HCM FREQUENTLY ASKED QUESTIONS
• Question: What is the significance of the recent Centers for Medicare and Medicaid Services (CMS) Final Rule entitled "Medicare Program: Reporting and Returning of Overpayments" published in the Federal Register, February 12, 2016?
• Answer: This very important Final Rule has very specific requirements for providers and suppliers receiving funds under the Medicare program to report and return overpayments by the later of 60 days after the date on which the overpayment was identified or the date any corresponding cost report is due. It also specifies a 6 year look back period for the identification and return of overpayments that “a person has or should have, through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment.” This Rule has far-reaching implications for previous overpayments that have resulted from systemic factors over the 6 year period before an initial overpayment identification, which might have been discovered during routine Medicare billing audits. The Rule also specifies that federal False Payment Act violations may be implicated when proper return of identified overpayments is ignored or when reasonably diligent efforts to identify overpayments is not made. We feel that Compliance Officers and billing and coding departments for Medicare providers and suppliers must carefully study and understand this important piece of federal rulemaking.
• Question: What is a “customized education program” to assist in billing and coding properly?
• Answer: It is a program customized to fit the education needs of the medical practice, group, or facility. It involves auditing of documentation of services provided against services billed to determine accuracy of individual physicians, non-physician practitioners, or other providers of healthcare services. Education is then provided based on the findings of the audit activities.
o An example would be an audit of documentation against billing of Evaluation and Management (E&M) services in a 10-person primary care physician group with the findings that 3 of the physicians had accuracy rates of less than 85%. Education would then be done to improve the accuracy of the 3 individual physicians, rather than all of the physicians in the group. We think this approach is more effective and more cost-effective for the group than the traditional approach of single or multiple education sessions for the whole group.
• Question: In what situations would HCM be of assistance as “expert witnesses”?
• Answer: The situations vary. Examples would be:
o Overpayments for services deemed not rendered are requested from a Medicare, Medicaid, or commercial health insurance entity. If hearings or meetings with the health insurance entity (or law enforcement officials in serious allegations of fraud or abuse) are required HCM can provide expert advice and testimony related to the allegations. These services can be provided either directly to the health care practice or facility or indirectly through the legal counsel to the healthcare practice or facility.
o Attorneys, at times, need expert witnesses for healthcare compliance related cases to appear in court to testify or give depositions related to whether their clients knowingly violated well-established coding or billing regulations or simply made mistakes related to coding or billing complexities.
• Question: What is the importance of private and public healthcare payer medical policy, and how does it impact healthcare provider practices?
• Answer: In today’s world, essentially all healthcare insurance payers, public and private, have well-developed systems of medical policies. In the commercial health insurance systems, they are usually simply called medical policies. In Medicare, they are called coverage determinations. Depending on the payer, the policies may be local or national. They exist for assuring appropriate use of certain high cost and/or high volume services. They are guidelines for appropriate medical care and are published on the payers’ websites. If a healthcare practice bills for or requests prior approval for medical or surgical services that do not fit these guidelines, the claim or prior approval will generally be denied. In many, if not most, of the denials, the healthcare provider either did not provide the necessary information with the claim or request for prior approval that the medical policy requires. Then, to have the claim paid, an appeal or several appeals must be submitted. It is to all healthcare provider entities advantage to know the governing medical policies for their commonly performed medical services so that unnecessary denials and submission of appeals (which can disrupt cash flow and require extra work by billing personnel) can be avoided. HCM can provide advice and suggest processes to optimize a medical practice submission of claims to be in accordance with the medical policies of the major insurers that the practice bills.
• Question: What are Recovery Audit Contractors (RACs) and why be concerned about them?
o RACs are special contractors within the Medicare system. There are 4 different RACs, one in each of the 4 RAC Regions across the U.S. Their task is to do analysis of Medicare A and B claims and find areas in which overpayments for Medicare billed services were likely made, request the medical documentation involved, and, if overpayments are detected for the services billed, send bills (demand requests) to the healthcare entity involved for the overpayment amount involved. The RACs make their money by being paid a percentage of the amount of overpayment monies that are recovered. The RACs came into existence nationwide in Medicare in 2010 after a pilot RAC program in Medicare had been instituted for several years before in selected states. The pilot program showed that the RACs were very effective in finding and enabling recovery of overpayments in Medicare. The RACs generally are subsidiaries of companies that have wide experience in other segments of government business, such as defense contracts, in which cost overruns and erroneous billing have been present.
o Healthcare providers of all types need to be aware of the presence of the RACs because chances are that over the next few years, requests for medical records from the RACs will become frequent and must be properly handled. If a RAC requests medical records which are not sent within a relatively short time period, the billed services involved will be presumed to have not been performed, and demands for overpayment monies could be considerable. Additionally, a RAC finding of a low percentage of proper submission of claims would logically place a healthcare provider in a position to have additional requests for medical records for auditing, either for more of the same services or other associated services.
• Question: How can HCM help with RACs?
o HCM can conduct vulnerability analysis for a healthcare practice, group, or facility to identify potential problems areas that can be addressed to lessen vulnerability to successful RAC activities.
o HCM can assist in handling RAC audit inquiries and requests for records to assure optimum submission of supporting documentation for billed services that might be in question.
o HCM can assist in the appeal process when overpayment demand letters are received based on RAC activities.
• Question: Do all physicians and non-physician practitioners get audited by Medicare?
o The short answer is “yes” and the frequency is “all the time.” This is qualified in the following way:
In the traditional Medicare system, computer analysis of claims data is done constantly for patterns of billing that are out of the ordinary. If no aberrant patterns of billing are detected, the physician or non-physician practitioner never knows about the statistical audit.
o The long answer is that for a formal audit that the physician and non-physician practitioner is aware of through a formal written request for medical records, the percentage is fairly low. Since statistical significance for aberrant billing behavior is approximately 2 standard deviations from the mean, only about 5% of physicians and non-physician practitioners will have such an audit for suspected erroneous billing. Another kind of recognizable audit for physicians and non-physician practitioners is a random audit, in which no statistical pattern of abnormal billing is detected, but the Medicare claims computer system randomly samples a small percentage of claims, perhaps 1-2 % each year, to detect possible problems in this way. Thus, the long answer is that all physicians and non-physician practitioners do not get noticeably audited during their practice lifetimes by Medicare.
• Question: Do commercial healthcare insurers audit in the same way as Medicare?
• Answer: Not necessarily. The principles are basically the same, but the details will vary according to the insurer. Commercial insurers perform routine prior approval review such as pre-authorizations and pre-certifications for certain selected medical and surgical services. Prior approvals are not part of the traditional Medicare program but may be part of the Medicare Advantage portion of Medicare which is administered by private healthcare insurers.
• Question: Why does HCM’s website mention compliance programs frequently?
• Answer: Compliance programs are important because these programs are a means of assuring that a medical practice, group, or facility operates effectively within the many healthcare regulations and guidelines that are present in both public and private healthcare payment programs. Having a good compliance program in a medical practice, group, or facility is also a good way to show a “good faith” effort to avoid mistakes in billing or coding of services and is a mitigating factor if allegations of fraud or abuse in healthcare payment practices are made.
• Question: What if I undercode on my claims, and, if I undercode and am audited, does the undercoding found mean I get money paid back to me for undercoding?
• Answer: In Medicare, provision is made for undercoding and if significant undercoding is found on an audit, the medical practice, group, or facility will get credit for monies that is due from instances of undercoding. From a practical standpoint, undercoding is not as rigorously looked for by auditors in Medicare, since not coding to a high enough level is generally considered a problem for the individual medical practice, group, or facility rather than an instance of possible healthcare abuse or fraud and a threat to taxpayer funding of public healthcare insurance programs. In the world of private healthcare insurance, undercoding is very rarely addressed. It should be mentioned that consistent, statistically significant, patterns of undercoding detected by claims analysis systems may be a reason for an official audit with request for medical records because consistent undercoding of claims can be a sign that medical services are not being performed at all and the undercoding is an attempt to avoid detection.
• Question: How will healthcare reform affect billing and coding of healthcare insurance claims?
• Answer: With healthcare reform, more people will have access to healthcare insurance and the systemic cost of paying for everyone’s healthcare will necessarily go up. One of the big worries is that healthcare abuse and fraud activity will also go up. In the healthcare reform bill which has been passed by Congress and enacted, there are increased dollars designated for increased healthcare abuse and fraud detection activities by federal and state departments of justice. We anticipate closer scrutiny of healthcare billing and coding activities with more statistical claims analysis and detection of outliers. This will result in increased formal audit activity and requests for submission of medical records from medical services providers. We also anticipate growing activities of RACs and RAC-like entities in the next 5 years. Because of this, we anticipate that greater attention will need to be paid to healthcare compliance activities by medical practices, groups, and facilities of all types.
• Question: Does increased advertising activity by a medical practice, group, or facility cause Medicare to target the medical practice, group, or facility for audits.
• Answer: Advertising activity in itself does not affect frequency of Medicare auditing, in our opinion. However, if a recently implemented advertising campaign should cause a large statistical increase in usage of certain medical services in a short period of time, especially in certain problematic areas known to be associated with abusive or fraudulent practices, a formal audit with request for medical records to substantiate that appropriate medical services were actually being performed might result.
• Question: What type of healthcare entities does HCM provide consulting services for frequently?
• Answer: HCM’s clients usually are the following:
o Physician organizations ranging from solo practices to large group practices (including hospital-based practices);
o Hospitals of all sizes;
o Free-standing healthcare facilities such as endoscopy centers and outpatient surgery centers;
o Pharmaceutical manufacturers;
o Medical device manufacturers;
o Other healthcare consulting groups (as a subcontractor);
o Healthcare attorneys; and,
o State Medical Associations.