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Recent Trends in RAC and MAC AppealsHCCA Compliance Institute

San Diego, CaliforniaMarch 30 – April 2, 2014

Tracy M. Field, M.S., J.D. Deonys de Cardenas, R.N., J.D.

Womble Carlyle Sandridge & Rice, LLP 271 17th Street, NW – Suite 2400, Atlanta, GA 30363(404) 872-7000

AGENDA

• The Audit and Appeal Environment• Two-Midnight Rule and Implementation• Compliance Considerations

o Medical Necessity and False Claims Acto Assessing Accuracy?

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MEDICARE AUDITSNow What?

Perspective:• By challenging denials, CMS changed

the rules!• Compliance challenge: How assess

accuracy?• Business reasons for rebilling Part B

o 2 year backlog – and growing!

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BACKGROUNDThe Audit and Appeal Process

Office of Medicare Hearings and Appeals (OMHA) Forum: February 12, 2014

• Backlog of 500,000 cases – and counting!• Moratorium on docketing new appeals

until workload addressed per ALJo Hearings being scheduled

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BACKGROUNDOMHA February 2014 Forum

• Backlogo Budget increase: 18+% (after sequester)o Statistical sampling?

‒ OMHA statistician‒ Appropriate for fact-specific cases?

o Mediation/Alternative Dispute Resolutiono New regulations

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BACKGROUNDOMHA February 2014 Forum

• No longer need to submit medical records?• Group cases – but individually file!• Electronic filing?

o Send files via tracking methods, and don’t expect an acknowledgment!

o Miami piloto 2 year development from award

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BACKGROUNDOMHA February 2014 Forum

• Backlogo Increase in Escalation to DAB-MAC

‒ NO Hearing at DAB-MAC‒ Access to federal court sooner – but…

o OMHA stated testimony makes difference - yet

o OMHA suggested may not want to request hearing?

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BACKGROUNDOMHA February 2014 Forum

• Legal Considerationso Medicare Modernization Act (MMA)

and BIPA deadlines not being meto For medical necessity cases, what

standard of review applies? o Confusion on local coverage effective

dateso Jimmo Case: Important for rehab, other

uses?

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BACKGROUNDOMHA February 2014 Forum

• Compliance Considerationso Part A/B Claims: 97% of appealso Redetermination reversal rate to fully

favorable: ‒ 30% per OMHA

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BACKGROUNDOMHA February 2014 Forum

For OMHA Outcomes of Cases Decided at ALJ• 37% Fully Favorable – 4% Partially

Favorable• 30% Unfavorable• 1% Remand • 27% Dismissed

Impact on Compliance activities….

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HOSPITAL ADMISSIONS: MEDICAL NECESSITYThe 2 Midnight Rule

Two-Midnight Rule• Issued August 2, 2013: CMS-1599-F • Intent: Improve payment integrity and

provide clarity regarding inpatient status orders

• Previous “Standard”o Medicare Benefit Policy Manual,

Pub. No. 100-02, Ch. 1, § 10

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BACKGROUNDThe 2 Midnight Rule

Two-Midnight Rule • Physician expectation that patient

requires a stay crossing at least 2 midnights; and

• Physician admits the patient to hospital based on that expectation

• Published in Federal Register: < 90 day implementation

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BACKGROUNDThe 2 Midnight Rule

Implementation Challenges• Short “lead time”• Coordination with adopting new

electronic medical records? • Who can enter patient “status”?

o Automatic if in outpatient lab?o Prompts to have order signed pre-

discharge?

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INITIAL REVIEWSProbe Audits

MAC Audits: January 2014• MAC prepayment reviews: “probe and

educate”

Recovery Audits: • Delayed until November 2014

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PROBE AUDITSOccurrence Span Code 72

• Started December 1, 2013• Voluntary• Procedure for Application

o Contiguous outpatient hospital services preceding inpatient admission can be reported on inpatient claim

o Condition Code 44 still exists

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INITIAL REVIEWSProbe Audits

Presumptions that Hospital Stays Less than 2 Midnights are Not Medically Necessary

• Presumption does not mean wrong!!• Legal challenges to denials• Strategy to avoid audits

o Some opted for no one-day stayso Rebill under Part B?

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IMPLEMENTATIONTraining

Who? Training…• Physicians• Physician Extenders• Case Management • Utilization Management Committee• Registered Nurses?

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IMPLEMENTATIONElements

What? Need the Inpatient Order• Physician Certification and Documentation

o Authenticationo Reason for Inpatient Services

(Elements)o Document Expectation Length of Stayo Post-Hospital Care

• Recertification

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IMPLEMENTATIONElements

What? Medical Necessity• Medical History, Co-morbidities• Severity of Clinical Presentation • Medical Stability of the Patient• Risk of Adverse Events

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IMPLEMENTATIONElements

What? Medical Necessity (cont…)• Current Medical Needs• Diagnostic Testing/Monitoring• Plan of Care/Treatment Requiring

Inpatient SettingAnswer “because” (hasn’t changed)

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IMPLEMENTATIONElectronic v. Paper?

Where? How? Form Not Mandatory, but:• Electronic record • Paper record with form • Paper record progress note

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IMPLEMENTATIONOperational Challenges

• Changing the Cultureo Case Managerso Physician’s practice of medicine

• Admit: Document “inpatient”• Authenticate prior to discharge

o Certification: Still complex medical judgment

• No retroactive admissions! No social stays!• No contingent orders!

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OPERATIONAL CONSIDERATIONSImplementation

Unforeseen or Unusual Circumstances• Must document:

o Against medical adviceo Patient expireso Transferso Hospiceo Improves sooner than expected

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COMPLIANCE ISSUESInternal Reviews

Compliance Internal Reviews• Audit tool• Robust utilization management

committee• Re-educate!

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FALSE CLAIMS ACTMedical Necessity Litigation

• WakeMed• Physician Cases• Other Medical Necessity Cases:

o Shands – settlemento Health Management Associateso Halifax

‒ Privilege issues to consider

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WAKEMEDThe Media Reports and Lessons Learned

December 9, 2012WakeMed to pay $8M to settle investigation

• Criminal charges: Making material false statements

• Medicare billed for inpatient admissions for patients discharged same dayo No physician order or order “overwritten”

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WAKEMEDThe Legal Process

Deferred Prosecution Agreement (DPA)• DOJ tool since 1999• File Criminal Information: Admission of

Facts• Deferral Avoids “Arthur Andersen Effect”• Judge: Convict and Defer Sentencing…• Debarment!

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WAKEMEDThe Investigation

• 2007 Program Safety Contractor Audit• Data mining of claims• For NC, WakeMed with highest Zero-Day

stay billings for Oct. 1, 2003 – Sep. 30, 2006

• On-site interviews at WakeMed –conflicting information o Tip: On site with auditors!

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FALSE CLAIMS ACTMedical Necessity Litigation

Maryland St. Joseph’s Medical Center: $4.9M settlement for unnecessary hospital admissions 2007-09

• Related prosecution of cardiologist for medically unnecessary admissions under fraud theory

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FALSE CLAIMS ACTMedical Necessity Litigation

Other observations:• Contractors as whistleblowers:

Reported concerns to compliance, but issues not addressed

• Data Mining• More sophisticated whistleblowers• Whistleblowers “going all the way”

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FALSE CLAIMS ACTMedical Necessity Litigation

Health Management Associates (HMA)• Employed physician as whistleblower –

first to JC, not validated• Allegations of free office space, medically

unnecessary admissions from ED• CEO named individually as well as HMA

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Halifax Hospital:• Whistleblower suit: unlawful

compensation of physicians violating Stark, AKS – $200M

• Government intervened: Discovery of regulatory compliance, communication with legal

• Court: Business advice, not protected with in-house counsel

FALSE CLAIMS ACTPrivilege Issues

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FALSE CLAIMS ACTPrivilege Issues

Halifax Hospital:• No presumption of privilege with in-

house counsel communications• Business advice, not protected with in-

house counsel when routine communications with compliance

• Lawyer was on email, to be “kept in loop”

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OTHER FCA ISSUESMedical Necessity

Halifax Hospital:• Allegations that neurosurgeons paid in

excess of Fair Market Value• Allegations that spinal fusion surgeries

that were not medically necessary were performed

Stay tuned…

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MEDICARE AUDITSMedical Necessity

Compliance Concerns

• Monitor trends

• Other business

• Considerations may dictate rebilling

• Disagreement is not a False Claim!

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MEDICARE APPEALSThe Two Midnight Rule

Admission Order and Certification as Condition of Payment

• Certification: PRIOR to Dischargeo Authenticated ordero Documentation of reason for inpatient

admission, estimated time of hospital stay

o Physician judgment!

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MEDICARE APPEALSJimmo v. Sebelius

Rehabilitation Providers/Suppliers:• Change Request 8458, MedLearn on

standard for rehab/care

Affirms “Longstanding” Policy:• Beneficiary need for care, not

improvement dictates coverage

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REFERENCES

www.hhs.gov/omha• Per OMHA: Updates after 15th of each

month on adjudication timelines, processes

• OMHA Adjudication Manual Pending

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QUESTIONS?

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Tracy M. Field, M.S., J.D.Deonys de Cárdenas, R.N., J.D.

tfield@wscr.com(404) 962-7539

ddecardenas@wcsr.com(404) 879-2473

Womble Carlyle Sandridge & Rice, LLP271 17th Street, N.W.

Suite 2400Atlanta, Georgia 30363