Overview - AHRA · 2013. 11. 18. · – Qualifications of non-physician personnel, medical directors and supervisors, safety, quality of images Other Recent Regulatory Updates: 2011

Recent Developments and Key Legal Issues Impacting Radiology Practices

Adrienne Dresevic, Esq.Jessica L. Gustafson, Esq.

The Health Law Partners(248) 996 - 8510

http://[email protected]@thehlp.com

Overview • The Stark Law• The Anti-Kickback Statute (the “AKS”) • Other Regulatory Changes

– MIPPA, Supervision, FTC Red Flags Rule, Meaningful Use, Reimbursement, Pre-authorizations, Mobile Imaging, Enrollment

• Third Party Payor Audits and Compliance Issues

The Federal Stark LawBasic Self-Referral Prohibition

• A physician may not refer:– Medicare patients– For designated health services (e.g., MRI, CT,

ultrasound, x-ray, nuclear medicine)– To an entity with which the physician or immediate

family member has– A financial relationship unless an exception applies

The Federal Stark LawKey Stark Terms

• Referral– Does include the referral of both components (TC/PC) of a

diagnostic imaging test – Does not include personally performed services (e.g.,

orthopedic surgeon who orders and reads x-ray film)– Excludes certain requests by radiologists and radiation

oncologists (the “Radiologist Referral Exception”)• Requests by radiologist for diagnostic services when initiated from

another physician and tests/services furnished by or under the supervision of the radiologist (group)


• Designated Health Services – Radiology and certain other imaging services – Radiation therapy services and supplies – Defined by CPT/HCPCS Codes – Includes TC/PC– Does not include x-ray, fluoroscopy, or ultrasound that

require the insertion of a needle/catheter/probe/tube– Does not include radiology procedures that are integral to the

performance of a non-radiological procedure


• Entity (e.g., hospital, imaging center, group practice)– October 1, 2009 – includes the entity that receives

payment and the entity that performs the services • Financial Relationship

– Direct/indirect ownership and compensation

The Federal Stark Law2009 Updates

• Effective October 1, 2009– Per-click and percentage-based lease of space and

equipment leases are prohibited • When payments reflect services provided to patients referred

between parties (Block leases are they still ok?)– Stark law eliminates a referring physician's ability to own

interests in an under arrangements service provider• E.g., JV between cardiologists and hospital

The Federal Stark LawStark Law Exceptions

• Is a Stark exception needed? – Radiologist versus Referring Physician– In-office referrals by referring physicians

• In-Office Ancillary Services Exception – Applies to compensation/ownership– Protects in-office DHS– Groups must also meet group practice definition

The Federal Stark LawIn-Office Ancillary Services Exception

• IOASE requirements– Location

• Same building/U.S. postal address (3 alternative tests)– Physicians provide some services unrelated to DHS (8hrs/6hrs)

• Central building (exclusive use 24/7)– Supervision

• Furnished by physician (or group) or supervised by them– Billing (physician, group, or wholly owned entity)

Stark Law IOASE Updates: PPACA

• The Patient Protection and Affordable Care Act (PPACA)– President Obama signed into law on March 23, 2010 – Section 6003 of PPACA imposes a new disclosure

requirement under the IOASE for advanced imaging services

• Applies to Medicare MRI/CT/Pet In-Office Referrals• Written disclosure required at time of referral

Stark Law IOASE Updates: PPACA

• PPACA Section 6003 – Written list of alternative suppliers

• Near patient’s residence? • How many suppliers? What type of suppliers?• Effective date (January 1, 2010 or March 23, 2010)?

– Not applicable to non-referring radiology groups/centers– Penalties for non-compliance with 6003

• Stark law penalties (denials/refunds/CMP)/false claims

Stark Law IOASE Updates: 2011 Proposed Physician Fee Schedule

• 2011 Proposed Physician Fee Schedule (PPFS)– Not a final rule (final rule expected later this year)– PPACA Section 6003 IOASE Disclosure Proposals

• Potential expansion to other radiology services?– Probably not but stay tuned

• Notice must explain to patient that service may be obtained from another individual/entity

• Patient's signature on disclosure notification must be in medical record


• 2011 PPFS– Alternate suppliers list

• Given at time of referral• CMS will not permit/require list to include “providers”

(hospitals)• Listed suppliers must be located within a 25 mile radius of the

physician's office (not patient residence)• List must include no fewer than 10 suppliers

– Special exceptions when fewer suppliers exist


• Alternate suppliers list – Information on suppliers must be provided

• Name, address, phone number, distance

• Effective date – Applies to services furnished on or after effective date of

final regulations (January 1, 2011)

Stark Law IOASE Updates: Future Changes?

• The Medicare Payment Advisory Council (MEDPAC) 2010 Report– MEDPAC Proposes options to address concerns

regarding growth of ancillary services• Most ancillary services (including advanced imaging and

ultrasound) are not performed on the same day as a related office visit. Raises questions for rationale for IOASE


MEDPAC IOASE options:• Exclude certain services from IOASE (radiation therapy)• Limit exception to clinically integrated practices• Exclude diagnostic tests that are not usually performed during

an office visit (advanced imaging)• Reduce payments for testing provided using IOASE• Improve payment system (multiple related services)• Prior authorization for advanced imaging


• Advanced Imaging and Radiation Oncology– Request for GAO to study physician self-referral

arrangements • Congress asks GAO to focus study on:

– Prevalence/patterns/trends in self-referral for advanced imaging and radiation oncology

– Medicare spending – Extent that self-referral may have lead to increases in the provision of

such services

The Federal Anti-kickback Statute (AKS)• AKS Prohibited Conduct

– Criminal offense to:• Knowingly and willfully• To offer, pay, solicit, or receive any remuneration• To induce, or in return for referrals

– One purpose test– Penalties

• Felony (jail and fines)/civil monetary penalties/exclusion

The Federal Anti-kickback Statute (AKS)• Safe harbors

– Employment/investments/space and equipment rentals/personal services contracts

• OIG Guidance – Advisory Opinions– Fraud Alerts – Special Bulletins (Contractual joint ventures)

The Federal Anti-kickback Statute (AKS)

• Joint Venture Guidance – Special Advisory Bulletin Contractual Joint Ventures– IMRT Advisory Opinion 08-10

• JVs between existing suppliers and health care entities to service that entities patients are “suspect”

The Federal Anti-kickback Statute (AKS) Updates: PPACA

• PPACA Section 6402 (f) amends the AKS– New penalties

• Claims resulting from AKS violation also constitute false claims under the FCA

– Knowledge• A person need not have actual knowledge or specific intent to

commit a violation of the AKS

Other Recent Regulatory Updates:MIPPA

• MIPPA Accreditation for advanced imaging– Applies to suppliers (e.g., physicians/imaging centers)

that furnish the TC of advanced diagnostic imaging– MRI, CT, nuclear medicine (e.g., PET)– Paid under the Medicare Part B physician fee schedule– Does not apply to the PC– Requires suppliers to be accredited by January 1, 2012

in order to receive payment

Other Recent Regulatory Updates:MIPPA

• January 2010 CMS published notice of approval of 3 national accreditation organizations under MIPPA:– The American College of Radiology (ACR)– The Intersocietal Accreditation Commission (IAC)– The Joint Commission

• Standards met or exceeded MIPPA standards:– Qualifications of non-physician personnel, medical directors and

supervisors, safety, quality of images

Other Recent Regulatory Updates:2011 Proposed Physician Fee Schedule

• Sustainable Growth Rate (SGR)– CMS calculated that the conversion factor would be reduced in 2011 by an

additional 6.1% – This 6.1% cut would be added to the 21.2% cut recently delayed by Congress

• (June 2010 President Obama signed the “Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010” which establishes a 2.2 % update to the fee schedule rates retroactive from June 1 through November 30, 2010)

• Equipment Utilization Rate– PPACA mandates that the equipment utilization rate be changed to 75% for all

equipment priced over 1 million (CT/MRI). CMS also states in PPFS that this applies to CTA and MRA.


• Equipment Utilization Rate– Full implementation by January 1, 2011– 75% rate supersedes the CMS November final rule which changed the

utilization rate from 50-90 percent over a four year period. • Multiple Procedure Reduction Rate

– CMS is proposing to apply the MPPR rule across all three modalities (CT/MR/Ultrasound) of the TC of all studies performed on a patient in the same session if even if they are non-contiguous and across the modalities

– CMS is proposing to add cardiac CT and coronary CTA to the list of codes


• Misvalued Procedures– PPACA mandates CMS to find methods for identifying misvalued services– CMS discusses seven areas it has been working to indentify misvalued codes

• (e.g., New technologies , codes with fast growth )– Radiology codes fall within these categories

Other Recent Regulatory Updates:2011 HOPPS Proposed Rule

• 2011 Hospital Outpatient Prospective Payment Systems Proposed Rule (HOPPS)– Direct Physician Supervision Clarified

• For services provided on-campus, direct supervision means the supervising physician or non-physician needs to be present on the campus of the hospital or critical access hospital (CAH) and immediately available to provide assistance

• Same rule applies in the off-campus location (present in the off-campus location and immediately available)

Other Recent Regulatory Updates:2011 HOPPS Proposed Rule

• 2011 (HOPPS)Direct Physician Supervision – CMS notes it does not make payment to a physician under the

MPFS when the physician solely provides direct supervision of hospital outpatient procedures

– Hospital's responsibility to make arrangements for appropriate supervision

– Supervising physician does not have to be from the specialty of the service that is being performed

• (scope/privileges)

Other Recent Regulatory Updates:ZIP CODE BILLING

• January 2010 Medicare Claims Processing Manual (CR6733)– Implementation of Medicare Anti-markup rule requirements– Effective March 15, 2010 eliminates zip code billing for purchased

interpretations • Eliminates IDTF or radiology group imaging center’s ability to bill its local

carrier (MAC) for interpretations performed by out of state physicians • Two options for IDTFs and radiology groups using teleradiology services

that cross different MAC jurisdictions– Take reassignment from the interpreting physician, then enroll and submit

claims to that physician's MAC (if they are able to establish a practice location in the jurisdiction)

– Direct billing

Other Recent Regulatory Updates:PECOS Enrollment Ordering Physicians

• June 30, 2010 CMS to review PECOS enrollment process– CMS will not implement the July 6, 2010 rule which would

automatically reject claims based on orders, certifications, andreferrals made by providers that have not yet had their applications approved

Other Recent Regulatory Updates:Mobile Imaging

• 2009 IDTF Rule Changes– Mobile diagnostic entities must enroll in Medicare as IDTFs and bill

directly for the services furnished (unless furnished “under arrangements with hospitals”)

– CMS issues FAQ on its website• CMS states that mobile leasing company that provides equipment and/or

personnel does NOT have to enroll as an IDTF and bill directly • CMS distinguishes leasing entities from entities that FURNISH the

services – Physician supervision

Other Recent Regulatory Updates:Preauthorization

• The Preauthorization Debate – Many payors require that imaging services to be preauthorized prior to

the provision of services– Who is responsible for obtaining the preauthorization

• Imaging center? Ordering physician? What does the payor say?

• Can an imaging center provide preauthorization assistance to ordering physicians? – AKS concerns

• Even if preauthorization is not required for Medicare?


• AKS concerns– OIG Opinion 08-12 (September 2008)

• Favorable but didn’t address arrangements where administrative services were provided by, or on behalf of, a supplier (imaging center), to an existing referral source (ordering physician)

– OIG Opinion 10-04 (May 2010)• Favorably approved a program conducted by several imaging centers to

provide free pre-authorization services to patients and referring physicians– Made available to all patients and referral sources– No payments or reward to physicians


• OIG Opinion 10-04 (May 2010)– Transparent operations– No staff provided to referring physicians– OIG recognized legitimate business interests of imaging centers

in offering uniform preauthorization services

• Federal Stark law issues?– Is it remuneration to a referral source?

• Stark law non-monetary compensation exception ($355 limit)

Other Recent Regulatory UpdatesRed Flags Rule

• Requires every “creditor” offering or maintaining a “covered account” to develop and implement a written Identity Theft Protection Program.– See 16 C.F.R. § 681.2 and 72 Fed. Reg. 63772-63774 (November 9,

2007)

Other Recent Regulatory Updates:Red Flags Rule

Are Health Care Providers Creditors?

• A health care provider is a “creditor” if it does not regularly demand payment in full at the time services are rendered.– A health care provider is a creditor if it regularly bills patients after

the completion of services, including for the remainder of medical fees not reimbursed by insurance

– A health care provider is a creditor if it regularly allows patients to set up payment plans after services have been rendered

Other Recent Regulatory Updates:Red Flags Rule Covered Accounts

• Accounts offered or maintained by a creditor involving or designed to permit multiple payments or transactions– 16 C.F.R. § 681.2 (b) (3) (i)


Application• If the Red Flags Rule apply, then a written Identity Theft Protection

Program (the “Program”) must be adopted that is “appropriate to the size and complexity” of the practice and the “nature and scope”of its activities.

• The Program should:– (1) Identify the kinds of red flags that are relevant to your practice; – (2) Explain your process for detecting them; – (3) Describe how you’ll respond to red flags to prevent and mitigate

identity theft; and – (4) Spell out how you’ll keep your program current.


Enforcement• Enforcement of the Red Flags Rule against health care

providers has been delayed several times. – The FTC has delayed the compliance deadline for the Red Flags Rule

until December 31, 2010.– On June 25, 2010, the FTC and several medical groups stipulated that

the FTC will not enforce the Red Flags Rule against physicians who are members of the AMA, AOA and the Medical Society of the District of Columbia until the D.C. Circuit court issues a decision in the case of American Bar Association v. FTC.

Other Recent Regulatory Updates:Meaningful Use Regulations

• The American Recovery and Reinvestment Act of 2009 (“ARRA”) establishes an incentive payment program to eligible professionals (“EPs”) and eligible hospitals that participate in the meaningful use of certified electronic health record (“EHR”) technology.


Meaningful Use Definition• Three requirements:

– (1) Use certified EHR technology in a meaningful manner;– (2) The certified EHR technology must be connected in a manner that

provides for the electronic exchange of health information to improve quality of care; and

– (3) In using certified EHR technology, the provider must submit to the Secretary information clinical quality measures and such other measures as selected by the Secretary.

Other Recent Regulatory UpdatesMeaningful Use Regulations

Incentive Programs• The Centers for Medicare and Medicaid Services

(“CMS”) has developed EHR incentive programs under:– Original Medicare (Fee for Service)– Medicare Advantage– Medicaid

• A provider eligible for the Medicare and Medicaid incentive programs can only participate in one program, not both.


Incentive Programs• General differences between the Medicare and Medicaid EHR incentive programs:Medicare EHR Incentive Program Medicaid EHR Incentive Program

Can participate as soon as the federal program launches

Can participate once the provider’s state offers the program

Can receive up to $44,000 in incentives (and up to $48,400 if practicing in a Health Provider Shortage Area)

Can receive up to $63,750 in incentives

Required to demonstrate meaningful use of certified HER every year to qualify for payment

Can qualify for payment for adopting, implementing, upgrading or demonstrating meaningful use of certified EHR technology in first participation year. Required to demonstrate meaningful use in each subsequent year to qualify for payment.

Must participate by the second year to receive the maximum incentive payment

Must participate by 2016 to receive the maximum incentive payment


Eligible Professionals• Medicare – A Medicare eligible professional (“EP”) is a doctor of medicine or

osteopathy, doctor of dental surgery or dental medicine, doctor of podiatry, doctor of optometry or a chiropractor who is not hospital-based – A provider is “hospital-based” if he or she provides more than 90% of his or her

services in a hospital inpatient or hospital ER setting).

• Medicaid – A Medicaid EP is a physician, NP, certified nurse-midwife, dentist, or PA who furnish services in a Federally Qualified Health Center or Rural Health Clinic that is led by a PA. The EP must not be hospital-based (defined above), and must meet certain patient volume criteria (must meet one of the following):– Have a minimum 30% Medicaid patient volume– Have a minimum 20% Medicaid patient volume and is a pediatrician– Practice predominantly in a Federally Qualified Health Center or Rural Health Center

and have a minimum 30% patient volume attributable to needy individuals


Certification• The EHR incentive programs require the use of

“certified” EHR technology, as established by the Office of the National Coordinator (“ONC”). – Existing EHR technology must be certified by an ONC

Authorized Testing and Certification Body to meet criteria designed to ensure that EHR products are secure, can maintain data confidentiality, can work with other systems to share information, and can perform a set of well-defined functions.


Meaningful Use Defined• Three main components of Meaningful Use:

– The use of a certified EHR in a meaningful manner (e.g., E-prescribing)

– The use of certified EHR technology for electronic exchange of health information to improve quality of health care; and

– The use of certified HER technology to submit clinical quality and other measures.


Staged Implementation• Stage 1 implementation begins in 2011.

– Criteria focuses on electronically capturing health information in a coded format; using that information to track key clinical conditions; communicating that information for coordination of care; and initiating the reporting of quality measures and public health information.

– Stage 1 includes:• A core group of 15 objectives (all required)• A menu set of 10 objectives (EPs must meet 5 out of 10).


Medicare Incentive PaymentsMedicare Incentive Payments

General Incentive Payments Additional payment if services predominantly provided in Health Professional Shortage Area (“HPSA”)


Medicaid Incentive Payments

THIRD PARTY PAYOR AUDITS AND COMPLIANCE

• Recent areas of audit activity• Key compliance issues• Medicare appeals process and

strategies for successful appeals

RECENT AREAS OF AUDIT ACTIVITY• Medicaid

– Medicaid Integrity Program– Recovery Audit Contractor audits

• Medicare– Affiliated Contractor audits– Program Safeguard Contractor (“PSC”) (or

Zone Program Integrity (“ZPIC”) audits)– Recovery Audit Contractor audits

• Other third party payor audits

MEDICAIDMIC Overview

• The Deficit Reduction Act of 2005 added Section 1936 to the Social Security Act, which created the Medicaid Integrity Program (“MIP”) and required CMS to procure contractors to:– Review provider actions– Audit claims– Identify overpayments– Educate providers and others with respect to program integrity and quality of care

• To perform the functions above, CMS awarded contracts to contractors known as Medicaid Integrity Contractors (“MICs”). There are three (3) types of MICs:– Review MICs– Audit MICs– Education MICs

MEDICAIDMIC Overview

• Audit MICs are entities with which CMS has contracted to perform audits of Medicaid providers

• Unlike RACs, MICs are not compensated on a contingency fee basis

• Objectives of Audit MICs – to ensure that paid claims are:– For services provided and properly documented; – For services billed using appropriate procedure codes; – For covered services; and – In accordance with Federal and State laws, regulations and policies

MEDICAIDSteps in the Provider Audit Process

Step 1 – Data Analysis• The Medicaid Integrity Group (“MIG”) and Review MICs

examine all paid claims using the Medicaid Statistical Information System (“MSIS”). – MIG identifies potential areas that are at high risk for overpayments or

fraudulent claims that require additional review by Review MICs.– The Review MICs identify the specific providers on which the Audit MICs

should focus their auditing efforts.• Data driven approach intended to focus audits on those

providers with “truly aberrant” billing practices.


Step 2 – Vetting Potential Audits • Prior to providing an Audit MIC with an audit assignment, CMS

“vets” the providers identified for audit with:– State Medicaid agencies– State and Federal law enforcement agencies– Medicare contractors

• Entities listed above are provided a list of the potential audits generated by data analysis. If any stakeholder is performing anaudit of the same provider for similar Medicaid issues, CMS may cancel or postpone the Audit MIC’s audit of the provider.

MEDICAID Steps in the Provider Audit Process

Step 3 – Audit MIC receives audit assignment

• Upon completion of the vetting process, CMS forwards the audit assignments to the Audit MIC, and the Audit MIC immediately begins auditing.

• CMS’ policy is that the audit period, also known as the “look back period” mirrors that of the State which paid the provider’s claims.


Step 4 – Audit MIC schedules entrance conference• Audit MIC’s initial communication with the provider includes the following:

– An audit notification letter, which identifies a contact person in the Audit MIC and gives the provider at least two (2) weeks’ notice of the audit

– Records request • If desk audit is to be performed – records must be mailed to the Audit MIC; or • If field audit is to be performed – records must be made available to the Audit MIC

• Audit MIC will coordinate with the provider to schedule an entrance conference to communicate relevant information regarding the audit, including its scope and objectives.– May be conducted in person or by phone

MEDICAIDSteps in the Provider Audit ProcessStep 5 – Audit MIC performs audit

• Most audits are desk audits• Providers are given timeframes to produce records; if an

extension is requested, the Audit MIC will “seriously consider” this request– CMS policy requires that the provider be generally allowed the same

amount of time to provide records as the State Medicaid agency allows in its own provider audits


Step 6 – Exit Conference and draft audit report• Audit MIC will coordinate with the provider to schedule an exit

conference to communicate preliminary audit findings and tentative conclusions.– May be conducted in person or by phone– The provider will have an opportunity to comment on the preliminary

findings and provide additional information where appropriate• If the Audit MIC concludes that there is a potential overpayment,

the Audit MIC prepares a draft report.

MEDICAIDSteps in the Provider Audit ProcessStep 7 – Review of draft audit report

• Draft audit report submitted to several agencies for review, comment and approval:– Report shared with CMS for approval– Report submitted to the State for review and comment– Report provided to the provider for review and comment

• Where appropriate, the draft is revised and then shared again with the State


Step 8 – Draft audit report is finalized

• Upon completion of the review of the draft audit report, audit findings may be adjusted based upon the information provided by the State and the provider.– Guidance from CMS states that, “The provider will be given

credit for payments it is able to justify.”• At this point, the audit report is finalized.


Step 9 – CMS issues final audit report• CMS sends its final audit report to the State.• Per 42 C.F.R. §§ 433.316 (a) & (e), sending the final audit

report to the State serves as CMS’ official notice to the State of the discovery and identification of an overpayment.– Under Federal law, the State must repay the Federal share of the

overpayment to CMS within 60 calendar days, whether or not the State recovers, or seeks to recover, the overpayment from the provider.


Step 10 – State issues final audit report to provider and begins overpayment recovery

• The State will issue the final audit report to the Provider. • Each state follows its respective administrative process.• The provider may exercise appeal rights are available under

State law at this time.

MEDICAID• Recovery Audit Contractor (“RAC”) Audits• Section 6411 of the Patient Protection and

Affordable Care Act (“PPACA”) expands the RAC program to include Medicaid claims

MEDICAREProgram Safeguard Contractor (“PSC”) Audits

• PSCs are responsible to perform benefit integrity functions:– Fraud and abuse investigation and detection– Overpayment identification– Case resolution (e.g., coordination of overpayment recovery; referral to

law enforcement)• PSCs are authorized to:

– Conduct prepayment reviews– Recommend suspensions of payment– Conduct post-payment audits and extrapolate the amounts of alleged

overpayments identified• Unlike RACs, PSCs are not compensated on a contingency-fee

basis


• On September 26, 2008, a Final Rule was issued regarding “Termination of Non-Random Prepayment Complex Medical Review”– Final Rule mandates that, in most cases and unless an exception

applies, CMS will terminate a provider or supplier from review no later than one year from the initiation of the review, or when the provider’s error rate decreases by 70%

• See 73 Fed. Reg. 55753 and 42 C.F.R. 421.500 et seq.– Does not apply to reviews conducted for “BI purposes”


• Benefit Integrity (“BI”) reviews vs. Medical Review(“MR”)– Medicare Program Integrity Manual (“PIM”), CMS Pub. 100-08, Chapter 3 –

“Verifying Potential Errors and Taking Corrective Actions” – governs MR– Medicare PIM, CMS Pub. 100-08, Chapter 4 – “Benefit Integrity” – governs BI

reviews• The Medicare PIM Chapter 4, § 4.3 (governing “Medical Review for Benefit Integrity

Purposes”) states, “The PIM, chapter 3, §§3.4 – 3.4.3 outlines the procedures to be followed by both MR and MR for BI staff to make coverage and coding determinations”

– However, PSCs regularly take the position that the guidelines set forth in this Manual do not apply if its review is initiated for BI purposes (i.e., fraud and abuse investigation and detection), even if a coverage and coding determination is ultimately made, and a finding of fraud and abuse is not made.

MEDICARERAC Audits – RAC Overview

• What are RACs?• What is the purpose of the RAC program?

– To identify and correct Medicare overpayments and underpayments• How are RACs compensated?

– RACs are compensated on a contingency fee basis based on the principal amount collected from and/or returned to the provider

– Although the RACs are responsible for correcting overpayments andunderpayments, during the RAC Demonstration Program, the RACs identified and collected $992.7 million in overpayments and ordered repayment of just $37.8 million in underpayments

• Thus, 96% of the alleged improper payments were overpayments

RAC OVERVIEWThe RAC Demonstration Program

• Section 306 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) – Mandated the Department of Health and Human Services to

conduct a 3-year demonstration program using RACs• Began in 2005 the three states with the highest Medicare expenditures:

CA, FL and NY• Expanded in 2007 to include three more states: AZ, MA and SC

RAC OVERVIEWThe RAC Demonstration Program

• Objective – To determine whether using RACs is a cost effective way to identify and correct improper Medicare payments

• Results – Highly “cost effective” for CMS– CMS estimates that the RAC demonstration program cost

approximately 20 cents for each dollar returned to the Medicare Trust Funds

RAC OVERVIEWMaking RACs Permanent

• Section 302 of the Tax Relief and Health Care Act of 2006 – Made the RAC Program permanent and required

nationwide expansion by 2010– RAC program now operational nationwide

RAC OVERVIEWMaking RACs Permanent – the Future

• Section 6411 of the Patient Protection and Affordable Care Act expands the RAC program to include:– Medicare Advantage (Part C);– Medicare Prescription Drug (Part D); and– Medicaid claims.

• This expansion is in line with a White House Memorandum which states President Obama’s support of the use of “high-tech bounty hunters” to help find health care fraud in government-run Medicare and Medicaid programs.

RAC OVERVIEWRAC Vendors

• Region A – Northeast States– Diversified Collection Services, Inc., of Livermore, CA– www.dcsrac.com

• Region B – Midwestern States– CGI Technologies and Solutions, Inc. of Fairfax, VA– http://racb.cgi.com

• Region C – Southeast States– Connolly Consulting Associates, Inc. of Wilton, CT

– www.connollyhealthcare.com/RAC

• Region D – Western States– HealthDataInsights, Inc. of Las Vegas, NV– http://racinfo.healthdatainsights.com

RAC OVERVIEWWhat to Expect – RAC Reviews

• Targeted Review – Using proprietary data techniques to determine claims likely to have overpayments– Audits are not random

• 2 Types of Reviews for Improper Payment– Automated Review – A review of claims data without a review of

records– Complex Review – A review of medical or other records

RAC OVERVIEWIdentifying Improper Payments

• RACs are permitted to attempt to identify improper payments resulting from:– Incorrect payments;– Non-covered services (including services that are not reasonable

and necessary);– Incorrectly Coded Services (including DRG miscoding); and– Duplicate services

RAC OVERVIEWComplex Review Process

• The RAC requests medical records for review– CMS will limit the number of records that a RAC may request

from providers per 45-day period, which will be posted on the CMS RAC website (www.cms.hhs.gov/RAC).

– Instructions for provider response on specific RAC websites • Importance of timely response to claims


Record Request Limits• CMS has not yet posted the record request limits for FY

2010 for non-institutional providers (physicians).• In FY 2009 records request limits were based upon size of

the physician practice:– Solo Practitioner: 10 medical records per 45 days – Partnership of 2-5 individuals: 20 medical records per 45 days – Group of 6-15 individuals: 30 medical records per 45 days – Large Group (16+ individuals): 50 medical records per 45 days


Record Request Limits• For institutional providers, record request limits are established on an

annual basis to establish a per-campus maximum number of record requests per 45-days.

• Limits will be set at 1% of all claims submitted for the previous calendar year (2008), divided into eight periods (45 days)– From April through September 2010, providers/suppliers who bill in excess of 100,000 claims

to Medicare (per TIN, across all claims processing contractors) will have a cap of 300 additional documentation request per campus unit, per 45 days.

• The RACs may request permission to exceed the cap.


• In conducting reviews, RACs are required to comply with NCDs, coverage provisions in Interpretive Manuals, LCDs, national and local coverage and coding articles. – RACs also are authorized to develop internal guidelines to use in

reviewing claims.• Registered nurses or therapists are required to make

determinations regarding medical necessity and certified coders are required to make coding determinations

• RAC reviewers have a 3-year maximum look-back period– Cannot look at claims earlier than October 1, 2007


• Generally speaking, a RAC must complete a complex review within 60 days from receipt of the requested medical records.

• Following a RAC review:– The RAC will issue a findings letter;– A RA showing the claim adjustment will be issued;– The Affiliated Contractor will issue a demand letter, which

triggers the appeals process.• RACs no longer entitled to keep their contingency fees if a denial is

overturned on appeal

PREPARING FOR AN AUDIT• Providers cannot prevent audits from happening, but they

can prepare for increased claims scrutiny in the following ways:– Identify an Audit point person, responsible for:

• Communicating with the auditor – TIP: Enter contact information on RAC website

• Internally monitoring protocols to better identify and monitor areas that may be subject to review

• Responding to record requests within the required timeframes• Understand intricacies of Electronic Health Records• Implementing an effective compliance program in and/or strengthening

procedures currently in place

COMPLIANCE• Section 6401 (a) (7) of the Patient Protection and

Affordable Care Act (“PPACA”) included provisions mandating compliance programs as a part of the Medicare enrollment process.– Regulations will be issued specifying which providers

and suppliers will be subject to mandatory compliance, timelines, and other details.

COMPLIANCE• Providers may choose to engage in compliance audits to assess

compliance with Medicare regulations/policy– Pre-payment vs. post-payment audit issues– Issues surrounding known overpayments

• Section 6402 of PPACA imposes a duty to return known overpayments to the government within 60 days of discovering an error. Retaining overpayments beyond this timeframe results in False Claims Act liability.

– Application to the Federal Stark law – if a provider obtains Medicare payments for DHS rendered per prohibited referrals, this would constitute an “overpayment”

– PPACA mandates a Self-Referral Disclosure Protocol by late September 2010 that permits HHS to compromise Stark refunds.

KEY COMPLIANCE ISSUES• Identify and monitor areas that may be subject to

review– Approved audit issues– Areas scrutinized in the RAC demonstration program– OIG Work Plan

• Develop and implement effective processes to respond to record requests and prepare for appeals, if necessary.

KEY COMPLIANCE ISSUESApproved Audit Issues

• As of July 2010, the following radiology issues were approved for review:– TC of radiology (Regions A and D) – Global billing (Regions A and D)

RAC Demonstration Program Results – Top Services With Overpayments

KEY COMPLIANCE ISSUESOIG Work Plan 2010

• Payments for diagnostic X-rays• Geographic areas with a high density of

independent diagnostic testing facilities (“IDTFs”) –the OIG will review services and billing patterns of IDTFs

• Enrollment standards for IDTFs

MEDICARE APPEALS• 42 C.F.R. Part 405, Subpart I• 5 Stages

– Stage 1 – Redetermination– Stage 2 – Reconsideration– Stage 3 – Administrative Law Judge (“ALJ”) Hearing– Stage 4 – Medicare Appeals Council (“MAC”) Review– Stage 5 – Federal District Court

First Level of Appeal: Redetermination

• With respect to post-payment audits (including RAC audits), if a Medicare Contractor renders an unfavorable initial determination, withholding may begin on the 41st day following the date of the demand letter, unless a request for redetermination is received. – Once a provider files a request for redetermination, Medicare will cease its

withhold activities. (42 CFR 405.379)• Requests for redetermination must be filed in writing within 120 days from

receiving the initial determination• No amount in controversy requirement

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Second Level of Appeal: Reconsideration

• With respect to post-payment audits (including RAC audits), if the Medicare Contractor issues an unfavorable redetermination decision, withholding may begin in 61 days, unless the provider first files a request for reconsideration. – The Medicare Contractor may not initiate, and must cease, recoupment once a

valid and timely request for reconsideration has been filed. (42 CFR 405.379)• Requests for reconsideration must be filed within 180 days from

receiving the redetermination decision

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• The reconsideration is an “On-the-record” review as opposed to an in-person hearing– “On-the record” review consists of a review of the initial

determination, the redetermination and all issues related to the payment of the claims.

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• Full and Early Presentation of Evidence Requirement:– Absent good cause, failure of a provider to submit all of

its evidence at the QIC level precludes subsequent consideration of the evidence.

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Third Level of Appeal: Administrative Law Judge Hearing

• Requests for Administrative Law Judge (“ALJ”) Hearing must be filed within 60 days from receiving the reconsideration decision– The Affiliated Contractor may re-initiate a withhold following the

reconsideration stage of appeal, regardless of when the request for ALJ hearing is filed.

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Third Level of Appeal: Administrative Law Judge Hearing

• There are four ALJ offices nationally: (1) Arlington, VA; (2) Miami, FL; (3) Cleveland, OH; and (4) Irvine, CA

• ALJ hearings may be conducted by video-teleconference (VTC), by phone or in-person. – ALJ hearings must be conducted by VTC if the technology is

available; in practice, most hearings are conducted by telephone. Whether or not a hearing can be conducted in-person will be up to the ALJ.

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Final Stages of Appeal: Medicare Appeals Council (“MAC”) Review

Federal District Court Review

• 60 days to file MAC review – No hearing– De novo review

• 60 days to file request for judicial review

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APPEALS STRATEGIES• Advocating the merits• Audit defenses

– Treating Physician Rule– Waiver of Liability– Provider without Fault– Reopening Regulations– Challenges to Statistics

APPEALS STRATEGIESAdvocating the Merits

• Draft a position paper outlining factual and applicable legal arguments

• Engage in the services of a qualified physician expert• Using medical summaries, illustrations, and other types of

color-coded charts or graphs depicting the claims at issue that are user-friendly for the decision maker

APPEALS STRATEGIESAudit Defenses

• Treating Physician Rule• Waiver of Liability• Provider without Fault• Challenges to claim revisions• Challenges to Statistics

APPEALS STRATEGIESAudit Defenses – Treating Physician Rule

• The treating physician, who has examined the patient and is most familiar with the patient’s condition, is in the best position to make medical necessity determinations – Can be contradicted with substantial evidence, though treating physician’s

determination holds weight• The determination whether a radiology service is reasonable

and necessary often is initially made by a referring physician that orders the radiology services provided by the radiologist– Issues surrounding obtaining medical records, etc.

APPEALS STRATEGIESAudit Defenses – Waiver of Liability

• Section 1879(a) of the Social Security Act (42 U.S.C. 1395pp)

• Payment may be rendered if the provider rendered the service anddid not know and could not reasonably have been expected to knowpayment would not be made

• Potential argument under Waiver of Liability: – The radiologist did not know, and could not reasonably have been

expected to know, that payment would not be made on a claim, because the referring physician specifically determined that theservices would be reasonable and necessary.

APPEALS STRATEGIESAudit Defenses – Provider without Fault

• Section 1870 of the Social Security Act (42 U.S.C. 1395gg)• Payment will be made to a provider if the provider was without “fault”

with regard to billing for and accepting payment for disputed services– Provider is without fault if s/he exercised reasonable care in billing for and

accepting payment– 3-year Rule

• Potential argument under Provider without Fault:– Similar to Waiver of Liability, the radiologist did not know, and could not

reasonably have been expected to know, that payment would not bemade on the claim, because the referring physician specifically determined that the services would be reasonable and necessary.

APPEALS STRATEGIESAudit Defenses – Provider without Fault

• “Fault” is defined as– An incorrect statement made by the individual which he knew or

should have known to be incorrect; or– Failure to furnish information which he knew or should have

known to be material; or– With respect to the overpaid individual only, acceptance of a

payment, which he knew or could have been expected to know, was incorrect

APPEALS STRATEGIESAudit Defenses – Challenges to Revisions

• Restrictions upon the permissible timeframe for reopening determinations

• Once an initial determination to pay a claim has been made, the claim can only be reopened for review within a certain time period


• 42 C.F.R. 405.980 (b) – A contractor may reopen and revise its initial determination -– Within 1 year from the initial determination for any reason– Within 4 years from the initial determination for “good cause” as defined in

Sec. 405.986– At any time if there exists reliable evidence that the initial determination

was procured by “fraud or similar fault” as defined in Sec. 405.902– At any time if the initial determination is unfavorable, in whole or in part, to

the party thereto, but only for the purpose of correcting a clerical error on which that determination was based


• 42 C.F.R. 405.986 – “Good cause” may be established when:– There is new material evidence that –

• Was not available or known at the time of the determination or decision; and

• May result in a different conclusion or– 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

APPEALS STRATEGIESAudit Defenses – Challenges to Statistics

• In many post-payment audits, CMS will audit a small sample of a provider’s records and, if it finds an overpayment, CMS will extrapolate the overpayment to the provider’s patient population– RAC auditors authorized to use statistical extrapolation

• The MMA limits statistical extrapolation and when it can be used• If an extrapolation is flawed, it may be successfully challenged,

bringing the total dollars at issue to the “actual” alleged overpayment, and not the extrapolated alleged overpayment

APPEALS STRATEGIESAudit Defenses – Challenges to Statistics

• MMA Section 935 – LIMITATION ON USE OF EXTRAPOLATION – A Medicare contractor may not use extrapolation to determine overpayment amounts to be recovered by recoupment, offset, or otherwise, unless the Secretary determines that –– There is a sustained or high level of payment error; or– Documented educational intervention has failed to correct the

payment error

Recent Developments and Key Legal Issues Impacting Radiology Practices

Adrienne Dresevic, Esq.Jessica L.Gustafson, Esq.

The Health Law Partners(248) 996 - 8510

http://[email protected]@thehlp.com

Documents

Overview - AHRA · 2013. 11. 18. · – Qualifications of non-physician personnel, medical directors and supervisors, safety, quality of images Other Recent Regulatory Updates: 2011