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Findings Patterns Where None Exist

Written by Brian Werfel on . Posted in Medicaid, Medicare, Reimbursement, Talking Medicare.

On August 16, 2016, the HHS Departmental Appeals Board (DAB) issued a decision related to CMS’ authority to revoke a Medicare supplier’s billing privileges.  The DAB is the fourth and final level of administrative appeal within the Department of Health and Human Services.

Factual Background

The case involved John P. McDonough III, Ph.D., a clinical psychologist residing in Florida, and two of his affiliated medical practices, Geriatric Psychological Specialists and Geriatric Psychological Specialists II.  In October 2014, First Coast Service Options, Inc., the Medicare Administrative Contractor for Florida, notified McDonough and both medical practices that their Medicare billing numbers were being revoked for alleged abuses of their billing privileges.  Specifically, First Coast indicated that data analysis had revealed that the three suppliers had submitted a total of 420 claims for deceased beneficiaries over an approximately two-year period.

McDonough and his two medical practices appealed for a reconsideration of the revocation of their billing privileges, which was denied in February 2015.   The suppliers then appealed for an ALJ hearing.  The suppliers conceded that they submitted more than 200 claims for beneficiaries that were deceased on the date of service.  However, they attributed these claims to data-entry errors and other clerical mistakes.  The suppliers argued that these were simple billing errors, representing a small percentage of the tens of thousands of claims they submitted during this period of time.   In December 2015, the ALJ issued his decision.  While the ALJ seemingly accepted the suppliers’ explanation that these were billing errors, and that there was no intent on the part of the suppliers’ to submit false claims, the ALJ nevertheless upheld the revocation of their billing privileges.  Citing previous DAB decisions, the ALJ held that the admitted submission of repeated claims for services to deceased beneficiaries due to “incorrect billing entries due to similar beneficiary names or Medicare numbers, and inadvertent typing errors” was not inconsistent with a finding that the suppliers’ had abused their billing privileges.

The suppliers’ then appealed to the DAB. In its decision, the DAB first noted that it has consistently rejected contentions that revocation required a finding that the supplier acted intentionally:

“The Board has long held that the regulation’s plain language does not require CMS to establish fraudulent or dishonest intent to revoke a supplier’s billing privileges under this section and that the regulatory language also does not provide any exception for inadvertent or accidental billing errors.”

The DAB then countered the suppliers’ argument that CMS never intended to revoke a supplier’s billing privileges for simple mistakes.  They cited language from the June 27, 2008 final rule, where CMS stated revocation “is not intended to be used for isolated occurrences or accidental billing errors.”  The DAB noted that CMS, in that same final rule, indicated that it would not consider the submission of three or more improper claims to be accidental.  The DAB also noted that the relatively small percentage of erroneous claims was irrelevant, as the regulation does not require CMS to establish any particular error rate or percentage of improper claims.

The DAB held that since the record established that the suppliers’ had submitted more than 3 claims for deceased beneficiaries, CMS had met the requisite legal standard for revocation.  Accordingly, the DAB upheld the revocation of the suppliers’ billing privileges.

Potential Impact on Ambulance Providers

The DAB’s decision effectively establishes a strict liability standard for revocations based on the submission of claims for deceased beneficiaries.  The submission of three or more such claims over any designated period of time could constitute legal grounds for CMS to revoke a supplier’s Medicare billing privileges. 

The implications of this decision should give every Medicare provider pause.  However, given the nature of our operations, our industry needs to pay particular attention.  The psychologist and therapists that were the subject of the above-referenced case saw patients on a scheduled basis, and spent many hours with each of their patients.  This gave them ample time to obtain insurance information from each of their patients, and to confirm the accuracy of that information.  Yet the suppliers’ still had more than 200 claims billed incorrectly.

EMS providers do not have that luxury.  We frequently encounter patients on the street or at their home.  Many of these patients do not have their insurance information on them at the time of transport.  Even when the patient had this information on their person, under the stress of an emergency medical situation, the paramedic or EMT may not record this information accurately.

As a result, our billing offices spend a good portion of their time trying to verify a patient’s insurance.  Unfortunately, some of the administrative “shortcuts” we have developed to address these problems create the potential to inadvertently submit claims for deceased patients.  While there is nothing at present that suggests that CMS intends to expand the use of its revocation authority, we probably want to rethink these shortcuts.

An example you say?

Consider a transport of an elderly woman to the hospital in an emergency.  The crew does not obtain the patient’s insurance information at the time of transport.  However, they do obtain the hospital face sheet, which lists the patient’s social security number.  To convert this social security number to a Medicare HIC#, we need to include a Medicare suffix.  How would you go about doing that?

One option would be to ping the patient’s name, date of birth and SSN against an eligibility database.  While effective, provider’s typically pay for these lookups.

Another option would be to simply guess what the applicable suffix might be, affix that to the SSN, and submit the claim.  If it goes through, the provider guessed correctly.  If it rejects as an invalid name and HIC# combination, the provider would know to try another suffix.  So let’s assume the provider elects to use this option.  Playing the percentages, the provider would likely add the “B” suffix, on the theory that, given her age, the woman likely qualified for Social Security Benefits (and therefore Medicare benefits) based on the work history of her spouse.  But what if the provider was wrong, and the woman was the primary wage earner in her family?  If that were the case, her suffix would likely be the “A.”  Now imagine that her husband shared the same Social Security numerics, and that his suffix was the “B.”  Further imagine that he has since passed, and the provider has now inadvertently submitted a claim for the dead husband.

Now imagine this happens three times in a year…

Another way we can inadvertently submit claims for dead patients is not using front-end verification.  Many providers submit claims based off the insurance information they received at the time of transport (or from the hospital, nursing home, etc.), without any attempt to confirm its accuracy.  These providers recognize that the insurance information will be correct more often than not.  They are making the calculated decision that it is easier to deal with any issues after they have been identified by the payer.  However, one reason an insurance can come back as invalid is because the crewmember recorded the HIC# incorrectly.  For example, they may transpose a few digits (i.e., they wrote “1243” rather than “1234”).  If the transposed HIC# relates to a deceased beneficiary, that would be captured by the data analytics used by the Medicare contractors.

The DAB’s decision is certainly troubling.  However, I do not believe that our industry needs to overreact.  Rather, I would encourage everyone to view the DAB’s decision as a starting point, and to re-examine their own billing and verification processes to see if there is anything they can do to reduce the likelihood of their organization every confronting this issue.

 

Have an issue you would like to see discussed in a future Talking Medicare blog? Please write to me at bwerfel@aol.com.

CMS Announces 2017 Inflation Factor

Written by David Werfel on . Posted in Government Affairs, Medicare, Member Advisories, Member-Only, Regulatory, Reimbursement.

The Centers for Medicare and Medicare Services (CMS) issued Transmittal 3625 officially announcing that the inflation factor for payments under the Medicare ambulance fee schedule for 2017 will be 0.7%.

The calculation for determining the Medicare ambulance inflation factor is as follows: Consumer Price Index – Urban (which is the change in the CPI-U from June to June) minus the non-farm business multi-factor productivity adjustment (MFP) as projected by the Secretary of HHS (10-year average). The CPI-Urban for 2017 is 1.0% with a MFP of 0.3% which equals the 0.7% inflation factor. As part of the Affordable Care Act, a productivity adjustment is subtracted from the CPI-Urban for the final inflation update.

Prior Authorization Data Shows Dramatic Reductions in Spending on Dialysis Transports

Written by Brian Werfel on . Posted in Medicare, Talking Medicare.

In May 2014, CMS announced the implementation of a three-year prior authorization demonstration project for repetitive scheduled non-emergency ambulance transports.  CMS initially elected to limit this demonstration to three states: New Jersey, Pennsylvania, and South Carolina.  These states were selected based on higher-than-average utilization rates and high rates of improper payment for these services.  The Medicare Payment Advisory Commission (MedPAC) had previously singled out these states as having higher than average utilization of dialysis transports in a June 2013 report to Congress.

This demonstration project went into effect on December 15, 2014.  The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) subsequently expanded the demonstration project to five additional states and the District of Columbia on January 1, 2016, with a further expansion to all remaining states expected to occur at some time during 2017.  However, national expansion is contingent upon CMS determining that the demonstration project has been effective in reducing Medicare expenditures without jeopardizing patient’s access to necessary medical care.

Every year, CMS also releases data on aggregate Medicare payments for the preceding year.  This file is referred to as the Physician/Supplier Procedure Master File (PSP Master File).  This past month, CMS released the 2016 PSP Master File, which contains information on all Part B and DME claims processed through the Medicare Common Working File with 2015 dates of service.  I will be discussing this report in greater detail in next month’s blog.

This month, I want to focus on the impact the prior authorization project has had on total dialysis payments in the original three target states.  Reproduced below is a chart tracking the total payments for dialysis transports in these three states between 2010 and 2015.  Interestingly, these three states demonstrated very different trajectories prior to last year.

New Jersey saw a sustained, dramatic increase in payments over that time, increasing from approximately $56 million in 2010 to more than $106 million in 2014, an increase of nearly 90% over a 5-year period.  (Note: spending figures for 2014 and 2015 take into account the 10% reduction in payments for dialysis transports).
werfel-chart

South Carolina saw a much more moderate increase over that same period, increasing from $51 million in 2010 to slightly more than $60 million in 2014, an increase of roughly 18%.  By contrast, payments in Pennsylvania peaked in 2011 at $69.6 million, and have been in steady decline ever since.

While these states’ trajectories were different prior to 2015, the results for 2015 are fairly similar.  Each state saw a significant reduction in the total expenditures for dialysis once the prior authorization project went into effect. 

 The fact that these states saw a reduction in overall spending on dialysis is not surprising (to me at least, I recognize this came as a shock to many providers in these states).  These states were not selected at random; CMS selected these states based on its belief that they were particularly suspect to overutilization.

What I do find surprising is the relative sizes of the declines in these states.  New Jersey and Pennsylvania both experienced a more than 80% reduction in payments for dialysis.  By contrast, the reduction in South Carolina (approximately 25%) was far less dramatic.

Does this suggest that abuse was more prevalent in New Jersey and Pennsylvania?  Perhaps.  An ongoing federal Medicare Strike Force in the Philadelphia metropolitan area has resulted in a number of convictions against fraudulent providers in these states.  However, the impact has not been limited to these alleged “bad actors.”  Even those companies employing accepted best practices have seen significant reductions in their approved patient populations.

To me, the common factor seems to be the applicable Medicare contractor.  New Jersey and Pennsylvania are both administered by Novitas Solutions, Inc., whereas South Carolina is administered by Palmetto GBA.  While Medicare’s coverage standards are intended to be national, it seems reasonable to conclude that Novitas has taken a far harder stance on dialysis than Palmetto.  Anecdotal evidence from the states that came went live with prior authorization in January 2016 seems to confirm this thesis, although we will not be able to know for sure until the 2016 Medicare payment data is released this time next year.

Those of you that have attended this year’s AAA Regional Conferences, or who participated on AAA webinars this past year have heard me say that the Medicare Administrative Contractor’s stance on dialysis is the most important factor in determining whether an ambulance provider needs to rethink its current approach to its repetitive patient population.  To the extent the MAC takes a fairly lenient stance, providers will likely find that only a few “tweaks” are needed to align their existing practices with a prior authorization regime.  AAA members in these states may even find it worthwhile to even considering expanding the spectrum of patients they accept for transport. If, however, the MAC takes a fairly restrictive stances (as Novitas has clearly done), providers will likely find it necessary to dramatically trim these populations, or to arrange for alternative sources of payment for these transports.

I also encourage AAA members to attend our panel discussion at this year’s Annual Conference & Tradeshow in exciting Las Vegas (November 7 – 9th).  I have the privilege of serving as the moderator for a panel consisting of several providers that are currently operating under the prior authorization project.  These providers will talk about their experiences, and will be able to offer helpful tips on how to best navigate this major shift in Medicare’s coverage rules. (See full Conference Agenda)

Have an issue you would like to see discussed in a future Talking Medicare blog?  Please write to me at bwerfel@aol.com.

Life EMS’s Jimmy Johnson on Sustainable Reimbursement

Written by Jimmy Johnson on . Posted in Government Affairs, Legislative, Medicare, Reimbursement.

To address the importance of the work that the payment reform committee is doing, we must consider the value of the part that small providers play in the healthcare delivery system today, and how imperative it is that we accomplish goals such as moving from Supplier to Provider status for all ambulance services in order to set the table for reimbursement that is more creative than just fee for transports. For example, 73% of all ambulance services who are credentialed by Medicare do less than 1,000 transports per year, which does not add up to sustainability for ambulances services endeavoring to adhere to best practices in providing emergency medical care.   A vast majority of those services represented in the 73% are the first line—and in many cases the only line—of emergency medical care in their communities.

—Jimmy Johnson
CEO, Life EMS
Past President, American Ambulance Association
Co-Chair, American Ambulance Association Payment Reform Committee
Enid, OK

Acadian’s Asbel Montes on Ambulance Payment Reform

Written by Asbel Montes on . Posted in Medicaid, Medicare, Reimbursement.

“EMS is instrumental to the healthcare fabric of our country. As the healthcare industry continues to innovate, it is imperative to recognize the value that EMS brings to the pre- and post-hospital environment. EMS providers are the only gatekeepers to the healthcare system in many communities.

73% of all ambulance suppliers credentialed with Medicare bill the program less than 1,000 transports per year. It is imperative that any cost data collection system reporting requirements consider this to ensure the reliability of the data and the administrative burden to ambulance providers and suppliers.”

Asbel Montes
Vice President of Governmental Relations & Reimbursement, Acadian Ambulance
Co-Chair, American Ambulance Association Payment Reform Committee

Prior Authorization Expansion Delay

Written by David Werfel on . Posted in Medicare, Member Advisories, News, Reimbursement.

Prior Authorization – Repetitive Non-Emergencies – Expansion Delay

CMS has notified the American Ambulance Association that the expansion of Prior Authorization for repetitive non-emergencies, to the states not already on Prior Authorization, will not be implemented January 1, 2017.

The reason for the delay is that, pursuant to Section 515(b) of the Medicare Access and CHIP Reauthorization Act (MACRA), CMS must make determinations as to whether: (1) Prior Authorization for repetitive non-emergencies saves money, (2) it adversely affects quality of care and (3) it adversely impacts access to care.

These studies are being conducted and are expected to show the program saves money without adversely affecting quality or access to care.

For those of you in states currently not under Prior Authorization, it is highly recommended that you still prepare for it to be implemented, even though it will not be implemented January 1, 2017.  You should still ensure that these patients meet the requirements for medical necessity by reviewing your documents, obtaining documents from facilities, conducting assessments of repetitive patients, implementing internal procedures and processes, etc.

For those of you in states already under Prior Authorization for repetitive non-emergencies, there is no impact.  Your program continues.

When a Capitated Payment Arrangement Makes Sense

Written by Brian Werfel on . Posted in Medicare, Member-Only, Reimbursement, Talking Medicare.

Question

We operate a mid-sized ambulance services in the Midwest. Recently, one of our local hospitals entered into an agreement to become part of a large health system. We are increasingly being asked to transport patients from this local hospital to an affiliated facility in the neighboring city. These patients are being transported for consultations, medical tests, etc., and then being transported back to the local hospital. These transports become the financial responsibility of the health system, which has resulted in our monthly invoices to the hospital increasing nearly ten-fold over the past year. Recently, the hospital approached us with a proposal to move to a capitated payment arrangement. Are these arrangements permissible? And, if so, are there any “dos” and “don’ts” we should know about?

Answer

As the AAA’s Medicare Consultant, I am probably asked this question, or some variation of this question, several times a month. To me, these questions are a natural reaction by our industry to one of the larger tectonic shifts in health care over the past decade, namely the increasing footprint of national and regional hospital health care systems. According to the American Hospital Association, approximately 65% of hospitals nationwide were part of a larger health system in 2016. This is up from 51% in 1995. As these health systems have grown larger, ambulance providers are increasingly looking for alternatives to the traditional fee-for-service payment models.

Broadly defined, a “capitated payment” arrangement is any arrangement where the facility pays the ambulance provider a set amount to cover all or a portion of the transportation costs it incurs during a period of time, without regard to the specific volume of transports. A simple example would be a flat monthly fee for all transportation costs.

There is nothing in federal law that prohibits the use of capitated payment arrangements. The HHS Office of the Inspector General has signed off on capitated payment arrangements in numerous contexts, including the compensation paid to insurers under the Medicare Advantage Program (Medicare Part C). In fact, it could be argued that the Medicare Ambulance Fee Schedule includes some principles of capitation, e.g., it does not reimburse ambulance providers separately for certain ancillary services.

Therefore, capitated payment arrangements are something ambulance services can consider offering to their facility counterparties. However, you should aware that the normal prohibitions under the federal anti-kickback statute continue to apply. To the extent the OIG has a concern related to capitated payment arrangements, that concern would be that the capitated payment amount is used as a means of disguising an otherwise impermissible discount being offered to a potential referral source. In other words, the capitated payment must be structured in a way that avoids any improper remuneration to a potential referral source.

The arrangements do offer several advantages to both the ambulance provider and the facility. For the ambulance provider, the primary advantage is a stable, steady source of cash. However, there are other advantages, including the administrative benefits associated with submitting a simple monthly invoice, rather than a detailed invoice listing numerous transports. Many providers also find that a flat rate reduces tensions with the facilities, as they don’t have to engage in negotiations over why a particular transport is being billed to the facility. For the facility, the primary benefit is that it fixes their costs for transport during each measuring period. An ancillary benefit is that it offers a measure of insurance against unforeseen events (e.g., an MRI machine at hospital breaks down for an extended period of time, and as a result, the hospital is forced to incur the costs of sending patients to an affiliated facility for testing). Generally speaking, as the total volume of services rises, the benefits to moving away from a fee-for-service model also increases.

As noted above, capitated payment arrangements come in many forms, ranging from relatively simple to mind-numbingly complex. However, all arrangements share certain common features. The first is an estimate of the volume of services the facility would be purchasing from the ambulance service during any particular measuring period (hereinafter referred to as the “volume benchmark”). To the extent you are currently the facility’s vendor, this could be calculated based on past volume. This is then multiplied by the “price” of each service to arrive at the amount of the capitated payment. For example, if past history indicates that a facility pays for an average of 100 ambulance transports per month, and the parties agree to a rate of $200 per trip, then the monthly payment would be $20,000 per month. This monthly rate would stay the same regardless of whether the facility ends up responsible for 20 trips in the next month, or 200.

This brings us to one of the key features to a properly structured capitation agreement, i.e., both parties should have some degree of “risk” under the arrangement. In the example listed above, the facility runs the risk that the actual volume of services it would have otherwise been responsible for is less than the estimated 100. If so, it would have essentially paid more than $200 per transport. The ambulance provider bears the opposite risk, i.e., if the number of transports the facility would have paid for ends up being more than 100, it ends up receiving less than $200 per transport. As long as both parties bear risk, the arrangement is permissible.

If, however, one party bears no actual risk under the arrangement (e.g., because the monthly payment is based on an unreasonably low volume benchmark), the OIG could see the arrangement as a disguised way of rewarding the facility for other referrals. Thus, the key to any capitated arrangement is a good-faith estimate of the number of services involved. Please note that there is nothing wrong within incorporating language to adjust the monthly payment if the actual volume over any period of time is radically different than the volume benchmark. For example, I frequently include language that calls for the monthly payment to be recalculated if the actual volume is 20% more or less than the volume benchmark over any calendar quarter. These adjustments can be made prospectively (i.e., they only apply to future monthly payments) or they can be paid retroactively. To the extent you want to include an adjustment mechanism, the guiding principle is that any adjustment should be for the purpose of better estimating the volume benchmark.

Capitated payment arrangements may not be appropriate for all ambulance providers. However, as fee-for-service becomes an increasingly smaller portion of your facility partners’ operations, it may make sense to consider these arrangements.

Have an issue you would like to see discussed in a future Talking Medicare blog? Please write to me at bwerfel@aol.com.

Novitas – Denials

Written by David Werfel on . Posted in Medicare, Member Advisories, Member-Only.

This advisory is for members who have Novitas as their Medicare Administrative Contractor.

On August 17, 2016, Novitas called me to let me know that they are seeing many ambulance claims denied due solely to the diagnosis codes that are listed on claims. Novitas requires a minimum of two ICD-10 codes, as follows:

  • A primary diagnosis code that describes the patient’s medical condition at the time of transport, AND
  • A secondary diagnosis code that reflects the patient’s need for the ambulance at the time of transport.

The list of primary ICD-10 codes was published by Novitas in their Ambulance Local Coverage Article A54574. While the ICD-10 codes in A54574 are not the only codes that will be accepted, it is highly recommended that you use one of those as your primary code, whenever possible.

Novitas also requires a secondary “diagnosis code”. This list is in their Ambulance Local Coverage Determination (LCD) Policy L35162. That has the four “Z” codes, at least one of which must be used as the secondary diagnosis code:

  • Z74.01 – Bed Confined
  • Z74.3 – needs continuous supervision (includes EKG)
  • Z78.1 – physical restraints (patient safety, danger to self/others)
  • Z99.89 – dependence on enabling machines (includes IV fluids, active airway management)

If the claim does not list a primary AND a secondary code, the claim is automatically denied. While the claim can be corrected and resubmitted for processing, that delays cash flow and adds time and expense for the ambulance supplier. Therefore, please make sure you list an appropriate primary code AND an appropriate secondary code.

 

AAA 2016 State Balanced Billing & Direct Pay Survey Results Released

Written by Brian Werfel on . Posted in Finance, Medicare, Member-Only, Reimbursement.

Just Released!

View the AAA 2016 State Balanced Billing Survey Results

View the AAA 2016 State Direct Pay Survey Results

The AAA is providing its members with the results of two important surveys conducted of state laws impacting ambulance services.  The first chart entitled “2016 State Balance Billing Survey” shows whether a state restricts balancing billing of patients.  The second entitled “2016 State Direct Pay Survey” lists whether a state has a law requiring an insurer to send payment directly to a non-contracted ambulance service or a law allowing the insurer do send payment to the patient.  We thank AAA Medicare Consultant Brian Werfel for compiling the data and members of the AAA Medicare Regulatory Committee and the AAA membership to which Brian reached out for their assistance.

CMS Moratoria Update

Written by Kathy Lester on . Posted in Government Affairs, Medicaid, Medicare, Member Advisories, Member-Only, Regulatory.

The Centers for Medicare & Medicaid Services Lifts Moratoria on Enrollment of Part B Emergency Ground Ambulance Suppliers in All Geographic Locations; Moratoria for Part B Non-Emergency Ground Ambulance Suppliers Extended

Effective July 29, the Centers for Medicare & Medicaid Services (CMS) has lifted the temporary moratoria in all geographic locations for Part B emergency ground ambulance suppliers.  Beginning in 2013, CMS placed moratoria on Medicare Part B ground ambulance suppliers in Harris County, Texas, and surrounding counties (Brazoria, Chambers, Fort Bend, Galveston, Liberty, Montgomery, and Waller).  In February 2014, CMS announced it would add six more months to these moratoria and add Philadelphia, Pennsylvania, and surrounding counties (Bucks, Delaware, and Montgomery), as well as the New Jersey counties of Burlington, Camden, and Gloucester.  Since that date, CMS extended the moratoria four additional times, most recently in February of this year.

CMS considers qualitative and quantitative factors when determining if there is a high risk of fraud, waste, and abuse in a particular area and whether or not it should establish a moratorium.  If CMS identifies an area as posing an increased risk to the Medicaid program, the State Medicaid agency must impose a similar temporary moratorium as well.  CMS also consults with the Office of the Inspector General (OIG) within the Department of Health and Human Services (HHS) and the Department of Justice (DOJ) when identifying potential areas and providers/suppliers that should be subject to a temporary moratorium.  Finally, CMS also considers whether imposing a moratorium would have a negative impact on beneficiary access to care.  In areas where there is a temporary moratorium, the policy does not apply to changes in practice location, changes to provider/supplier information (e.g., phone number, address), or change in ownership.  Temporary moratoria remain in place for six months, unless CMS extends the policy through notice in the Federal Register.

CMS may lift a moratorium at any time if the President declares an area a disaster under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, if circumstances warranting the imposition of a moratorium have abated, if the Secretary of HHS has declared a public health emergency, or if, in the judgment of the Secretary of HHS, the moratorium is no longer needed.  After a moratorium is lifted, providers/suppliers previously subject to it will be designated to CMS’s “high screening level” for six months from the date on which the moratorium was lifted.

CMS has announced it will lift the moratoria on new Part B emergency ambulance suppliers in all geographic locations because the Agency’s evaluation has shown the primary risk of fraud, waste, and abuse comes from the non-emergency ambulance supplier category and that there are potential access to care issues for emergency ambulance services in the areas with moratoria.  New emergency ambulance suppliers seeking to enroll as Medicare suppliers will be subject to “high risk” screening.  If enrolled, these suppliers will be permitted to bill only for emergency transportation services.  They will not be permitted to bill for non-emergency services.

The moratoria remain in place for Medicare Part B non-emergency ground ambulance suppliers for all counties in which moratoria already are in place in New Jersey, Pennsylvania, and Texas.

 

A Preliminary Estimate of 2017 Medicare Rates

Written by Brian Werfel on . Posted in Finance, Medicare, Member-Only, Talking Medicare.

 On July 15, 2016, the Bureau of Labor Statistics released its monthly report on inflation.  This release includes the change in the Consumer Price Index for all urban consumers (CPI-U) for June 2016.  As a result, it is now possible to make a preliminary estimate of the Ambulance Inflation Factor (AIF) for calendar year 2017.  The AIF is main factor that determines the increase (or decrease) in Medicare’s payment for ambulance services.

Calculating the 2017 AIF

 The AIF is calculated by measuring the increase in the consumer price index for all urban consumers (CPI-U) for the 12-month period ending with June of the previous year.  For 2017, this means the 12-month period ending on June 30, 2016.  Starting in calendar year 2011, the change in the CPI-U is reduced by a so-called “productivity adjustment”, which is equal to the 10-year moving average of changes in the economy-wide private nonfarm business multi-factor productivity index (MFP).  The resulting AIF is then applied to the conversion factor used to calculate Medicare payments under the Ambulance Fee Schedule.

The formula used to calculate the change in the CPI-U is limited to positive increases.  Therefore, even if the change in the CPI-U was negative over a 12-month period (a rarity in the post-war era), the change in the CPI-U cannot be negative.  However, when the MFP reduction is applied, the statute does permit a negative AIF for any calendar year.  That is precisely what occurred in 2016, where the change in the CPI-U was 0.1% and the MFP was 0.5%.  As a result, the industry saw an overall reduction in its Medicare rates of 0.4%.

Fortunately, it seems unlikely that we will see a negative AIF in 2017.  For the 12-month period ending in June 2016, the Bureau of Labor Statistics (BLS) currently calculates the change in the CPI-U to be exactly 1.00%.

CMS has yet to release its estimate for the MFP in calendar year 2017.  However, assuming CMS’ projections for the MFP are similar to last year’s projections, the 2017 MFP is likely to be in the 0.5% range.

Therefore, at this time, my best guess is that the 2017 Ambulance Inflation Factor will be a positive 0.5%.

Please note that this estimate assumes the Bureau of Labor Statistics does not subsequently revise its inflation estimates.  Please note further that this projection is based on the MFP being similar to last year.  To the extent either of these numbers changes in the coming months (up or down), my estimate of the 2017 AIF would need to be adjusted accordingly.  Ultimately, the 2017 AIF will be finalized by CMS by Transmittal, which typically occurs in the early part of the 4th quarter.

Impact on the Medicare Ambulance Fee Schedule

 Assuming all other factors remained the same, calculating your 2017 Medicare rates would be a relatively simple exercise, i.e., you would simply add 0.5% to your 2016 rates.  However, as part of its 2017 Physician Fee Schedule Proposed Rule (issued on July 15, 2016), CMS proposed extensive changes to the GPCIs.   These changes can be viewed by going to the Physician Fee Schedule page on the CMS website and clicking the link for the “CY 2017 PFS Proposed Rule GPCI Public Use Files” (located in the Downloads section).  You would then need to open the file for “CY 2017 Proposed Addendum E.”

If the PE GPCI in your area is proposed to increase, you can expect your 2017 Medicare rates to increase by slightly more than 0.5%.  If the PE GPCI in your area is proposed to decrease, you can expect your 2017 Medicare rates to increase by slightly less than 0.5%.

If you are looking for a more precise calculation of your rates, you will need to use the following formulas:

Ground Ambulance Services

Medicare Allowable = (UBR x .7 x GPCI) + (UBR x .3)

Air Ambulance Services

Medicare Allowable = (UBR x .5 x GPCI) + (UBR x .5)

 In this formula, the “UBR” stands for the unadjusted base rate for each HCPCS code.   These are calculated by multiplying the national conversation factor by the relative value unit assigned to each base rate.  To save some time, estimates for the 2017 unadjusted base rates are reproduced below:

Base Rate (HCPCS Code)

 2017 Unadjusted Base Rate
BLS non-Emergency (A0428)                     $221.84
BLS emergency (A0429)                     $354.95
ALS non-emergency (A0426)                     $266.21
ALS emergency (A0427)                     $421.51
ALS-2 (A0433)                     $610.08
Specialty Care Transport (A0434)                     $721.00
Paramedic Intercept (A0432)                     $388.23
Fixed Wing (A0430)                     $3,010.52
Rotary Wing (A0431)                     $3,500.17

 

Plugging these UBRs into the above formulas will result in adjusted base rates for each level of ground and air ambulance service.  The final step would be to apply the current adjustments for urban (2%), rural (3%) and super-rural (22.6% over the corresponding rural rate).

2017 Projected Rates for Mileage:

At this time, I am estimating the following rates for Medicare mileage:

Base Rate (HCPCS Code) 2017 Unadjusted Base Rate
Ground Mileage – Urban                     $7.28
Ground Mileage – Rural Miles 1 – 17                     $11.02
Ground Mileage – Rural Miles 18+                     $7.35
Fixed Wing Mileage – Urban                     $8.54
Fixed Wing Mileage – Rural                     $12.81
Rotary Wing Mileage – Urban                     $22.79
Rotary Wing Mileage – Rural

 

                     $34.19

Please keep in mind that a number of assumptions went into these projections.  The Bureau of Labor Statistics can revise its inflation figures in the coming months.  CMS may announce an MFP projection that differs from what we expect.  CMS may also announce that it is electing not to finalize its proposed changes to the GPCI (highly unlikely).   If any of these assumptions was to change, these projections would need to be revised.  Therefore, I would suggest that you view these as rough estimates at best.  The AAA will update members as more information becomes available in the coming months. 

Have an issue you would like to see discussed in a future Talking Medicare blog?  Please write to me at bwerfel@aol.com.

AAA Launches Medicare Audit Activity Survey

Written by Tristan North on . Posted in Finance, Medicare, Member Advisories, Reimbursement.

In an effort to better determine a pattern of Medicare audit issues facing our members, the AAA has launched a survey to identify the different types of audit activity. The AAA will use the survey to inform federal policymakers about problems identified with the audits and how best to address the issues to reduce the burden of the audits on AAA members. It is therefore critical that you complete the survey to help us determine what audit issues your operation is facing.

Start Survey

The survey is comprised of only 14 questions including contact, demographic and characteristic information about your organization and requests data about your claim denial and audit activity. The information will be kept confidential and privileged and will only be reported in the aggregate with no organization identifying information. Contact information will be used only to follow up should we have any questions.

Should you have any questions regarding the survey, please contact AAA Senior Vice President of Government Affairs Tristan North at tnorth@ambulance.org.

Thank you in advance for completing this important survey.

MedPAC Issues June 2016 Report to the Congress

Written by Kathy Lester on . Posted in Finance, Government Affairs, Medicare, Member Advisories, Member-Only, Regulatory.

MedPAC Issues June 2016 Report to the Congress with Chapter on Improving Efficiency and Preserving Access to Emergency Care in Rural Areas

Medicare Payment Advisory Commission (MedPAC or the Commission) has issued its June 2016 Report to the Congress.   The June report includes recommended refinements to Medicare payment systems and identifies issues affecting the Medicare program, broader changes in health care delivery, and the market for health care services.

Chapter 7 focuses on preserving access to emergency care in rural areas.  The Commission recognizes that access to inpatient and emergency services in rural areas is threatened because of the dwindling populations.  Declining populations can lead to fewer hospital admissions and reduced efficiencies that can create financial and staff problems for hospitals.  The Report notes that “[d]eclining volume is a concern because low-volume rural hospitals tend to have worse mortality metrics and worse performance on some process measures.” In addition, “low-volume CAHs have the difficult job of competing with each other for a shrinking pool of clinicians who want the lifestyle of operating an outpatient practice during the day, covering inpatient issues that arise at night, and covering the emergency department.”

Under current policies, most rural hospitals are critical access hospitals (CAHs).  They receive a cost-based payment for providing inpatient and outpatient services to Medicare beneficiaries.  To receive these payments, a hospital must maintain acute inpatient services.  In rural areas, many small towns do not have a sufficient population to support such a model.  Yet eliminating these services would mean giving up the supplemental payments that their hospitals receive through the CAH cost-based payment model.

The hospital prospective payment system serves as the payment model for other hospitals.  Rural providers receive supplemental payments, which are also linked to providing inpatient services.

MedPAC highlights the concerns with cost-based payment models:

  • Cost-based payments do not direct payments toward isolated hospitals having the greatest financial difficulty, but rather reward hospitals in high-income areas with higher non-Medicare margins by providing them with higher Medicare payments.
  • Cost-based payments encourage providers to expand service lines with high Medicare and private-payer shares rather than primarily focus on services that are needed on an emergency basis.
  • Cost-based models reduce the incentive for hospitals to control their costs, which can lead to unnecessary growth in capital costs, despite declining volumes.

In light of these challenges, MedPAC sets forth a two of options that would give isolated rural hospitals the option of converting to an outpatient-only model while maintaining their special payment arrangements.  These models seek to ensure access to essential services:

  • Establishing a 24/7 emergency department model; and
  • Adopting a clinic with ambulance services model.

Under the 24/7 emergency department model, the hospital would be paid under the outpatient prospective payment rates and would receive an annual grant/fixed payment from Medicare to cover the standby costs associated with 24/7 emergency services.  The current supplemental payments would be redirected to support this annual grant/fixed payment amount.  If a hospital chose to use inpatient beds as skilled nursing facility (SNF) beds, it would be reimbursed under the Medicare SNF prospective payment system.  The hospital could be required to use the fixed payment for emergency standby capacity, ambulance service losses, telehealth capacity, and uncompensated care in the emergency department.

Under the clinic and ambulance model, hospitals could convert their existing inpatient facilities into primary care clinics.  These clinics would be “affiliated” with an ambulance service.   Medicare would pay the prospective rates for primary care visits and ambulance transports.  Medicare would provide an annual grant/fixed payment to support the capital costs of having a primary care practice, the standby costs of the ambulance service, and uncompensated care costs.

The Commission recognizes that the “low population density would also make it difficult to retain primary care providers and support an ambulance service.”  It could also be difficult to describe the exact level of primary care and ambulance access that is required to receive the fixed Medicare payment.

MedPAC reiterates its position that “supplemental payments beyond the standard PPS rates should be targeted to isolated rural providers that are essential for access to care.”  Thus, it states that a program to support stand-alone emergency departments should be limited to facilities that are a minimum distance in road miles from the nearest hospital.

 

AAA Issues Response to GAO Claims Report

Written by Tristan North on . Posted in Medicare, Member Advisories, Regulatory.

On May 13, the Government Accountability Office (GAO) issued a report entitled “Claim Review Programs Could Be Improved with Additional Prepayment Reviews and Better Data“. In the report, the GAO recommended that CMS be provided legislative authority to allow Recovery Auditors to use prepayment claims reviews to address improper Medicare payments. CMS fortunately disagreed with the GAO on the recommendation and cited better options such as prior authorization to address potentially improper payments.

The AAA has now issued a Formal Statement in response to the GAO report noting the problems with prepayment claims review for ambulance services and promoting the better alternative of prior authorization for nonemergency BLS transports of dialysis patients. The statement is in follow up to our Member Advisory providing an in-depth review of the report. Please feel free to share the statement if you receive questions about the report.

On June 26, 2015, the AAA had participated in a conference call with the GAO officials conducting the report in which AAA representatives had pushed for recommendations in line with our statement. The AAA will continue to advocate for policies to address improper payments that address the issue but are also the least burdensome to AAA members and help ensure our ability to continue to provide high-quality emergency and nonemergency ambulance services to patients.

Indian Health Service Issues Final Rule on Payments to Non-Contracted Providers

Written by Brian Werfel on . Posted in Government Affairs, Medicare, Member Advisories, Talking Medicare.

On March 21, 2016, the Indian Health Service (IHS), an agency with the Department of Health and Human Services, issued a final rule with comment period titled “Payment for Physician and Other Health Care Professional Services Purchased by Indian Health Programs and Medicare Charges Associated with Non-Hospital-Based Care.” This final rule will change the way the Indian Health Service pays for Purchased/Referred Care (PRC), formerly known as Contract Health Services (CHS). The provisions of this final rule will become effective on May 20, 2016.

Under current regulations, payment for PRC services is based on rates established by arms-length negotiations between the physician or other health care provider (including ambulance providers and suppliers) and the IHS, Tribe, Tribal Organization or urban Indian organizations (collectively referred to hereinafter as I/T/U programs). In the absence of an agreement, the health care provider is generally paid its full billed charges.

Provisions of Final Rule

The final rule amends the regulations at 42 C.F.R. 136.1 e. seq. to provide that payment for PRC services will now be based on Medicare payment methodologies. Specifically, payments would generally be set at the lowest of: (1) the amount provided for such service under the applicable Medicare fee schedule or Medicare waiver, (2) the amount negotiated with a specific provider or its agent, or the amount negotiated by a repricing agent, if applicable, or (3) the rate for such service paid by the health care provider’s or supplier’s “Most Favored Customer” (MFC). For these purposes, IHS has indicated that the MFC rate will be evidenced by commercial price lists or paid invoices and other related pricing and discount data.

While the previous paragraph sets forth the general rate-setting regime, a number of important exceptions will apply. First, any negotiated rate between the parties must be equal to or better than the provider’s or supplier’s MFC rate. The AAA is interpreting this requirement to require the provider or supplier to offer better (i.e. lower pricing) to the I/T/U program than it offers to any nongovernmental entities, including insurance plans. However, IHS indicated that this restriction would not apply to the extent the I/T/U program determines that the negotiated rate is otherwise fair and reasonable, and is otherwise in the best interests of the I/T/U (as determined by the I/T/U). Second, in the event that no agreement exists, and the Medicare Fee Schedule amount is greater than the provider’s or supplier’s MFC rate (i.e. the provider or supplier has voluntarily elected to accept a rate lower than the corresponding Medicare allowable from at least one nongovernmental entity), then the rate may not exceed the MFC rate, but may be lower than the MFC rate.

The final rule can be viewed in its entirety here.

The GAO Releases New Report on Claims Review Programs, Recommending Additional Prepayment Review Authority and Written Guidance on Calculating Savings from Prepayment Review

Written by Kathy Lester on . Posted in Government Affairs, Medicare, Member Advisories, Reimbursement, Talking Medicare.

On Friday, May 13, the Government Accountability Office (GAO) publicly released a new Medicare report entitled, “Claim Review Programs Could Be Improved with Additional Prepayment Reviews and Better Data,” which it shared with the Congress and the Centers for Medicare & Medicaid Services (CMS) in April. The report is addressed to the Senate Finance Committee Chairman Orrin Hatch (R-UT) in response to his request.

The Report examines:

1. The differences, if any, between prepayment and post-payment reviews, and the extent to which the contractors utilize these types of reviews;

2. The extent to which the Medicare claim review contractors focus their reviews on different types of claims; and

3. CMS’s cost per review and the amount of improper payments identified by the claim review contractors per dollar paid by CMS.

In compiling the Report, the GAO reviewed Administration documents, interviewed CMS officials, Recovery Auditors (RAs), and Medicare Administrative Contractors (MACs). The GAO also interviewed representatives from 10 Medicare provider/supplier organizations that have experienced claim reviews on both a pre- and post-payment review basis. The AAA worked the GAO by participating in a telephone interview and providing written comments.

The GAO examined three types of contractors – the RAs, the MACs, and the Supplemental Medicare Review Contractor (SMRC). These contractors are responsible for reviewing claims that are at high risk of improper payment and claims that pose the greatest financial risk to Medicare. Only MACs conduct both pre- and post-payment reviews. RAs and the SMRC conduct only post-payment reviews, but RAs did participate in a pre-payment review demonstration project. RAs are paid on a contingent basis from recovered overpayments. During the demonstration, RAs were paid contingency fees based on claim denial amounts.

In its review, the GAO found that few differences exist between pre- and post-payment reviews, but noted that pre-payment reviews “better protect Medicare funds.” The GAO found that CMS is not always able to collect overpayments from post-payment reviews and that post-payment reviews require more administrative resources than pre-payment reviews.

The provider/supplier organizations highlighted two issues that need to be resolved with regard to pre-payment review audits. First, they identified that the option to hold discussions with RAs before payment determinations are made in the context of post-payment reviews can be helpful. These discussions are not part of the pre-payment review process; nor are they part of the MAC process. CMS indicated that it is not practical to have such an option in these contexts because of the timing requirements.

Second, the providers/suppliers noted that pre-payment reviews create cash flow burdens, in light of the appeals process. When appealing a post-payment review, providers/suppliers retain their Medicare payments through the first two rounds of review. If the denial is overturned at a higher level, CMS must pay back the recovered amount with interest accrued. However, for pre-payment reviews, providers/suppliers do not receive payment and CMS does not provide interest on the dollars withheld if the provider/supplier wins on appeal.

MACs have traditionally relied upon post-payment review. MACs will also use post-payment reviews to analyze billing patterns to inform other review activities, such as future pre-payment reviews and educational outreach. CMS has encouraged MACs to perform extrapolation, especially for providers/suppliers that submit large volumes of low-dollar claims with high improper payment rates.

The SMRC reviews often include studies to develop sampling methodologies or other policies that could be rolled out more broadly in the future.

The GAO also found that different contractors focused on different claims during 2013 and 2014. RAs focused on inpatient claim reviews primarily. RAs have the discretion to select the claims they review and the GAO stated that “their focus on reviewing inpatient claims is consistent with the financial incentives associated with the contingency fees they receive, as inpatient claims generally have higher payment amounts compared to other claim types.” The GAO also found that RA claim reviews had higher average identified improper payment amounts per post-payment claim review relative to other claim types in 2013 and 2014. For the upcoming contracts, CMS has indicated that it will more closely monitor RAs to ensure that they are reviewing all types of claims. For DME claims in particular, CMS has increased the contingency fee percentage paid to the RAs for DME, home health agencies, and hospice claims.

In contracts, MAC claim reviews focused primarily on physician and DME claims. DME claims accounted for 29 percent of their reviews in 2013 and 26 percent in 2014, while representing 22 percent of total improper payments in fiscal year 2013 and 16 percent of improper payments in fiscal year 2014. DME claims also had the highest rates of improper payments in both years.

Physician claims is a broadly used term that includes labs, ambulances, and individual physician.

The SMRC focused its claim reviews on studies that CMS directs the contractor to conduct. In 2013, the SMRC reviews focused on outpatient and physician claims, but in 2014 the focus shifted to home health agency claims and certain DME suppliers.

The GAO concluded that both RAs and SMRC generated savings for CMS, but unreliable data prevented comparing these results to those of MACs. CMS paid the RAs an average of $158 per review; the RAs averaged $14 in identified improper payments per dollar paid by CMS in both 2013 and 2014. CMS paid the SMRC an average of $256 per review, and the SMRC averaged $7 in identified improper payments per dollar paid in 2013 and 2014. The higher SMRC costs related to the study costs and extrapolation.

CMS lacks reliable MAC cost and savings data. CMS does not collect reliable data on claim review funding and does not have consistent data on identified improper payments. While CMS has established ways to collect this information, some MACs are not reporting it. MACs also use different methods to calculate and report savings.

The GAO recommended that CMS take two actions:

• In order to better ensure proper Medicare payments and protect Medicare funds, CMS should seek legislative authority to allow the RAs to conduct prepayment claim reviews.

• In order to ensure that CMS has the information it needs to evaluate MAC effectiveness in preventing improper payments and to evaluate and compare contractor performance across its Medicare claim review program, CMS should provide the MACs with written guidance on how to accurately calculate and report savings from prepayment claim reviews.

CMS did not agree with the first recommendation, stating that it has a strategy to move away from “pay and chase” using different policies, such as prior authorization initiatives and enhanced provider enrollment screening. CMS concurred with the second recommendation.

CMS Releases Medicare Provider Utilization and Payment Data for CY 2014 for Ambulance Suppliers, Physicians and Other Part B Organizations

Written by Brian Werfel on . Posted in Government Affairs, Medicare, Member Advisories, Reimbursement, Talking Medicare.

On May 5, 2016, CMS publicly released the “Medicare Provider Utilization and Payment Data: Physician and Other Supplier Public Use File,” which provides information on the services and procedures provided to Medicare beneficiaries by ambulance suppliers, physicians and other healthcare provider groups.  The data file is based on calendar year 2014 data. This release follows on last year’s release of payment data for calendar year 2012.

The database lists all individual and organizations providers by National Provider Identifier (NPI), and provides information on utilization, total payments and submitted charges.  It can also be searched by Healthcare Common Procedure Coding System (HCPCS) code and place of service.

The Public Use File can be obtained here. Please note that you will need to download the desired file and then import it into an appropriate database or statistical software program.  CMS is indicating that Microsoft Excel is not sufficient for these purposes, and that importing it into Excel may result in an incomplete loading of data.

A number of news organizations have already created searchable databases that will allow you to search the CY 2012-2013 data by physician/organizational name, provider specialty, city, state, etc.  It is expected that these news organizations will be updating their websites to incorporate the CY 2014 data in the coming weeks. The searchable database created by the Wall Street Journal can be accessed here.

Prior Authorization Pilot Program – Status Update

Written by David Werfel on . Posted in Medicare, Member Advisories, Member-Only.

CMS released preliminary data on the impact of the prior authorization demonstration program on Medicare payments for ambulance services.  This data is limited to the three states (NJ, PA, and SC) that were included in the demonstration program’s first year.

CMS noted that it has observed a dramatic decrease in expenditures for repetitive non-emergency ambulance transports since the program’s implementation.  CMS released the following data for the first 10 months of the program (i.e. December 2014 – September 2015), comparing that data to the first 11 months of 2014:

  • Payments for repetitive non-emergency ambulance transportation in these states averaged $5.4 million per month, down from nearly $18.9 million per month prior to the program’s implementation. This is a reduction of more than 70%.
  • In the states that were not part of the demonstration program, payments have decreased very slightly for the 10 months in 2014 and are very similar to the payments in the 11 months prior to the program beginning in SC, NJ and PA.
  • 18,367 prior authorization requests were received and finalized by Medicare’s contractors. Of these, 6,430 (35.0%) were approved.

CMS is closely monitoring these results to evaluate its effectiveness. Here is the full status update.

HHS Office of Civil Rights Announces Phase 2 HIPAA Audit Review Program

Written by Brian Werfel on . Posted in Medicaid, Medicare, Regulatory, Reimbursement, Talking Medicare.

On March 21, 2016, the Office for Civil Rights of the Department of Health and Human Services announced Phase 2 of its HIPAA Audit Program.  The Health Information Technology for Economic and Clinical Health Act (HITECH) required HHS to perform periodic audits of covered entities and business associates to assess their compliance with the HIPAA Privacy, Security and Breach Notification Rules.  These rules are enforced by the HHS Office for Civil Rights (OCR).

Background on Phase 1

In 2011, OCR implemented a pilot audit program to assess the controls and processes covered entities have adopted to meet their HIPAA obligations.  The pilot audit program was conducted in three phases.  OCR first developed a set of audit protocols that it would use to evaluate covered entities’ compliance.  This protocol was then tested using a limited number of audits.   The final step involved using the revised audit protocols on a larger number of covered entities.  Ultimately, 115 covered entities were selected for review, and all audits were concluded by December 31, 2012.

Phase 2

Phase 2 of the HIPAA Audit Program will focus on the policies and procedures adopted and employed by entities to meet the requirements of the Privacy, Security, and Breach Notification Rules.  OCR has indicated that these audits will be conducted primary through desk audits (i.e., document submissions), although by a limited number of on-site audits will also be conducted.

Unlike Phase 1, which focused exclusively on covered entities, OCR is indicating that Phase 2 will involve audits of both covered entities and their business associates.

As with the initial pilot audit program, Phase 2 will consist of several stages.  The first stage involves verification of a covered entity’s or business associate’s address and contact information.  A sample address verification letter can be viewed by clicking here.  OCR has indicated that emails will be sent to entities requesting accurate contact information for the entity.  OCR will then transmit a “pre-audit questionnaire” to the entity.  These questionnaires will be used to gather data about the size, type, and operations of potential auditees.  Based on this data, OCR will create potential audit subject pools.

Note: OCR has indicated that if an entity fails to respond to OCR’s request to validate its contact information and/or fails to return the pre-audit questionnaire, OCR will use publicly available information about the entity to create its audit subject pool.  As a result, an entity that fails to respond may still be selected for audit and/or compliance review.  OCR is specifically reminding entities to check their email “junk” or “spam” folders for any communications from OCR.

Once OCR has developed its audit subject pools, it will randomly select auditees from these pools.  Auditees will then be notified by OCR of their participation.  OCR has indicated that the first set of audits will focus on covered entities, with a subsequent round of audits focused on business associates.  These audits will focus on compliance with specific requirements of the Privacy, Security, or Breach Notification Rules.  Auditees will be notified of the scope of their audit in a document request letter.  Both of these rounds will be desk audits.  OCR indicated that all desk audits will be completed by the end of December 2016.

A third round of on-site audits will take place after the completion of the desk audits, and will examine a broader scope of requirements under HIPAA.  OCR further indicated that desk auditees may also be subject to on-site audits.

If an entity is selected for audit, OCR will notify them by email.  The email will introduce the OCR audit team, explain the audit process, and discuss OCR’s expectations in greater detail.  The email notification letter will also include initial requests for documentation.  OCR has indicated that it will expect entities to respond to these documentation requests within ten (10) business days.  Documents will be submitted through a new secure online portal.  Once received, OCR’s auditors will review the submitted information and inform the entity of its draft findings.  The entity will then have ten (10) business days to respond with written comments, if any.  OCR will then review the entity’s comments and issue a final audit report within thirty (30) business days.

OCR has indicated that the audits are primarily intended as a compliance improvement activity.  OCR will use aggregated data to better understand compliance with respect to particular aspects of the HIPAA rules.  The goal being to understand what types of technical assistance and/or corrective actions would be most helpful.  In other words, OCR is indicating that the goal of these audits is to improve its understanding of the state of compliance, and not to penalize specific companies for violations.  However, OCR indicated that should an audit reveal a serious compliance issue, OCR may initiate a further compliance review of the company.

OCR indicated that it will not post a list of the audited entities, nor will its findings be available in a format that would clearly identify the audited entity.  However, OCR noted that audit notification letters and other information regarding these audits may be discoverable under the Freedom of Information Act (FOIA).

Additional information from OCR regarding the Phase 2 HIPAA Audit Program can be obtained by clicking here.

CMS Implements Cycle 2 Revalidation Program

Written by Brian Werfel on . Posted in Government Affairs, Medicaid, Medicare, Regulatory, Reimbursement.

By Brian S. Werfel, Esq. AAA Medicare Consultant

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Join Brian Werfel and Angie Lehman for a 60 minute webinar on Revalidation for All Services.
June 29, 2016 at 2:00 PM EASTERN
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CMS recently announced the start of its Cycle 2 Revalidation Program. This program affects all enrolled Medicare providers and suppliers.

In Cycle 1, which was conducted from 2011 through 2015, the so-called “trigger” to revalidate was a formal request to do so by your Medicare Administrative Contractor (MAC). For Cycle 2, CMS is adopting a new approach. CMS will be assigning revalidation due dates, i.e., dates by which the provider or supplier must revalidate. These due dates will be the last day of a particular calendar month. These due dates are based on the provider’s or supplier’s last successful revalidation or the date of the provider’s or supplier’s initial enrollment with Medicare. In other words, providers or suppliers that last revalidated in 2011 are likely to have new revalidation due dates in 2016, providers or suppliers that revalidated in 2012 are likely to have 2017 due dates, etc. The first set of due dates is May 31, 2016.

CMS has indicated that it will notify providers or suppliers by email within 2-3 months of their due date. These emails will include the following subject line: Urgent: Medicare Provider Enrollment Revalidation Request. If the email is returned as undeliverable, the MAC is instructed to send a paper revalidation notice to at least two of your reported addresses: correspondence address, special payments address, or primary practice address.

Providers or suppliers will be permitted to submit revalidations up to 6 months prior to their scheduled due date. Revalidations can be submitted either on paper or by using the online Provider Enrollment, Chain, and Ownership System (PECOS).

If a provider or supplier fails to submit a timely revalidation packet, CMS has indicated that the entity’s Medicare billing privileges will be deactivated. The entity will be required to submit a complete enrollment application to “reactive” its billing privileges. However, CMS has indicated that no payments will be made for services provided during the interim period.

If you have not received an email from your MAC asking that you revalidate, it is likely that your revalidation due date is more than 3 months out, or has not even been assigned. However, it is possible that the requests to revalidate may have been sent to invalid email addresses, or may have been routed to your email “spam” folder. It is also possible that paper revalidation notices may have been sent to obsolete physical addresses.

For these reasons, the AAA is strongly encouraging members to check the CMS revalidation webpage. That webpage includes a lookup tool that you can use to determine whether your organization has been assigned a revalidation due date. Currently, CMS has assigned due dates through the end of October 2016. Providers and suppliers that have yet to be assigned due dates will display as “TBD”. You can also download the entire list of currently enrolled providers and suppliers into an Excel spreadsheet. This option may be particularly helpful for organizations that bill under multiple Medicare PTANs (which can have separate revalidation due dates) and for billing agents that intend to assist their clients with the revalidation process.

In sum, the new process appears to be a vast improvement over how revalidations were handled during Cycle 2. Assuming things work as intended, AAA members should have a minimum of 2 months prior notice of the need to revalidate, and potentially up to 6 months prior notice. This should be more than enough time to submit the revalidation and avoid any potential disruptions to your ability to bill Medicare.

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