain whether the supplier is meeting applicable regulatory standards or program requirements. Some examples of site visits include:  (1)  The National Supplier Clearinghouse (NSC) Medicare Administration Contractor (the Medicare contractor responsible for handling enrollment applications for DMEPOS suppliers) currently conducts pre-enrollment site visits of DMEPOS applicants that are not part of a chain supplier (a chain is a supplier with more than 25 locations), (2) The NSC also conducts post-enrollment site visits to DMEPOS suppliers if CMS or NSC believes that the supplier may be involved in fraudulent or abusive activities.  These post-enrollment site visits are intended to help ensure DMEPOS compliance with supplier standards, (3) A state survey agency or an approved national accreditation organization with “deeming authority” may also conduct pre-enrollment surveys of certified providers and suppliers to determine if they meet the Federal conditions of participation.
• Criminal Background Checks – CMS is now empowered to conduct criminal background checks of DMEPOS “owners” (e.g. those who maintain a 5% or more ownership interest in the supplier), authorized officials, or managing employees.
• Fingerprinting – the new fingerprinting requirement also applies to all owners, authorized officials, or managing employees of a DMEPOS supplier.

(b)          Currently-Enrolled, Revalidating DMEPOS Suppliers.

Currently enrolled, revalidating DMEPOS suppliers, which are deemed “Moderate Risk” under the new regulations, will be subject to the following screening measures:

• Verification that the provider meets applicable federal regulations and state requirements;
• Verification that the provider meets applicable licensure requirements;
• Ongoing database checks to ensure that the provider satisfies all applicable enrollment criteria; and
• Unannounced or unscheduled site visits prior to and following provider enrollment or revalidation.

CMS has elected to categorize currently-enrolled, revalidating DMEPOS suppliers as “Moderate Risk” because many of them are highly dependent on federal healthcare programs for revenue and because CMS believes that a number of these types of providers enter business without any substantial clinical or business experience.

(c)        Newly-Enrolling DMEPOS Suppliers.

Newly-enrolling DMEPOS suppliers will fall into the “High Risk” category and therefore must meet all of the foregoing requirements for “Moderate Risk” providers and undergo:

• Fingerprinting; and
• Criminal background checks.

CMS has classified newly-enrolling DMEPOS suppliers as “High Risk” because of the substantial number of such providers already enrolled in the Medicare program and the numerous government reports alleging waste, fraud, and abuse by DMEPOS suppliers in the Medicare program.

(d)       Adjustments to a Supplier’s Risk Category.

The new rule also permits CMS to increase a supplier’s risk level from “Limited” or “Moderate” to “High” in any of the following circumstances:

• CMS imposed a payment suspension on the supplier in the last 10 years;
• The supplier has been excluded from Medicare by HHS-OIG;
• The supplier’s billing privileges were revoked in the last 10 years and the supplier is attempting to establish new Medicare billing privileges by enrolling as a new supplier or registering a new practice location;
• The supplier is precluded from billing Medicaid;
• The supplier has been subject to any “final adverse action” in the last 10 years;
• The supplier has been excluded from any federal healthcare program; or
• CMS has lifted a temporary moratorium for a particular supplier type and a supplier that was prevented from enrolling due to the moratorium applies for enrollment within 6 months from the date the moratorium was lifted.

III.        Certification Standards:

There are currently 30 unique standards that DMEPOS suppliers must certify that they meet and remain compliant with in order to be eligible for payment by Medicare. Four of these “standards” recently took effect on September 27, 2010. Additionally, on April 4, 2011, CMS published a proposed rule revising four different, existing standards.

(a)        New Certification Standards.

The four recently enacted certification standards with which DMEPOS suppliers must comply include:

(1) Oxygen Procurement — All DMEPOS suppliers must obtain oxygen from a state-licensed oxygen supplier if the DMEPOS supplier is located in a state that requires oxygen suppliers to be licensed.  (42     C.F.R.  § 424.57(c)(27)).

(2) Records Maintenance — All DMEPOS suppliers must maintain ordering and referring documentation relating to written orders and requests for payments for medical equipment within 7 years of the date of service. (42 C.F.R. § 424.57(c)(28)).

(3) Facility Location — All DMEPOS suppliers are prohibited from sharing a practice location with any other Medicare supplier or provider, except where:

• The DEMPOS supplier is co-located with and wholly owned by a hospital, home health agency, skilled nursing facility, or other Medicare Part A provider and the DMEPOS supplier operates as a separate unit; or
• A physician, non-physician practitioner, or physical or occupational therapist furnishes items directly to his or her own patients as part of his or her own professional services. (42 C.F.R. § 424.57(c)(29)).

(4) Business Hours — All DMEPOS suppliers must be open to the public for a minimum of 30 hours per week, except where:

• A physician, non-physician practitioner, or physical or occupational therapist furnishes items directly to his or her own patients as part of his or her own professional services; or
• The DMEPOS supplier is working with custom made orthotics and prosthetics (42 C.F.R. § 424.57(c)(30)).

(b)       Proposed Revisions to Existing Certification Standards.

A Proposed Rule issued by CMS would alter four certification standards that are currently in force, including the following:

(1) Prohibition Against Direct Solicitation:

Current Rule: DMEPOS suppliers are prohibited from engaging in direct solicitations (e.g. by telephone, computer, e-mail, or in-person contact) of Medicare beneficiaries without their consent for the purpose of marketing a DMEPOS supplier’s products or services. (42 C.F.R. § 424.57(c)(11)).

Proposed Revision: The new rule would replace the phrase “direct solicitation” with a prohibition on contacting Medicare beneficiaries by telephone.

(2) State Licensure and Contractual Arrangements:

Current Rule: If a DMEPOS supplier is located in a State that requires a license to furnish items or services, the supplier must be licensed to provide those services and must employ any professionals so licensed on a full- or part-time basis. DMEPOS suppliers cannot contract with a third party to provide any such licensed services. (42 C.F.R. § 424.57(c)(1)(ii)).

Proposed Revision:A DMEPOS supplier may contract with a third party to provide a service that must be licensed under State law where such an arrangement is not expressly prohibited by State law.

(3) Compliance With Local Zoning Ordinances:

Current Rule: DMEPOS suppliers must comply with all local zoning requirements as a condition for payment by Medicare. (42 C.F.R. § 424.57(c)(1)(iii)).

Proposed Revision: CMS has proposed to eliminate this rule entirely.

(4) Physical Facility and Site Requirements:

Current Rule: DMEPOS suppliers must maintain a physical facility on an appropriate site, that meets certain requirements related to minimum square footage, visible signs, posted hours of operation, public accessibility, and adequate space for record storage, among others. (42 C.F.R. § 424.57(c)(7)).

Proposed Revision: The current rule exempts State-licensed professionals who provide custom fabricated orthotics or prosthetics in private practice. The proposed revision would extend this exemption to such professionals in States that do not offer such licenses.

In reviewing these proposed changes, most Suppliers believe that CMS’  contemplated regulatory changes merely represent additional “tightening” of the rules applied to DMEPOS Suppliers – effectively strengthening the government’s oversight over the industry.  In any event, these proposed changes clearly point to the need for an effective Compliance Program.

IV.        Conclusion:

Suppliers who are concerned about these new regulations should contact qualified counsel to assist with developing an effective compliance plan or, if need be, responding to an adverse action taken by CMS against the supplier.

Liles Parkers attorneys are experienced in representing DME suppliers and other Medicare participating providers in a wide range of audits, investigations and other enforcement actions by both contractors and by law enforcement.  Should you have any questions regarding this article or other regulatory requirements, please contact us.  Initial consultations are free.   We can be reached at:  1 (800) 475-1906.

Under Health Care Reform Legislation, Stark’s Whole Hospital and Rural Provider Exceptions are Changing

(October 22, 2010):  It’s not exactly breaking news to anyone in the hospital industry that the U.S. Congress and the regulators at the Center for Medicare and Medicaid Services seem bent on preventing or eliminating physician referrals to hospitals in which they invest. With the passage of health reform legislation in March of this year, Congress approved yet another round of sweeping measures designed to eliminate or prevent the growth of physician investment in hospitals to which they refer by drastically changing both the rural provider and whole hospital ownership exceptions to the Stark Law.

Here are a few key points to be aware of if you invest or work in a physician-owned hospital and you rely on the Stark Law rural provider or whole hospital exceptions to protect physician-investor referrals to the facility:

1. No new physician-owned hospitals after December 31, 2010 – The new law imposes a total moratorium on Medicare certification of new physician-owned hospitals that would rely on either of these exceptions to protect investor referrals unless they have a provider agreement in place as of December 31, 2010.

 2. Cap on Total Physician Ownership Percentage – Health reform legislation capped total physician investment in existing Medicare-certified facilities at whatever total percentage physician ownership a facility had on March 23, 2010, the date the law was passed.  Physician owners can still buy and sell their interests, but total physician ownership may not exceed the capped amount.  If your physician investors have increased their total ownership percentage since March 23, 2010, they will have 18 months from that date to take action to comply with the new law.

3. No Bed Increases Without An Exception from CMS – The legislation also froze the number of beds a physician owned, Medicare-certified hospital may have unless it is granted an exception by CMS to increase its capacity.  The new law defines the basic criteria for an exception, but CMS has until December 31, 2012 to promulgate regulations implementing the exception process.  You may not put new beds into service and continue to have physician investors refer to your facility until your hospital has been granted an exception.

4. New Disclosure and Reporting Requirements – There were a host of new disclosure and reporting requirements added by the legislation, including mandatory disclosures to patients referred or treated by an investor, public disclosures on hospital websites and in public advertising about physician ownership, and an annual report to the Secretary of the Dept. of Health & Human Services that identifies all physician and non-physician owners or investors in a hospital, as well as the nature and extent of their ownership and investment interests.  Also, the law includes a mandate for the Secretary of HHS to post on its website all investment information reported pursuant to these new requirements. 

5. New Patient Safety Requirements – Finally, there are new patient safety requirements that mandate a disclosure to, and written acknowledgement from, all patients regarding whether a physician is available on-site, 24-hours a day,  as well as a requirement that the hospital provide assessment and initial treatment for all patients and the capacity to refer and transfer patients to hospitals with the capability to treat the needs of each patient that can’t be appropriately treated on-site.

 CMS recently proposed regulations implementing most of the above described legislative changes. 

Jennifer Papapanagiotou, Counsel to LilesParker, PLLC, is a health care attorney with 10+ years experience assisting providers with structuring or re-structuring their businesses and contractual relationships to comply with Federal and State health care fraud and abuse laws, including the Stark Law.

Should you have questions regarding the Stark Law, the Anti-Kickback Statute, or the myriad other health care fraud and abuse laws and regulations, please give us a call at 1 (800) 475-1906. 

 

 

Is More Medicare Fraud Legislation on the Way?

(September 15, 2010): Notably, on September 14th, members of the House Ways and Means Health Subcommittee introduced legislation cited as “Strengthening Medicare Anti-Fraud Measures Act of 2010″  which would expand current permissive exclusion provisions to permit HHS-OIG to exclude owners, officers and managers of companies that are convicted of health care fraud.  The proposed legislation appears to be quite broad and arguably could result in an officer being excluded from participation in Federal Health Benefits programs even if he was no longer working at the company when it convicted of the crime, as long as the officer was at the company when the wrongful conduct occurred.   It could also be used to go after parent companies of subordinate enterprises that are convicted of health care fraud.

Liles Parker attorneys represent health care providers in a wide variety of health law matters.  Please feel free to contact us at 1 (800) 475-1906 for a free consultation.

 

 

HHS-OIG Alleges that 70% of the Medicare Claims Recently Audited for Home Blood-Glucose Test Strips and Lancets Were Improperly Paid by the MAC for Jurisdiction A

(September 6, 2010):  HHS-OIG recently issued its audit findings examining Home Blood-Glucose Test Strips and Lancets paid by the Durable Medical Equipment (DME) Medicare Administrative Contractor (MAC) responsible for claims in Jurisdiction A (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont and Washington DC).  As the audit report reflects, 70 of the 100 sampled claims examined contained or more documentation deficiencies.  Specific problems identified include:

 

•  The quantity of blood-glucose strips and / or lancets utilized which exceeded utilization guidelines failed to properly document the reasons why additional supplies were needed. 
• There was no documentation supporting the need for refills.
• Physician orders for these DME supplies was “missing or incomplete.”
• “Proof-of-delivery” documentation was missing.

As a result of these findings, HHS-OIG alleged that the MAC had improperly paid $39.2 million in claims by DME suppliers for blood-glucose test strips and/or lancets.  Remedial steps recommended by HHS-OIG for the Jurisdiction A DME contractor include:

“[I]mplement system edits to identify high utilization claims for test strips and/or lancets and work with CMS to develop cost-effective ways of determining which claims should be further reviewed for compliance with Medicare documentation requirements;

 [I]mplement system edits to identify claims for test strips and/or lancets that have overlapping service dates; and

 [E]nforce Medicare documentation requirements for claims for test strips and/or lancets by (1) identifying DME suppliers with a high volume of high utilization claims, (2) performing prepayment reviews of those DME suppliers, and (3) referring them to the Office of Inspector General or CMS for further review or investigation when necessary.”

 As reflected by the report, DME suppliers and their claims to the Medicare program remain under considerable government scrutiny.  In consideration of the recent enforcement authorities passed under the Health Care Reform Act, DME suppliers must continue to take affirmative steps to ensure that claims are fully documented, consistent with applicable statutory and regulatory provisions.

Liles Parker attorneys represent DME suppliers and companies in connection with HHS-OIG and Medicare contractor (e.g. ZPIC, PSC and RAC) audits.  Should you have questions in this regard, please call for a free consultation.  We can be reached at 1 (800) 475-1906.

Additional Cities will have HEAT Teams in 2011

(August 27, 2010):  Yesterday, Attorney General Eric Holder and U. S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius conducted the second of a planned series of “Regional Health Care Fraud Prevention Summits.”  The first summit was recently conducted in Miami, Florida.  This summit was held in Los Angeles, California. 

In addition to these agency heads, summit participants learned of current and additional planned initiatives from a number of Federal and State law enforcement officials. 

Describing the progress made in the last fiscal year, Attorney General Holder noted that:

“In just the last fiscal year, we’ve won or negotiated more than $1.6 billion in judgments and settlements, returned more than $2.5 billion to the Medicare Trust Fund, opened thousands of new criminal and civil health care fraud investigations, reached an all-time high in the number of health care fraud defendants charged, and stopped numerous large-scale fraud schemes in their tracks.”  

Notably, Attorney General Holder also made it clear that the government’s joint Health Care Fraud Prevention and Enforcement Action Team (HEAT) program is slated for further expansion over the next year.  As he noted:

 “HEAT’s impact has been recognized by President Obama, whose FY 2011 budget request includes an additional $60 million to expand our network of Strike Forces to additional cities.   With these new resources, and our continued commitment to collaboration, I have no doubt we’ll be able to extend HEAT’s record of achievement.   And this record is extraordinary. (emphasis added).

These additional funds will be to supplement, not supplant, existing health care fraud enforcement efforts currently underway around the country.  While the additional cities slated fro HEAT expansion were not announced at this event, all health care providers, regardless of location, should be especially vigilant in their efforts to ensure that Medicare coding and billing practices regulating the services provided must comply with applicable statutory and agency requirements.  

 Should you have questions regarding a health care fraud issue, you may call Robert W. Liles or another of our attorneys.  Call 1 (800) 475-1906 for a free consultation.

States Are Taking Aim at Home Health Providers – Florida’s MFCU Will Expand Their Review and Investigation of Home Health Providers Billing Medicaid – Your State May be Next

(July 19, 2010): Home health care providers are in the crosshairs again.  On July 15, HHS granted Florida a waiver of the anti-data mining provisions of federal Medicaid program regulations that will allow its Medicaid Fraud Control Unit (MFCU) to begin seeking out reasons to investigate home health and other providers for fraud.  While Florida is the first and currently the only state to obtain a waiver of this type, if Florida’s pilot program “succeeds”, the other 49 MFCUs could soon be doing the same thing.

MFCU “strike forces” are designed to investigate referred cases of fraud.  They are prohibited by 42 CFR §1007.19(e)(2) from receiving federal funding for conducting analysis to independently identify Medicaid fraud.  In their formal July 7^th request, the Florida Attorney General and Florida Agency for Health Care Administration Secretary requested an expedited waiver of those protections. 

The pilot program, intended to be effective January 1, 2011, will allow the state MFCU to use data mining to “identify situations in which a question of fraud may exist, including the screening of claims, analyses of patterns of practice, or routine verification with recipients of whether services billed by providers were actually received.”  The Florida officials’ request makes a point of calling out home health providers in justifying this expansion of the MFCU’s powers, declaring that:

“[S]ome services such as durable medical equipment and home health are frequent targets of fraudulent activity…” and

“areas of particular concern that the demonstration would address include …home and community based waivers, payments to assisted living facilities, and home health services.” (Emphasis added).

We are greatly concerned by the continued targeting of home health providers by state and Federal officials.  Given the explicit program goals of increasing the number of leads and cases, the number of arrests and convictions, the number of overpayment and abuse referrals, and the recovery of funds and then serving as a model for other states, this program warrants close monitoring.

Should you have any questions regarding these issues, 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.

Medicare Fraud Strike Force Operation Leads to Charges against 94 Defendants, including 4 in South Texas

(July 17, 2010): Yesterday, the Department of Justice (DOJ) announced charges against 94 physicians, medical assistants, and health care company owners and executives in connection with alleged false Medicare claims amounting to more than $251 million.  24 defendants from Miami account for approximately $103 million of that amount.  Four defendants were charged in Houston for their alleged roles in a $3 million scheme to submit fraudulent claims for durable medical equipment (DME).  Other arrests were made in Baton Rouge, Brooklyn, and Detroit.   

The offenses charged include conspiracy to defraud the Medicare program, criminal false claims, violations of the anti-kickback statutes, and money laundering.  The charges are based on a variety of fraud schemes, including physical therapy and occupational therapy schemes, home health care schemes, HIV infusion fraud schemes and durable medical equipment (DME) schemes.

Announcing the arrests, Attorney General Eric Holder said, “With today’s arrests, we’re putting would-be criminals on notice: Health care fraud is no longer a safe bet.  It’s no longer easy money.  If you choose to engage in health care fraud, you will be found; you will be stopped; and you will be brought to justice.”

The operation was conducted by the joint DOJ-HHS Medicare Fraud Strike Force, multi-agency teams 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.  Strike Force teams are operating in seven cities in the United States: the five aforementioned cities, Los Angeles, and Tampa.  AG Holder noted that the ongoing Strike Force initiative in South Florida has resulted in the indictments of 810 organizations and individuals since March 2007 and uncovered $1.85 billion in improperly billed claims.

The Strike Forces are a part of Health Care Fraud Prevention and Enforcement Action Team (HEAT), which is made up of top level law enforcement and professional staff from the DOJ and HHS and their operating divisions.  HEAT is dedicated to joint efforts across government to both prevent fraud and enforce current anti-fraud laws around the country.

Should you have any questions regarding these issues, 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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