Preparing for the Future: Audit Risk Areas, Successful Appeal Strategies and Compliance

1. Preparing for the Future: Audit Risk Areas, Successful Appeal Strategies and Compliance Andrew B. Wachler, Esq. Wachler & Associates, P.C. 210 E. Third St., Ste. 204 Royal Oak, MI 48067 (248) 544-0888 awachler@wachler.com www.wachler.com www.racattorneys.com MGMA 2013 Annual Conference October 6-9, 2013 San Diego, California

2. Learning Objectives • Understand key audit risk areas for physician group practices. • Integrate successful strategies into Medicare appeals to defend against claim denials. • Identify specific compliance measures to implement before a Medicare audit.

3. Current Audit Landscape • CMS contractors in the current audit landscape • Medicare Administrative Contractors (MACs) • Zone Program Integrity Contractors (ZPICs) • Medicaid Integrity Contractors (MICs) • Recovery Audit Contractors (RACs) • Medicare RACs& Medicaid RACs • Office of Inspector General (OIG) audits

4. Medicare Administrative Contractors (MACs) • Statistically Projected Audit • Statistical sampling is used to calculate and project (i.e., extrapolate) the amount of overpayment(s) made on claims. • Claims are reviewed from a statistical random sample, the results of which are then extrapolated to the universe of claims during a given time period to determine the overpayment amount. • Focus/Target Review • Contractors conduct targeted reviews, focusing on specific program vulnerabilities inherent in the PPS, as well as provider/service specific problems. The reviews should be conducted based on data analysis and prioritization of vulnerabilities. • Additional Document Requests (ADRs) • When a claim is selected for medical review, an ADR is generated requesting medical documentation be submitted to ensure payment is appropriate. Documentation must be submitted in a timely manner for review and payment determination.

5. Zone Program Integrity Contractors (ZPICs) • Focus on detection & prevention of Medicare fraud • Different from the Medical Review program, which is primarily concerned with preventing and identifying errors • ZPICs request medical records and conduct medical review to evaluate the identified potential fraud • ZPICs may also refer to the OIG and the Department of Justice (DOJ) for further investigation • Prepayment reviews

6. Two Recent ZPIC Post-Payment Review Results Letters “The ZPIC has determined that it is likely you have been overpaid for the services provided from the end of the audit period through the current date based on the documentation submitted for the medical review. Section 1833(e) of the Social Security Act places the burden on the provider to furnish information necessary to determine the amount due to the provider.” “The ZPIC is requesting that the provider conduct an internal audit of its claims to determine the accuracy of the claims billed. If research determines the claim/payment is incorrect, please process claim adjustments and arrange repayment with the claims processing contractor. Please provide the ZPIC with the results of this audit within 90 days.”

7. Medicaid Integrity Contractors (MICs) • Creation of Medicaid Integrity Program (MIP) mandated by Deficit Reduction Act of 2005 • MICs hired to perform review, audit, and education functions • 5 year look-back period • 3 types of MIC contractors • Review MICs • Audit MICs • 30 days to provide records • All audit finding must be supported by adequate documentation • Auditors are not paid on a contingency fee basis and are not responsible for collecting overpayments from providers • Education MICs

8. MICs Continued • MIC Fraud Referrals • If an Audit MIC identifies potential Medicare or Medicaid fraud, it must simultaneously and immediately make a fraud referral to the Medicaid Integrity Group (MIG) or the Office of Inspector General for the Department of Health and Human Services (OIG). Medicaid Program Integrity Manual, 100-15, Ch. 10, § 10020. • The OIG has 60 days to determine whether to accept the referral.

9. Looking Forward: UPICs In, MACs & ZPICs Out Unified Program Integrity Contractor (UPIC) CMS will be combining integrity responsibilities of ZPICs and MACs into one integrity contractor  UPIC MICs will be phased out Focus on both Medicare & Medicaid integrity issues CMS will be consolidating Medicare and Medicaid data into one unified database

10. Medicare Recovery Audit Contractors (RACs) • Private companies contract with Medicare • Identify Medicare overpayments and underpayments • Paid on a contingency fee basis • Started as a demonstration project in 2005 • Section 302 of the Tax Relief and Health Care Act of 2006 made the RAC program permanent • Required nationwide expansion by 2010 • The Patient Protection and Affordable Care Act (PPACA) expanded the RAC program to Medicaid and Medicare Parts C and D

11. Who are the RACs? • Region A: Performant Recovery • Working in CT, DE, D.C., MA, MD, MA, NH, NJ, NY, PA, RI and VT • www.dcsrac.com • Region B: CGI Technologies and Solutions, Inc. • Working in KY, IL, IN, MI, MN, OH and WI • http://racb.cgi.com • Region C: Connolly Consulting, Inc. • Working in AL, AR, CO, FL, GA, LA, MS, NC, NM, OK, SC, TN, TX, VA and WV • www.connollyhealthcare.com/RAC • Region D: HealthDataInsights, Inc. • Working in AK, AZ, CA, IA, KS, MO, MT, ND, NE, NV, OR, SD, UT, WA, WY, Guam, American Samoa and Northern Marianas • http://racinfo.healthdatainsights.com/home.aspx

12. Medicaid RACs • States were required to have implemented their Medicaid RAC programs by January 1, 2012 • Medical necessity reviews for Medicaid RAC • CMS will not issue oversight provisions • Reviews will be performed within scope of state laws and regulations • The Medicaid RAC Final Rule does not require Medicaid RACs to receive prior approval for medical necessity reviews. • The ACA requires states to contract with RACs, but states are free to contract with any RAC. As a result, there is significant variability between the states - there are 50 different sets of rules, and 50 different appeal processes. 

13. Physician Audit Risk Areas • Home Services – Care Plan Oversight (CPO) • Focus on overutilization of Care Plan Oversight (CPO) Services. • Provided by a physician to a patient under home health agency or hospice care that requires complex and multidisciplinary modalities involving regular physician development and/or revision of care plans, review of subsequent reports of status, etc. • Time spent for services is 30 minutes or more per calendar month.

14. Physician Audit Risk Areas • Emergency Department Services • Denial reasons for services include: • Failure to submit physician’s notes documenting component work with medical record; • Key work was not performed by the physician or mid-level provider; • Documentation failed to meet the key components for the level of coding.

15. Physician Audit Risk Areas • “Incident-to” Services • The OIG assesses whether “incident-to” services have a higher error rate • The OIG stated that “incident-to” services represent a program vulnerability that does not appear in claims data • Can be identified only by reviewing the medical record

16. Physician Audit Risk Areas • Physician Responsibilities for DME and Home Health Providers • Physicians are required to retain documentation for diagnostic or specialist services they order for patients (i.e. DME, home health, and IDTF) • CMS or a Medicare contractor may request this documentation from a provider. (42 C.F.R. 424.516)

17. Physician Audit Issues • E/M coding • Documentation does not support the level of service billed (i.e., upcoding or downcoding of services) • Required components are not documented in the medical record • The historical component is incomplete or absent • The medical decision-making documented is inappropriate or incomplete

18. Examples of New RAC Approved IssuesAffecting Physicians • Incorrect Billed Drug and Biological HCPCS Code • Providers are required to report appropriate HCPCS codes for the drugs and biologicals administered and billed. Medical documentation will be reviewed to determine that the appropriate HCPCS code was billed. (At this time, Medical Necessity will be excluded from this review.) • Blepharoplasty – eyelid lifts • When done for cosmetic purposes, it does not meet the criteria of the functional visual impairment parameters and is considered not reasonable and medically necessary. • Intensity-Modulated Radiation Therapy (IMRT) • IMRT is only covered for certain diagnosis and when certain conditions are met • Excessive Units of Multiple Drug Class Screenings • Effective January 1, 2011, HCPCS codes G0431 and G0434 for multiple drug class screenings may only be reported once per patient encounter regardless of the number of drug classes tested.

19. Other Physician Audit Issues • Extended Services • Oncology/Hematology • Computed Tomography Angiographies • Medical necessity • Surgical procedures • Cataract surgeries • Cardiology procedures • Cardiac testing

20. Other Physician Audit Issues Pain management EPO: medical necessity and LCD requirements Urological procedures: medical necessity and LCD requirements Home physician services

21. Medicare & MedicaidOverpayments • PPACA Section 6402(d) • Requires providers and suppliers receiving funds under the Medicare program to report and return overpayments by the later of (1) the date which is 60 days after the date on which the overpayment was identified or (2) the date any corresponding cost report is due, if applicable. • Expands liability to include knowing failure to repay • “…knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.” • Proposed Rule (77 Fed. Reg. 9179) • 10-year look-back period • Recent case law: United States and State of Wisconsin ex rel. Keltner v. Lakeshore Medical Clinic, LTD

22. Successful Audit Appeals Strategies:Overview • Rebuttal and Discussion Period • Redetermination • Appeal deadline: 120 days (30 days to avoid recoupment) • Reconsideration • Appeal deadline: 180 days (60 days to avoid recoupment) • Administrative Law Judge Hearing • Appeal deadline: 60 days • CMS will recoup the alleged overpayment during this and following stages of appeal • Medicare Appeals Council (MAC) • Appeal deadline: 60 days • Federal District Court • Appeal deadline: 60 days

23. Successful Appeals Strategies: Arguing the Merits • Merit-based arguments: • Medical necessity of the services provided • Appropriateness of the codes billed • Frequency of services • To effectively argue the merits of a claim: • Draft a position paper laying out the proper coverage criteria • Summarize submitted medical records and documentation • If relying on medical records in an ALJ hearing: • Organize using tabs, exhibit labels and color coding • Use graphs and medical summaries to assist in the presentation of evidence • Use of past Medicare Appeals Council cases • http://www.hhs.gov/dab/divisions/medicareoperations/macdecisions/mac_decisions.html • http://www.hhs.gov/dab/macdecision/

24. Successful Appeals Strategies:Use of Experts • Experts such as physicians, registered nurses, coding experts, and inpatient rehabilitation specialists may be helpful in appealing a contractor determination • Experts can: • Assess strength of a case early on and help develop a strategic plan • Assist with the interpretation and organization of medical records • Provide testimony regarding appropriateness and/or necessity of services • Affidavit at redetermination and reconsideration levels • Live testimony at ALJ hearing

25. Successful Appeals Strategies:Audit Defenses • Provider Without Fault • Waiver of Liability • Treating Physician’s Rule • Challenges to Statistics

26. Successful Appeals Strategies:Provider Without Fault Section 1870 of the Social Security Act • Once an overpayment is identified, payment will be made to a provider if the provider was without “fault” with regard to billing for and accepting payment for disputed services • Definition of fault • 3 Year Rule

27. Successful Appeals Strategies: Waiver of Liability Section 1879(a) of the Social Security Act • Under waiver of liability, even if a service is determined not to be reasonable and necessary, payment may be rendered if the provider or supplier did not know, and could not reasonably have been expected to know, that payment would not be made.

28. Successful Appeals Strategies:Challenges to Statistics Section 935 of the MMA • Limitations 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. • Cannot challenge the substance of the finding of “sustained or high rate of error,” but can challenge whether a finding was made • Guidelines for conducting statistical extrapolations are set forth in the Medicare Program Integrity Manual (CMS Pub. 100-08), Chapter 3, §§ 3.10.1 - 3.10.11.2 • Seealso MAC case • Transyd Enterprises, LLC d/b/a Transpro Medical Transport

29. Compliance • Comparative Billing Reports • Snapshot of utilization data for an individual provider • Provider’s billing pattern for a given code or group of codes is compared to the state average and the national average • Mailed to the top 5,000 billers • CBR examples: • E/M services • Podiatry: nail debridement • Cardiology services • Compliance Policy on Investigations • Compliance and Organizational Tips to Prepare for an Audit

30. Compliance Policy on Investigations • Have policies on cooperation and coordination with government investigations in place • If an employee receives any inquiry, subpoena, or other legal document relating to the employer’s business: • Notify the Compliance Officer immediately, who will contact legal counsel • Never provide false or inaccurate information to a government investigator • On-Site Government Inquiries • Obtain “initial contact” information • Contact Compliance Officer • Draft memorandum regarding information obtained from the investigator and provide to Compliance Officer • Search Warrants • Notify the Compliance Officer immediately, who will contact legal counsel • Employees speaking with government investigators: • Cannot be prohibited from speaking with government investigators, but may politely decline • May request legal counsel to be present during an interview

31. Compliance and Organizational Tips to Prepare for an Audit • Be aware of your RAC’s new approved issues • Designate a person to check the approved issues lists on a regular basis • Be aware of improper payments that have been identified in OIG and CERT reports • OIG: www.oig.hhs.gov/oas/cms.asp • CERT: www.cms.hhs.gov/cert/ • Implement proactive compliance measures • Self audits (prospective vs. retrospective) • Documentation

32. Compliance and Organizational Tips to Prepare for an Audit • Availability of internal experts • Determine who could act as an expert for the different specialties in your institution • Appeals – how will you handle? • Learn from past appeal experiences • Keep track of denied claims • Look for patterns of denials • Develop necessary corrective action

33. Call to Action Outline the audit landscape and stay current with new developments Identify key audit risk areas that affect your practice Develop proactive compliance measures that will help your practice prepare for and mitigate the impact of an audit

34. QUESTIONS? Andrew B. Wachler, Esq. Wachler & Associates, P.C. 210 E. Third St. Ste. 204 Royal Oak, Michigan 48067 (248) 544-0888 awachler@wachler.com www.wachler.com www.racattorneys.com