There are big changes coming to the Medicare incentive programs as we know them.  Beginning on January 1, 2017, the new Quality Payment Program (the “Program”) will replace all existing Medicare incentive programs with a comprehensive incentive model.  The Program will involve a modified set of EHR Meaningful Use requirements, new quality of care metrics, new cost efficiency goals and “clinical practice improvement activities” (for which physicians will be rewarded for care coordination, beneficiary engagement and patient safety).  The Program will also have a separate track for incentive payments associated with participation in Advanced Alternative Payment Models (such as Accountable Care Organizations) (“APMs“).

Congress provided for the development of the Program in the 2015 Medicare Access and CHIP Reauthorization Act (the “MACRA”).  Under the MACRA, the Program must be “budget-neutral” each year.  In other words, the rewards paid by Medicare to well-performing physicians and practices must be equally offset by the penalties levied against poor-performing providers.  The rewards will continue to take the form of payment adjustments to the Medicare Physician Fee Schedule.  The first year of payment adjustments will be 2019, based on data from the 2017 reporting year.  For 2019, the reward paid to (or penalty levied against) any provider may not exceed a 4% adjustment to the Medicare Physician Fee Schedule.  However, in subsequent years, the limits are set to increase, reaching a maximum of 9% in 2022.

The potential for substantial penalties under the Program has led to concerns that the Program will make it difficult for smaller practices with higher numbers of Medicare patients to be financially viable.  Foreseeing these economic issues, Congress earmarked $100 million over five years to help small practices successfully participate in the Program.

In June, the U.S. Department of Health and Human Services (“HHS”) announced that the first $20 million of these earmarked funds will be awarded by the end of 2016.  The recipients of the funding will be organizations that provide education, training and consultation on the Program to small practices.  In particular, these organizations will assist small practices in understanding what quality measures, EHR options and clinical practice improvement activities are most appropriate for their practices.  The organizations will also help small practices evaluate their options for joining an APM.  HHS has not announced when the organizations will begin training and educating small practices.

While the intention behind such training and education is laudable, it does not lay to rest the concern that small practices serving substantial Medicare populations will be under greater pressure and financial strain to continue to operate independently.  After all, the Program itself must remain budget-neutral.  If practices improve their compliance and quality of care metrics, payment adjustments will have to be reduced or compliance standards raised.  In the long-term, this may lead to small practices being forced to join an APM in order to continue to serve Medicare patients.

Stay tuned for updates on the Program from CMS, including details on the final regulations for the Program.  If you have specific questions about how the Program may affect your practice, be sure to contact a knowledgeable healthcare attorney.

The Affordable Care Act (ACA) requires Medicare providers to return overpayments within 60 days of the date they are identified in order to avoid liability under the False Claims Act.  Four years ago, CMS issued a proposed rule to implement this statutory requirement that would have placed a substantial burden on providers to identify and return overpayments within the 60-day period.  Last week, CMS issued its long-awaited “final rule” on the matter. The final rule is substantially less burdensome than the proposed rule would have been and offers providers a clearer view of their obligations to investigate and report overpayments.

Here are five key aspects of the final 60-Day Overpayment Rule that physicians and medical practices should keep in mind:

  1. What It Means to Identify an Overpayment

CMS clarifies that identifying an overpayment requires reasonable diligence and quantification of the overpayment.  Specifically, a provider has “identified” an overpayment when the provider “has or should have, through the exercise of reasonable diligence, determined that it has received an overpayment and can quantify the amount of the overpayment.”  In contrast, the proposed rule would have held providers to a “deliberate ignorance” or knowledge standard regarding the existence of an overpayment and would have included no leeway for quantification of the overpayment.

  1. The New Timeframe In Which Providers Must Identify Overpayments

One of the biggest questions that arose from the proposed rule was: “When does the 60-day clock to identify overpayments start ticking?”  The proposed rule called for providers to act with “all deliberate speed” to identify overpayments once they became aware of a possible billing error.  In its final rule, CMS provides a clearer answer to the question.  Providers will have up to 6 months to investigate a possible overpayment before the 60-day reporting period begins.

  1. The “Look-Back Period” Is Shortened

Part of a provider’s obligation with respect to overpayments under the ACA is to search through past records for overpayments after a provider identifies that it has received at least one overpayment.  CMS originally proposed a requirement that providers “look back” 10 years in their records for other overpayments in order to comply with this rule.  Acknowledging the unreasonable burden such a time period would impose on providers (both in effort and cost), in the final rule CMS has reduced the duration of the look-back period to 6 years.

  1. Documentation of Reasonable Diligence Is Advisable

In prefatory comments to the rule, CMS stated that it is “certainly advisable” for providers to document their diligence in investigating possible overpayments.  While documenting an investigation may not make a provider’s diligence “reasonable” per se, it may provide strong evidence of the provider’s efforts.

  1. Proactive Compliance

CMS emphasizes in the final rule that “reasonable diligence” requires not only reactive activities, such as a good faith investigation of potential overpayments by qualified individuals, but also “proactive compliance activities conducted in good faith by qualified individuals to monitor for the receipt of overpayments.”

The full text of the final rule may be accessed here:  https://www.federalregister.gov/articles/2016/02/12/2016-02789/medicare-program-reporting-and-returning-of-overpayments.

Be sure to consult experienced legal counsel if you would like further guidance on the Medicare 60-Day Overpayment Rule, including what steps your practice should take to proactively and reactively address potential overpayments.

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.

As of today’s date, Congress has not yet fixed or even patched the expected 21% cut to the Medicare Physician Fee Schedule.  A eNews alert sent out today by the Centers for Medicare and Medicaid Services notifies physicians of the following:

The negative update of 21% under current law for the Medicare Physician Fee Schedule is scheduled to take effect on April 1, 2015. Medicare Physician Fee Schedule claims for services rendered on or before March 31, 2015, are unaffected by the payment cut and will be processed and paid under normal procedures and time frames. The Administration urges Congress to take action to ensure these cuts do not take effect. However, until that happens, CMS must take steps to implement the negative update. Under current law, electronic claims are not paid sooner than 14 calendar days (29 days for paper claims) after the date of receipt. CMS will notify you on or before April 11, 2015, with more information about the status of Congressional action to avert the negative update and next steps.” (CMS Medicare Learning Network)

Physicians should keep a close on how this issue develops as it could impact practice cash flow even it a fix is put in place.

These days, more often than not, physicians and up on the short end of the stick when it comes to new health care legislation. However, last month a bill was introduced by Senator David Argall which, if passed, would give physicians and other healthcare providers important protection against retroactive insurance denials. Specifically, Senate Bill No. 554 would limit the period during which insurance companies could retroactively deny payment to 12 months after the date of the original payment. This would mean that if a payor makes payment on a claim, it would have only 12 months to later seek to recoup that payment if coverage is retroactively denied. The only time this rule would not apply as if the claim is fraudulent or improperly coded. The bill, which has been referred to the Banking and Insurance Committee can be viewed on the Pennsylvania Senate website.

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.