Billing & Reimbursement

Commercial payors are actively looking for ways to reduce payments to out-of-network providers.  One area of focus is discounts and waivers of patient copayments and deductibles by out-of-network providers.  In the eyes of these payors, coinsurance/copayments are essential to incentivizing patients to use in-network providers, and discounts on (or waivers of) coinsurance/copayments by out-of-network providers often result in higher costs to payors.

To challenge these discounts, some payors have denied reimbursement on claims where the patient’s copayment/coinsurance has been waived by an out-of-network provider.  Others have taken legal action, bringing cases for fraud and other claims, and arguing that they are not required to pay for items or services for which the patient is not billed.  There has been a special focus by some payors on instances where the provider “overstates” its charges in order to recoup the discounts or waivers of coinsurance/copayments it offers to patients.

The legal landscape is evolving on this issue; however, there are cases on the docket that may address certain aspects of this issue sooner rather than later.  Stay tuned to Fox Rothschild’s Physician Law Blog for updates.

In the interim, here are a few tips to keep in mind when considering whether to offer discounts on (or waivers of) coinsurance/copayments with respect to out-of-network plans:

  1. Consider offering the discounts solely in return for prompt payment by the patient. Under the federal Anti-Kickback Statute and other state anti-kickback laws, discounts could be considered remuneration to patients in exchange for purchasing of health care services.  However, the U.S. Office of Inspector General (OIG) has acknowledged that discounts for prompt payments of coinsurance/copayments may be permissible if they are not intended to induce purchases of services.  Note that the amount of such discounts should correspond to the savings in collection and billing costs of the Practice.
  1. Consider disclosing to payors your intent to offer the discounts to patients.  Based on recent case law, if a payor is aware of the out-of-network provider’s intent to offer discounts to patients, the payor is less likely to have a case for fraud against the provider.  See North Cypress Medical Center Operating Co. v. Cigna Healthcare, 781 F.3d 182, 205 (5th 2015) (available online here: http://www.ca5.uscourts.gov/opinions/pub/12/12-20695-CV0.pdf).  However, simply notifying payors of your intent to offer a discount would not address the risk of violating the federal anti-kickback statute and other state anti-kickback laws.  In addition, payors could deny your future claims based on the theory that the payor has no obligation to pay where the patient incurred no liability.  Therefore, payors should be notified only after discussing all options with your legal counsel.
  1. Avoid overstating charges for services provided.  If you offer discounts or waivers of coinsurance/copayments for services provided to patients of payors with which you are out-of-network, avoid charging the payors for the full cost of the services.  In addition, ensure that the charges reported to the payor reflect both the amount of coinsurance/copayment paid by the patient and any discount or waiver which you provide to the patient. Overcharging payors may be illegal under your state’s insurance laws, and, with respect to federal government payors, may lead to liability under the federal False Claims Act.
  1. Beware of “most-favored nation” clauses in your in-network provider contracts.   A most-favored nation clause requires a provider to charge a payor the lowest price it charges to any payor for a service.  If you charge payors with which you are out-of-network less to avoid overstating charges, you could also be required by your in-network payor contracts to charge the same rates for services billed in-network.

Finally, offering discounts or waivers of coinsurance/copayments is a complicated and unresolved legal issue.  You should consult a knowledgeable attorney to discuss the latest developments before taking any actions.

A new study in the BMJ suggests that the more services a physician provides to his or her patients, the less likely the physician is to be sued for malpractice.  The study examined the use of resources by attending physicians in several Florida acute care hospitals during a ten-year period from 2000-2009, in relation to the number of malpractice claims brought against the physicians in the year following care.  Researchers found that physicians who billed higher than average hospital charges were sued less often than lower-billing physicians.

The study builds on evidence that most physicians in the United States report practicing “defensive medicine”, commonly understood to be “medical care provided to patients solely to reduce the threat of malpractice liability rather than to further diagnosis or treatment.”  Prior to this study, no research had been published on whether greater resource use by physicians is associated with reduced claims for malpractice.

The researchers focused on physicians from seven specialties, including obstetrics, which tends to have a higher rate of malpractice claims than other specialties.   The evidence clearly showed that a physician’s risk of being sued for malpractice was reduced among those who performed and billed for more services.  However, the authors noted that the data only show a correlation.  Further research is necessary to understand why higher spending is linked to a lower risk of malpractice claims.

Perhaps the greatest value from this study is that the results corroborate the belief that defensive medicine reduces the likelihood of claims for malpractice.  Interestingly, the authors note that the effectiveness of defensive medicine could be a reason why efforts to reduce physician spending have been difficult.

The full study is available online at:  http://www.bmj.com/content/351/bmj.h5516-0.

The long-anticipated implementation of ICD-10 coding finally began this past Thursday, October 1, 2015.  As of that date, government and commercial payors ceased to accept claims under the old coding system (ICD-9).  The transition has been five years in the making due to a government delay in 2012.

The new system has five times the codes of the prior system, including everything from “problems in relationship with in-laws” to “pedestrian injured in collision with roller skater” to “burn due to water-skis on fire”.  The hope is that the breadth and detail of the new codes will provide greater accuracy and increase reimbursement rates.  However, the complexity of ICD-10 could also cause substantial delays in reimbursement from both the provider side and the insurer side.  While CMS and other insurers are committed to ensuring that the implementation of the new system is completed, it is up to each provider to prepare for and manage the transition in their own practice.

Here are a few tips for your practice during the transition:

  • Mitigate the risk of longer-than-expected reimbursement times by setting aside a reserve fund to cover interim operating expenses, such as payroll, in the event of a one to two week delay in reimbursement during the next few months.
  • Whenever your staff has specific claims questions, contact the appropriate payor sooner rather than later.
  • If you haven’t already, consult your practice management and EHR software vendors to find out how they recommend using their technology with the new coding system.
  • In an effort to speed up the learning curve, consider asking your billing and coding staff to dual code a few charts each day.  This will give them additional opportunities to train, while reducing the need for extra training sessions down the line.

You may have heard some years ago that the Affordable Care Act established a “60-day overpayment rule” that requires a provider to report and return any overpayment from a federal health care program (such as Medicare or Medicaid) within 60 days of “the date on which the overpayment was identified” by the provider (for certain institutional providers, the overpayment must be returned by the later of 60 days or the date on which a corresponding cost report is due to the applicable federal health care program).   Failure to return the overpayment within the required time period (60 days for physician practices) subjects the provider to liability under the False Claims Act and a fine of up to $11,000 per claim plus treble damages.

In an effort to clarify the rule, in 2012, CMS proposed that a provider has “identified” an overpayment when the provider has either “actual knowledge of the existence of the overpayment” or acted in “reckless disregard or deliberate ignorance of the overpayment”.  77 Fed. Reg. 9179, 9182-83.  However, CMS received so much negative feedback regarding its proposed interpretation of the rule that it decided to delay final guidance until 2016.  In the interim, the first court to review the 60-day overpayment rule has had an opportunity to give its opinion.

 

The Court’s Decision

In U.S. ex rel. Kane v. Continuum Health Partners, Inc., the U.S. Department of Justice, along with an ex-employee whistleblower, brought suit against Continuum Health Partners, Inc. on the grounds that Continuum failed to report and return over 900 Medicaid overpayments within 60 days of identification.   The government argued that Continuum “identified” the overpayments when the ex-employee (who was charged with investigating a software glitch in the billing system) emailed a spreadsheet of over 900 potential Medicaid overpayments to upper management of Continuum.   Continuum argued that it should not have been responsible to report or return the overpayments until it determined the precise amounts of the overpayments.

The Court sided with the federal government, denying Continuum’s motion to dismiss the case.  The Court held that Continuum “identified” the overpayments for purposes of the 60-day overpayment rule when Continuum was put on notice that the overpayments were likely to exist.  The Court explained that the spreadsheet provided by the whistleblower did not need to “conclusively establish each erroneous claim” and it did not need to “provide the specific amount owed” in order to put Continuum on notice of each overpayment, and thereby start the 60-day reporting clock.

 

What The Case Means for Providers

The Court’s decision in Continuum is not the last word on this issue.  The Court left open what it means to be “put on notice” that an overpayment is likely to exist.  Also, as noted, CMS may issue new guidance on the rule next year.  Nonetheless, the decision can provide useful guidance for providers who have discovered a potential overpayment and want to know how to comply with the rule.

The Court explained that a provider has a duty to investigate and report an overpayment within 60 days after the provider has been put on notice that the overpayment is likely to exist.  The Court also noted that a provider should not be liable under the False Claims Act for failing to return an overpayment within 60 days, if the provider (i) has reported the overpayment, (ii) is diligently investigating it, and (iii) does not intend to withhold repayment once the proper amount has been established.

In sum, the main message of the Court’s opinion is to Take Action and Report the Overpayment.  If you discover a potential overpayment, begin investigation in a reasonable timeframe.  If you are unable to determine whether the claim actually resulted in an overpayment within the 60-day time period, err on the side of caution by reporting and returning the potential overpayment.  If the overpayment(s) are substantial in amount, you may consider withholding repayment; however, be sure to report to CMS (or the applicable federal health program administrator) as much information regarding the claim as possible, including your intention to return each overpayment once the amount to be repaid is established.

Finally, before taking any action, be sure to consult your legal counsel regarding the best options for you and your practice.

You may have heard that CMS recently expanded its authority to deny enrollment and revoke the Medicare billing privileges of providers and suppliers.  The new changes could affect any physician, group practice or other Medicare provider or supplier.  As the changes are wide reaching, all Medicare providers and suppliers, and anyone providing support services for such providers or suppliers (such as billing companies or administrative staff), should be knowledgeable about CMS’ expanded authority.

Some important changes include:

  • CMS may deny the enrollment of a new provider or supplier if one of its owners previously owned a Medicare billing entity that (1) has had its billing privileges terminated or revoked, and (2) continues to have overpayments or other Medicare debt.
  • CMS may deny the enrollment, or revoke the billing privileges, of a provider or supplier if the provider/supplier, or an owner or managing employee of the provider or supplier, has been convicted within the last 10 years of any state or federal felony which CMS determines is detrimental to the best interests of the Medicare program and its beneficiaries.
  • CMS may revoke the billing privileges of any provider or supplier which CMS determines has engaged in a “pattern or practice of billing for services that do not meet Medicare requirements”.

I co-authored two articles on the new regulations that provide providers and suppliers (as well as billing companies) with what they need to know about the important changes.  One of the articles was the Cover Article for the May/June 2015 Issue of BC Advantage Magazine (available in print and accessible online for those individuals having a login to the BC Advantage website at: http://www.billing-coding.com/detail_article.cfm?ArticleID=5310).

The other article was published in Physicians News Digest (accessible to the public online at the following link:  http://physiciansnews.com/2015/04/16/physicians-beware-cms-may-deny-or-revoke-medicare-provider-privileges/).

The new regulations took effect on February 3, 2015.

Yesterday the Secretary of the Department of Health and Human Services (HHS) formally announced HHS’ intention to shift 90% of all traditional Medicare payments from fee-for-service (FFS) to quality or value-based payments by 2018. The secretary announced that HHS’ goal is to have 30% of traditional FFS payments tied to quality or value in 2016, increasing to 50% by 2018, through alternative payment models such as reimbursement through Accountable Care Organizations (ACOs) and bundled payment arrangements.

The Secretary also announced creation of a Health Care Payment Learning and Action Network through which HHS will work with private payers, employers, consumers, providers, and states to develop and expand alternative payment models. An HHS press release regarding the Secretary’s announcements can be viewed here.

While HHS’ desire to shift to outcomes-based reimbursement is nothing new, the Secretary’s announcements yesterday should signify to physicians and other healthcare providers that these payment models are likely to proliferate and as a result, pressure on providers to adapt to them can be expected to intensify. From a provider perspective, this is likely to mean that efforts to integrate through network formation, employment and the like will continue and networks may become more aggressive in their efforts to lock up eligible providers.

 

Last week, the Centers for Medicare and Medicaid Services (CMS) issued the final Physician Fee Schedule for Fiscal Year 2015.   The annual Physician Fee Schedule includes various policy and payment changes to be implemented in the coming year.  This year’s Fee Schedule includes details regarding Medicare’s payment for services outside of a face-to-face visit for managing the care for Medicare patients with two or more chronic conditions beginning in 2015. as well as a new, more transparent process for setting physician payment rates which is designed to allow for public input into the process.  Other changes announced include changes to the quality reporting initiatives: Physician Quality Reporting System (PQRS), Medicare Shared Savings Program, and Medicare Electronic Health Record (EHR) Incentive Program, and further implementation of the physician value-based payment modifier.  A summary of the FY2015 policy and payment changes can be viewed on CMS’ website Here.

In response to the development of alternative payment systems, provider networks are forming at a frenetic pace. If you are like most of my physician clients, you have been or will shortly be presented with network participation agreements for review (or in many cases, signature with very little opportunity to review) and consideration. In evaluating potential network affiliations, consider these basic contract review pointers:

1. Although it may seem obvious, I often have to remind physicians that they should carefully read and understand each element of contracts presented to them before signing. Not surprisingly, given the volume of paperwork put in front of them on a daily basis, many physicians skip this most critical step on the assumption that they will have no bargaining power in any case. However, even if a contract cannot be negotiated, it is important to understand what you are signing.

2. Ask for and review all relevant supporting documentation. Many network agreements I have seen refer to policies, procedures and clinical protocols. Participating providers will be expected to abide by these documents so it is important to request and review them as part of the overall analysis of the affiliation. These supporting documents can impose material obligations on participating providers so if they have not yet been created at the time of presentation of the participation agreement, physicians should ensure that they have an opportunity to withdraw from the network without penalty once these documents are developed.

3. Pay close attention to the economic terms and be sure you understand how they will impact your practice. Physicians should request examples of how complex economic formulas would work and ideally should try to model the economic terms using real practice data.

4. Finally, chances are that more than one network will form in your market, and you could be faced with having to choose one over another. For this reason, it is important to evaluate whether a proposed affiliation requires exclusivity and how difficult it would be to withdraw (and take your patients with you) should you need to change affiliations.

Obviously, there are many other legal and business considerations that should go into the evaluation of potential network affiliations. However, doing some basic legwork on your own may help you to distinguish between those affiliations that are most likely to get off the ground, those not quite ready for prime time but worth keeping an eye on, and those that can or should be ignored.

 

One of the ways the Medicare program and other payer plans are recovering overpayments and identifying billing fraud is through the regular use of data mining.  Simply put, by utilizing software programs that monitor and compare billing and coding data, enforcement authorities are easily able to identify problematic trends in physician billing.  This is an extremely cost effective means of identifying outliers since it does not require a person to manually review claims.

Many physicians I have spoken with over the years mistakenly believe that if they undercode their services, they are reducing their risk of being audited.  However, with data mining programs, this is unlikely to be the case and in fact the opporits may be true.  This is because many of these programs utilize comparative peer data to determine whether a physician’s patterns are outside of peer group norms.  Therefore, a physician who consistently bills one level of evaluation and management service, for example, could very well be flagged for audit if his or her peers routinely bill varying levels of service.

One good way to evaluate whether your coding patterns fall within norms is to request your peer group data from your Medicare Area Contractor and see how your own coding patterns match up.

Finally, if you still think Medicare isn’t paying attention to your coding, consider this case recently reported by the Chicago Tribune: Mobile Doctors CEO, Physician Charged With Medicare Fraud

Now that the new year is upon us, today’s post will look at the Department of Health and Human Services’ Office of Inspector General (OIG), in particular, OIG’s priorities for 2013.   According to OIG’s Fiscal Year 2013 Work Plan, it will be focusing upon a number of topics of interest – including some items not addressed last year.

OIG’s planned reviews of Medicare Part A and Part B will include:

● Billing patterns for nursing home stays.

● Accreditation of medical equipment suppliers, with a particular focus on quality standards.

● Claims submitted by medical equipment suppliers for lower limb prosthetics, power mobility devices and vacuum erection systems.

● Replacement of medical equipment, especially the frequency and necessity of that replacement.

● Independent physical therapists’ claims and whether the claims are reasonable, medically necessary and properly documented.

● Billing for electrodiagnostic testing.

● Ensuring that payments are not made for alien beneficiaries who were unlawfully present in the United States.

● Reviewing payments for Part A and Part B services to avoid claims starting after a beneficiary has died. 

 

Special attention should be paid to these areas in the coming year given OIG’s additional scrutiny.