Recovery audit contractors get a new fishing license
In a previous blog post, I discussed the Centers for Medicare & Medicaid Services’ (CMS) decision to allow one of its recovery audit contractors (RAC), Conolly, to begin auditing claims for evaluation and management codes, specifically code 99215. Earlier this month, the U. S. Court of Appeals for the 9th Circuit gave RACs and other Medicare contractors even more discretion in this regard. Specifically, in Palomar v. Sebelius, D.C. No. 3:09-cv-00605-BEN-NLS (Sept. 11, 2012), the court upheld that a decision by a RAC to reopen a Medicare claim for complex review was not reviewable.
The Palomar case involved a RAC's determination that services provided to a Medicare beneficiary were not reasonable and necessary. The claim in question was more than one year old and could only be reopened for "good cause" under Medicare regulations. All of the reviewers that examined the case agreed with the RAC's determination regarding medical necessity. However, the administrative law judge who reviewed the RAC determination concluded that there was not good cause to reopen the claim and reversed the RAC decision.
On appeal, the Medicare Appeals Council (MAC) reversed the administrative law judge decision. The council ruled that the Medicare regulation at 42 C.F.R. § 405.980(a)(5) makes a Medicare contractor's decision to reopen a claim unreviewable. Both the U.S. District Court and the U.S. Court of Appeals for the 9th Circuit affirmed this opinion. The courts held that the regulation expressly forecloses jurisdiction to review the reopening decision and that providers may only appeal the substance of a contractor's overpayment determination (e.g. whether or not the services were reasonable and necessary).
The Secretary for the U.S. Department of Health & Human Services argued that the review of contractors' compliance with the regulations is solely a matter for CMS's performance evaluations of the contractors. That leaves physicians at the mercy of CMS’s ability to manage its contractors.
Additionally, because the RACs get a cut of every overpayment that they find, they have incentive to reopen claims whether or not "good cause" exists under the Medicare regulations. This is especially true because most determinations finding an absence of medical necessity are based on a lack of documentation, and because it will be harder to find documentation and testimony to support older claims.
The "good cause" requirement was an important source of protection against contractor fishing expeditions. Unfortunately, the Palomar decision just gave RACs and other Medicare auditors a virtually unlimited fishing license going forward.
–Kent Moore, Senior Strategist for Physician Payment for the American Academy of Family Physicians
Putting E/M services on the RAC
In July, I posted about a report from the U.S. Department of Health & Human Services Office of the Inspector General (OIG) which found that from 2001 to 2010, physicians increased their billing of higher level evaluation and management (E/M) codes in all types of E/M services. In that post, I encouraged you to make sure that your documentation supports the level of E/M services that you are billing. With the OIG paying attention, the Centers for Medicare & Medicaid Services (CMS) were likely to follow suit, and you needed to be prepared.
Well, it appears that CMS was paying attention, or at least its recovery audit contractors (RACs) were. This week, CMS alerted the American Medical Association (AMA) that it has approved the Medicare Region C RAC. The contractor for Region C, Connolly, is to begin conducting audits of coding for E/M services in physician offices, specifically CPT code 99215. According to the AMA, in the next several weeks Connolly will begin a complex medical review of code 99215 and will be permitted to extrapolate their findings based on a statistical sample of such claims. Connolly is the Medicare fee-for-service RAC contractor who conducts RAC audits in the following states:
- Puerto Rico
- U.S. Virgin Islands
However, it has not yet been announced if all or only a subset of these states and territories will be under review. As of this writing, Connolly has not posted this information and other details of the review on its website. These reviews are expected to begin imminently in Region C and, according to CMS, are likely to be approved in other Medicare regions in the near future.
The American Academy of Family Physicians, the AMA, and 100 other state and specialty societies sent a letter to CMS in March 2009 strongly opposing RAC audits of E/M services. However, the OIG report apparently encouraged CMS, through its RAC auditors to do otherwise.
So, what's a family physician to do? I would argue that the advice given in my July post still applies: make sure that your documentation supports the level of E/M services that you are billing to Medicare. If you are subjected to a RAC audit, take some solace in the fact that, according to CMS' FY 2010 Recovery Auditor Report to Congress, 46 percent of the Medicare RAC determinations that were appealed were decided in the provider's favor. That means you have almost a 50/50 chance of prevailing in the long run. Of course, as John Maynard Keynes once observed, "In the long run, we are all dead." Hopefully, the prospects for physicians in this case are a bit more optimistic.
Is your practice "wholly owned" or "wholly operated"?
Recently I listened to a Medicare contractor's teleconference regarding the three-day payment rule that applies to services provided by an entity that is wholly owned or wholly operated by a hospital. In a nutshell, this rule bundles the technical component of the payment for all outpatient diagnostic services (e.g., lab, ECG) and the practice expense components for other related outpatient services (e.g., evaluation and management, or E/M, services) into the payment for a hospital stay that begins within three days of the outpatient service. The good news is that this applies only to physicians whose practice is wholly owned or wholly operated by a hospital that is paid under the Inpatient Prospective Payment System (IPPS). A shorter one-day rule applies to practices wholly owned or wholly operated by psychiatric hospitals and units, inpatient rehabilitation hospitals and units, long-term care hospitals, children’s hospitals, and cancer hospitals. The rules do not apply if your practice is owned by a health system that also owns hospitals or if a hospital is only one of the owners of your practice.
If your practice is not owned or operated by a hospital, the rest of this entry does not apply to you, but reading it may make you feel a little less hassled.
If you are unsure whether your practice is wholly owned or wholly operated by a hospital, it is important that you determine whether the rule applies to you and if so, how your practice and the hospital will work together to identify admissions and related outpatients services. The Center for Medicare & Medicaid Services (CMS) has published a memo of frequently asked questions that can help you determine if your practice is subject to the rule and also explains how hospitals must work with their wholly owned or wholly operated practices to comply with this rule.
Some key points regarding this rule are:
It applies to Medicare Part B claims of wholly owned or wholly operated practices.
It applies only to claims that are submitted using place of service 11, 12, or 32. It does not apply when professional and facility charges are separately billed (e.g., place of service 22.)
Practices subject to this rule must hold Medicare and Railroad Medicare claims for at least 72 hours prior to billing for the hospital to determine if a related admission has occurred. However, all services provided in the office on the date of admission will be considered related to the admission.
Medicare will pay only the professional component for services that have professional and technical components and the facility rate for other services such as evaluation and management services.
As of July 1, 2012, modifier PD ("Diagnostic or related nondiagnostic item or service provided in a wholly owned or operated entity to a patient who is admitted as an inpatient within three days or one day") must be appended to the codes for services that are subject to the rule.
Services that the hospital determines are not diagnostic or not related to the inpatient stay are not subject to the rule. (Practices should keep record of the rationale for why the service is unrelated to the admission.)
It is up to your practice to work with the hospital to determine if and how any lost revenue for the practice is offset by the hospital. How's that for administrative simplification? (No answer required.)
Confusion about the Medicare annual wellness visit
Since its debut last year, the Medicare annual wellness visit (AWV) has been an apparent source of ongoing confusion. That point was driven home to me again this week after I reviewed some Medicare claims data for this service.
As a reminder, there are two codes related to the AWV: G0438 (includes a personalized prevention plan of service, initial visit) and G0439 ( includes a personalized prevention plan of service, subsequent visit). As the descriptors imply, the initial AWV, should precede a subsequent AWV, and at least 11 months should have elapsed since the month of the initial AWV before a subsequent AWV can be performed and billed.
Both services became Medicare benefits effective Jan. 1, 2011. In 2011, Medicare paid for G0439 (subsequent AWV) more than 50,000 times. Given the timing of the two services and given that a Medicare beneficiary could not receive G0438 (initial AWV) before Jan. 1, 2011, it is not clear how or why any claims for a subsequent AWV (G0439) would have been processed in 2011.
I suspect that G0439 was being reported in 2011 because of confusion regarding its relationship to the Initial Preventive Physical Exam (IPPE, also known as the "Welcome to Medicare Visit"), code G0402. As noted in "When A Medicare Annual Wellness Visit Follows a Welcome to Medicare Physical," FPM, May/June 2012, "The initial annual wellness visit must take place before a subsequent annual wellness visit in order to establish the required components that will be updated at subsequent visits. The initial annual wellness visit must occur no earlier than the same month of the year following the IPPE." In other words, the inital AWV follows an IPPE and a subsequent AWV follows an initial AWV.
Why the Medicare contractors reimbursed for G0439 in 2011 is a mystery. Apparently, they do not have the capacity or edits in place to recognize when a subsequent AWV is billed erroneously instead of an initial AWV.
For physician practices, this is more than just a matter of miscoding. It is also a matter of lost revenue. Medicare's average allowance for G0438 is $166; for G0439, it is approximately $111. That means that every time you bill G0439 when you should have billed G0438, you are leaving about $55 on the table. Maybe that's why the Medicare carriers were happy to process G0439 claims in 2011.
For more information on the AWV, check out the FPM Topic Collection on Medicare Annual Wellness Visits.