DEATH BY A 1000 CUTS BUT ~ LIGHT AT THE END OF THE AUDIT TUNNEL

1. DEATH BY A 1000 CUTS BUT ~ LIGHT AT THE END OF THE AUDIT TUNNEL John E. Gallagher VGM & Associates 23 July 2014

2. WERE AS MAD AS HELL

3. On the bright side…. Bye - Bye Blum The Obama administration announced that CMS’s top Medicare official, Jonathan Blum has submitted his resignation.

4. AUDIT ~ Lack of Appeal Process Chief ALJ Details 460k Appeals Backlog, Suspension of Hearings A recently obtained memorandum from the Office of Medicare Hearings and Appeals (OMHA) Chief Administrative Law Judge Nancy Griswold to Medicare providers awaiting multiple Administrative Law Judge appeal hearings details the exponential growth in appeals to Medicare audits. The letter provides the most up-to-date appeals data that has been released by The Centers for Medicare and Medicaid Services (CMS) to date and includes some particularly damning statistics and statements about the appeals system. Judge Griswold states that from 2010-2013, OMHA’s claims workload grew by 184%. In just two years, the backlog of appealed claims has risen from 92,000 to 460,000, causing OMHA to suspend the assignment of hearing dates effective July 15, 2013.Citing a lack of additional resources allocated to handle the dramatic increase in appeals volume, Griswold states that in January 2012, their office averaged 1,250 appeals a week, in December 2013, they averaged 15,000. Average wait time now exceeds 16 months and with the current backlog, OMHA does not expect to begin assigning new ALJ hearing dates for at least 24 months. As a point of reference, there are a total of 65 Administrative Law Judges nationwide. How can this be possible? How can CMS audit claims, require providers to respond and in most cases repay the disputed monetary value associated with the claim without offering an adequate appeals process? The lack of due process is truly appalling.

5. VGM's Audit Team's efforts result in 70 percent overturn of claims re-submitted following the OMHA forum Peggy had her hands full of claims VGM had received from members who felt they were inappropriately denied by C2C Solutions. Peggy addressed the panel about the issue that day and followed up by sending the claims back to C2C Solutions for review.

7. Be advised! CMS Giveth and CMS Taketh Away! March 7, 2014 – Now that the dates for sending Addition Documentation Request (ADR) letters have passed, CMS would like to remind providers that the Recovery Auditors can continue to conduct automated reviews (reviews that do not require soliciting medical record documentation from providers) through June 1, 2014. Recovery Auditors will also continue to complete the reviews for the ADRs they’ve already sent as of 2/28/2014. Providers have 45 days to respond to an ADR and Recovery Auditors have up to 60 days to make a determination on the claim.  In general, CMS will not conduct post-payment patient status reviews for claims with dates of admission October 1, 2013 through October 1, 2014.

8. Transition Timeline • January 8, 2014 – CMS opens bids for new RAC • Active Recovery Auditing will continue through implementation of new RAC • ADRs and Automated reviews continue • Suppliers may receive correspondence from both outgoing and new RAC • At no time will providers have to respond to ADRs more frequently than every 45 days, or from two different Recovery Auditors

9. Transition Timeline • February 18, 2014 – Procurement process • RACs begin transitioning down processes • February 21, 2014 • Last day RAC can send postpayment ADR • March 7, 2014 – Reminder issued • RACs continuing automated reviews through 6/1/14 • RACs will complete reviews of ADRs sent 2/28/14

10. Transition Timeline • June 1, 2014 • Last day RACs can send claim adjustment files to DME MAC • All ‘in progress’ Discussion Periods must be completed

11. Transition Timeline • June 2, 2014 and after • RACs can only send claim closure files to DME MAC • RACs will not be required to update the “New Issues” section on their websites • RACs will continue to update “Claims Status” in provider portal

12. Transition Timeline • June 30, 2014 • Last day for RACs to accept new Discussion Period requests • All Discussion Period requests initiated in June will be completed • July 1, 2014 and after • RACs will not accept new Discussion Period requests

13. Transition Timeline • Until further notice • RACs will maintain customer service areas and process for escalating concerns • RACs will continue to support the appeal process

14. Take advantage of the transition downtime Get prepared

15. Proactive Preparation • Draft written policies and procedures related to risk areas • Appoint a Compliance Officer and/or Compliance Committee • Implement a comprehensive education and training plan • Include claim development, billing and coverage guidelines and compliance • Respond promptly to detected offenses and develop corrective actions • Have open lines of communication

16. Proactive Preparation • Practice internal audits • Compare to services provided • Review widespread review results • Review policies to ensure documentation and coverage criteria guidelines are met • Prior approval process • Review frequently audited items to be sure coverage/documentation criteria is met and have someone “approve” each delivery

17. Think like the RAC • When requesting documentation, RACs are generally looking to do one of the following: • Specifically view the physician’s progress notes to verify medical necessity (the prescription of DME was a main factor of the office visit with the physician) • View a supplier’s detailed orders and CMNs • Verify that the service billed for was provided • Verify that the claim was filed correctly using the appropriate HCPCS code for what was received

18. Know how your data compares • RAC will review claims data to detect irregularities • Be familiar with your own data and try to determine any potential outliers • Audit Triggers: • Increased billing for a particular procedure code • Billing for “high risk” items or services • Significant growth • Increase in denials for a particular service

19. Proactive Preparation • Do your internal documents contain all of the required elements? • Conduct a comparative analysis of your internal documentation • Or as a VGM member, vHG will do it for you at a discounted rate! • Are they completed fully? • Implement a product specific documentation checklist that must be completed prior to billing for item • Audit-ready files

20. Current RAC Jurisdiction Map

21. Hospitals appeal half of RAC claim denials • Despite the increasing backlog and cost of Recovery Audit Contractor (RAC) appeals, hospitals continue to petition the Centers for Medicare & Medicaid to overturn claim denials, according to the latest results from the American Hospital Association's (AHA) quarterly RACTrac survey. • The survey collects hospitals' cumulative RAC experience data from the beginning of activity through the first quarter of 2014. The AHA reports 2,489 hospitals participated in the survey since it began collecting data in January 2010, but 1,165 hospitals submitted data for the first quarter of 2014. • In the survey's latest findings, hospitals reported that they appeal 50 percent of all RAC denials with a 66 percent success rate. In addition, half had the appeal overturned during a discussion period before a formal appeal. • Hospitals and health system leaders continue to complain to lawmakers about inappropriate payment denials by RACs. Last week, Steven Hanks, M.D., executive vice president and chief medical officer at The Hospital of Central Connecticut, told congressional staff that despite medical need, in many cases, RACs deny payment for inpatients on the grounds that the services should have been provided in the outpatient settings, FierceHealthcare previously reported. Hospitals have appealed 96 percent of the denials and successfully overturned 94 percent of them, Hanks said.

22. H.R. 1250, H.R. 2329 and the Senate bill S. 1012 address the issue for hospitals. But the current bill language doesn’t address Durable Medical Equipment (DME) Providers. There is an urgent need to both support these bills and add DME to the language to protect vital homecare. In the House H.R. 5083- Audit Improvement and Reform (AIR) Act Sponsor- Rep Ellmers, Renee [NC-2]-5 Cosponsors H.R. 1250 – Medicare Audit Improvement Act of 2013 Sponsor – Rep Graves, Sam [MO-6] – 226 Cosponsors H.R. 2329 – Administrative Relief and Accurate Medicare Payments Act of 2013 Sponsor – Rep Smith, Adrian [NE-3] – 20 Cosponsors In Senate S. 1012 Medicare Audit Improvement Act of 2013 Sponsor- Sen Blunt, Roy [MO]- 14 Cosponsors

23. Introducing H.R. 5083Audit Improvement and Reform Act (AIR) H.R.5083Latest Title: Medicare Audit Improvement and Reform (AIR) ActSponsor: Rep Ellmers, Renee L. [NC-2] (introduced 7/11/2014)      Cosponsors (5)Latest Major Action:7/11/2014 Referred to House committee. Status: Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned. ·       “Champion of the Industry”

24. H.R. 5083 (AIR) • DMEPOS suppliers will receive a score on their error rates.  Suppliers with low errors rates will receive fewer audits. • DMEPOS suppliers with error rates of 15 percent or lower will only be subject to one random audit for the year they have a low error rate. • Clinical inference is restored in the audit process. • Look-back periods are limited to three years rather than five years for MACs and four years for RACs. • MACs and RACs must provide quarterly training on avoiding frequent payment errors, including notice of all new audit procedures and education to avoid clerical errors.

25. Rep. Renee Ellmers at NCAMES June 26, 2014

26. H.R. 1250 • H.R.1250Latest Title: Medicare Audit Improvement Act of 2013 Sponsor: Rep Graves, Sam [MO-6] (introduced 3/19/2013)      Cosponsors(226) Related Bills:S.1012Latest Major Action: 3/22/2013 Referred to House subcommittee. Status: Referred to the Subcommittee on Health. • 226 Co-sponsors • SUMMARY AS OF:3/19/2013--Introduced. • Medicare Audit Improvement Act of 2013 - Directs the Secretary of Health and Human Services (HHS) to establish a process which subjects to a single, combined maximum annual limit, applied incrementally, the number of additional documentation requests made to a hospital by Medicare administrative contractors, recovery audit contractors, or Comprehensive Error Rate Testing (CERT) program contractors pursuant to prepayment and postpayment audits requiring a hospital to submit a medical record for audit purposes. • Directs the Secretary also to establish a distinct additional documentation request limit, computed according to a specified formula, for each hospital claim type for each hospital for a 45-day period in a year. • Amends title XVIII (Medicare) of the Social Security Act with respect to the Medicare Integrity Program and use of recovery audit contractors. • Requires the Secretary to ensure that recovery audit contracts include certain mandatory terms and conditions pertaining to: (1) penalties for certain compliance failures, (2) penalties for overturned appeals, (3) postpayment and prepayment audits, and (4) guidelines for prepayment review.

27. H.R. 2329 • 20 Co-Sponsors • H.R.2329Latest Title: Administrative Relief and Accurate Medicare Payments Act of 2013 Sponsor: Rep Smith, Adrian [NE-3] (introduced 6/12/2013)      Cosponsors (20) Latest Major Action: 6/14/2013 Referred to House subcommittee. Status: Referred to the Subcommittee on Health.SUMMARY AS OF:6/12/2013--Introduced. • Administrative Relief and Accurate Medicare Payments Act of 2013 - Amends title XVIII (Medicare) of the Social Security Act to establish a maximum period of: (1) 2 years for submission of Medicare part B (Supplementary Medical Insurance) claims originally submitted by hospitals as Medicare part A (Hospital Insurance) claims, and (2) 60 days for certain such submissions for one-day stays. • Reduces from 4 to 3 fiscal years the maximum look-back period under the Medicare Integrity Program for the audit and recovery activities of recovery audit contractors.

28. S.1012 • S.1012Latest Title: Medicare Audit Improvement Act of 2013 Sponsor: Sen Blunt, Roy [MO] (introduced 5/22/2013)      Cosponsors (14) Related Bills:H.R.1250Latest Major Action: 5/22/2013 Referred to Senate committee. Status: Read twice and referred to the Committee on Finance. • 14 Co-Sponsors • SUMMARY AS OF:5/22/2013--Introduced. • Medicare Audit Improvement Act of 2013 - Directs the Secretary of Health and Human Services (HHS) to establish a process which subjects to a single, combined maximum annual limit, applied incrementally, the number of additional documentation requests made to a hospital by Medicare administrative contractors, recovery audit contractors, or Comprehensive Error Rate Testing (CERT) program contractors pursuant to prepayment and postpayment audits requiring a hospital to submit a medical record for audit purposes. • Directs the Secretary also to establish a distinct additional documentation request limit, computed according to a specified formula, for each hospital claim type for each hospital for a 45-day period in a year. • Amends title XVIII (Medicare) of the Social Security Act with respect to the Medicare Integrity Program and use of recovery audit contractors.

29. Prior Authorization and Performance Bonds Rep. Marsha Blackburn (R-TN) Sen. Lamar Alexander (R-TN) Rep. Diane Black (R-TN) Surety Bond vs. Performance Bond

30. CMS will create a Master List of DMEPOS that have appeared appear in a historical OIG or GAO report addressing DMEPOS with high rates of fraud or unnecessary utilization, or listed in an annual Comprehensive Error Rate Testing report, and which have either an average purchase fee of at least $1,000 or an average monthly rent of at least $100. CMS will select items from this Master List to create a “Required Prior Authorization List” of DMEPOS items. • The denial of a prior authorization request will not be considered an initial determination of a claim for payment and, consequently, will not be appealable. • The contractors will have ten days to review and either approve or deny an initial prior authorization request (there is also a proposed two day expedited review process in the event a ten day review will present a risk of “serious jeopardy to life or health”). • The approval of a prior authorization will be a condition of payment. Don’t obtain it, you don’t get paid. • A supplier may issue an advanced beneficiary notice (ABN) to a beneficiary, thereby shifting payment liability in the event of the denial of an authorization request, however, the ABN process will follow existing ABN rules and may not be used to bypass the prior authorization process or routinely issued by the supplier. • Deadline for comment period is July 28, 2014

31. CMS Prior Authorization - PMDs • Prior Authorization of Power Mobility Devices (PMDs) Demonstration This demonstration began for orders written on or after September 1, 2012. The CMS first announced the demonstration on November 15, 2011. To be responsive to comments received from the public, CMS delayed the demonstration start date to September 1, 2012 and made necessary improvements. The CMS believes this demonstration will lead to reductions in improper payments for power mobility devices, which will help ensure the sustainability of the Medicare Trust Funds and protect beneficiaries who depend upon the Medicare program. In addition, this demonstration is designed to develop and demonstrate improved methods for the investigation and prosecution of fraud in the provision of care or services under the health programs established by the Social Security Act.

32. CMS Prior Authorization NPRM • May 28, 2014 Federal Register • Comments due end of July • number of items selected for initial implementation; • number of future items selected for implementation; and • frequency with which CMS would select the items • SSA 1834a(15)(c) • list of DMEPOS items frequently subject to unnecessary utilization, advance determination of coverage

33. CMS Prior Authorization NPRM • Demonstration Description The CMS implemented a Prior Authorization process for scooters and power wheelchairs for people with Fee-For-Service Medicare who reside in seven states with high populations of fraud- and error-prone providers (CA, IL, MI, NY, NC, FL and TX). In addition to the benefits mentioned above, this demonstration will help ensure that a beneficiary's medical condition warrants their medical equipment under existing coverage guidelines. Moreover, the program will assist in preserving a Medicare beneficiary's ability to receive quality products from accredited suppliers. For more information about the demonstration see "Fact Sheet: General Information" in the Downloads section below.

34. CMS Prior Authorization PMD • Expansion of Demonstration- (Updated April 4, 2014) • Based on early successes, CMS has requested approval to expand the demonstration to 12 additional states MD, NJ, PA, IN, KY, OH, GA, TN, LA, MO, WA, and AZ). Part of the approval process is the completion and approval of a Paperwork Reduction Act (PRA) package. The PRA package was filed on April 3, 2014 and published on April 4, 2014. The PRA package can be found at http://federalregister.gov/a/2014-07577. The comment period will be open until April 18, 2014. CMS will then review the comments and continue to work toward approval to expand the demonstration. • The demonstration will end on August 31, 2015 for all states. The original seven states are not affected by this expansion, and the original demonstration requirements remain the same for all 19 states.

35. CMS Prior Authorization NPRM (cont’d) • PA for items with “unnecessary utilization” • Separate from current PMD Demo • Would apply in competitive bid areas • Master List → Required PA List • Required PA list published in Fed Reg 60 days in advance • Items identified by GAO, OIG, CERT • $1000 purchase price or $100 rental

36. CMS Prior Authorization NPRM (cont’d) • Submit all documentation for coding, coverage and payment • DMACs conduct “medial review” and make affirmative or non-affirmative decision • 10-day turnaround • 2-day expedited review if necessary to not jeopardize life/health of beneficiary • Unlimited resubmissions • Cannot use ABN to bypass PA, but can use ABN if non-affirmative

37. CMS Prior Authorization NPRM (cont’d) • Proposed Master List • Groups 1, 2 and 3 PMDs, plus

38. SBASmall Business Administration Hearing June 25th 8 HME providers and Peggy Walker of U.S. Rehab/VGM testified at the SBA Hearing. They spoke how competitive bidding and Medicare’s audits are putting their business in jeopardy.

39. VGM Suggested Remedies Please see the list of suggestions/remedies below given by General CounselJim Walsh. • Suspend CMS audit programs immediately to resume only when an effective and timely appeal channel is again available to all providers. • Stop recoupment's on current claim denials that are awaiting an ALJ hearing. • Refund recoupment's that have already occurred if appeal was made after July 15, 2013; during suspension of appeal process. • Support reform legislation to require fairness in audit programs including a fast and effective independent appeal program that both protects the Medicare program and medical providers

40. LAUGH or CRYYou have to Scratch your head??????

43. DID THEY REALLY SAY THAT?

44. JULY / AUG Meetings • Schedule Meetings with Key Congressional Members • In District • Conference Call • Contact VGM for Meeting Materials Sen. Heitkamp-North Dakota Great Plains Rehab, ND- Rep. Cramer Rep. Tom Price Event Norco/Wyden-Oregon Norco/Cantor- Idaho

46. Excerpt from GAO Competitive Bidding Report: “The total number of DME suppliers and Medicare allowed charges decreased more in the CBP areas than in the comparator areas. For example, the number of suppliers in the CBP areas with Medicare allowed charges of $2,500 or more decreased, on average, 27 percent. In the comparator areas, supplier numbers decreased by 5 percent. The decreases in supplier numbers may reflect other factors, such as CMS's efforts to reduce Medicare DME fraud.”

47. ACTION STEPS CONTINUED… 202.224.3121 • Contact Congressional Members who did not sign on to HR 5083- supports DME HR 1250 HR 2329 Hospital Centric S. 1012 and let them know this is their chance to right a wrong. • Go to the resource center VGM DC Link (www.vgmdclink.com) for handouts to use with your representatives.

48. WERE AS MAD AS HELL

49. Thank you VADMEC!! John Gallagher VGM Group, Inc. john.gallagher@vgm.com Emily Harken 866-512-8456