Medicare Update

Brian S. Werfel, Esq.Werfel & Werfel, PLLC

2012 Medicare Rates

• Ambulance Inflation Factor– CPI Update: 3.56% – Change from July 2010 – June 2011– MFP: 1.2%

2.4% Increase for 2012

GPCIs

•2010 – Revision to formula used to calculate GPCIs

– Resulted in overall movement of all GPCIs closer to 1.0

– “Hold Harmless” for GPCIs over 1.0– Expired in 2011

Productivity Adjustment

•MFP = 10-year moving average of the Private Nonfarm Business Multi-Factor Productivity Index

– Bureau of Labor Statistics metric

•For 2011 and beyond, annual update to Medicare Ambulance Fee Schedule will be equal to:

AIF = CPI-U – MFP

340

360

380

400

420

440

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

w/o MFP

w/ MFP

Effect on Future Updates

• Current temporary adjustments:– 2% urban– 3% rural– 22.6% super-rural– “hold harmless” for air ambulance

• Initially scheduled to expire on December 31, 2011

Temporary Adjustments

• December 23, 2011– Adjustments extended through February 29,

2011– Temporary “payroll tax” holiday

• Middle Class Tax Relief and Job Creation Act

– February 23, 2012– Adjustments extended through December 31,

2012

Temporary Adjustments

Debt Limit Compromise

• Budget Control Act of 2011

• 8/2/11

• Raised the debt ceiling

• Congressional “Super Committee”–12-member panel

• Tasked with finding $1.2 Trillion in budget cuts– Must make recommendations by 11/23/11– If Congress does not act on recommendations by 12/23/11, 2% across the board reductions in spending result

– This would include a 2% reduction in Medicare reimbursement

• Joint Select Committee on Deficit Reduction

– “Super Committee”– Tasked with finding $1.2 trillion in savings over 10 years

– Fails to reach agreement– 2% “sequestration” of Medicare payments

– Starting January 1, 2013

• Issue unlikely to be resolved prior to Presidential election

Sequestration

• Medicare Ambulance Access Preservation Act (MAAPA)

– 6% increase for urban and rural transports

– 22.6% increase for super-rural– 2012 – 2016

• On July 6, 2011, the A.A.A. sent a letter to President Obama and Congressional leaders from both parties

– Asking for support of MAAPA

Permanent Ambulance Relief

H.R. 1005House Sponsors

Jason Altmire ( D – PA) Tim Murphy (R – PA)

Dan Boren (D – OK) Richard Neal (D – MA)

Charles Boustany (R – LA) Devin Nunes (R – CA)

Charles Dent (R – PA) Collin Peterson (D – MN)

Michael Fitzpatrick (D – PA) Nick Rahall (D - WV)

Jim Gerlach (R – PA) Mike Ross (D – AR)

Charles Gonzalez (D – Tx) Aaron Schock (R – IL)

Martin Heinrich (D – NM) John Tierney (D – MA)

Maurice Hinchey (D – NY) Paul Tonko (D – NY)

Michael Michaud (D – ME) Peter Welch (D – VT)

Christopher Murphy ( D – CT)

S. 424

Senate Sponsors

Robert Casey (D – PA) Patrick Leahy (D-VT)

Susan Collins (R-ME) Pat Roberts (R-KS)

Kent Conrad (D-ND) Bernard Sanders (I-VT)

John Kerry (D-MA) Charles Schumer (D-NY)

Mary Landrieu (D – LA) Debbie Stabenow (D – MI)

Frank Lautenberg (D-NJ)

GAO Report

• Middle Class Tax Relief and Job Creation Act

• Updated GAO Report on Medicare payments for ambulance

– A.A.A. had call with GAO to discuss structure of survey

– Survey expected to go out 2Q 2012

• 2007 GAO Report– Medicare pays an average of 6% below cost– 17% below cost in super-rural areas

MedPAC

•Middle Class Tax Relief and Job Creation Act

•MedPAC to study ambulance reimbursement

–Appropriateness of temporary adjustments–Need to reform current payment structure

–Inclusion of temporary adjustments in payment for base rates

•Report due June 15, 2013

2010 Medicare Payment Data

FY 2010

FY 2010 v. FY 2009

FY 2010 v. FY 2009

Dialysis

Dialysis

ANSI 5010

• Initial Implementation Date: January 1, 2012

• Enforcement Delays:– Through March 30, 2012– Through June 30, 2012

• Medicare compliance:– 70% of Part A claims – 90% of Part B claims

ANSI 5010

•Problems:– Clearinghouses

– Zirmed – 27% of payers (~ 1000 payers) still sent claims in 4010 format

– Gateway – 20 pages of non-compliant payers

– Medicaid Programs– Commercial payers

Medicare Contracting

Reform

Medicare Contracting Reform

• 15 Existing MAC Jurisdictions being reduced to 10 “Super MACs”

• Transition period:–2010 – 2014

Current MAC Jurisdictions

Consolidated MAC Jurisdictions

Jurisdiction F

• Awarded to Noridian Administrative Services–AL, AZ, ID, MT, ND, OR, SD, UT, WA, WY

–Transition completed February 2012

Jurisdiction H

• Awarded to Highmark Medicare Services – November 8, 2011 – AR, CO, LA, MI, NM, OK, TX

• Protest has been denied, transition moving forward

• Highmark Medicare sold to Diversified Service Options– Renamed “Novitas Solutions, Inc.”

• On April 5, 2011, Congress passed a bipartisan repeal of the provision of ACA requiring companies to report payments of more than $600 to any particular vendor

– President Obama signed it into law on April 14, 2011

– First repeal of any provision of ACA

1099 Repeal

• Community Living Assistance Services and Support Act

–Long-term care insurance regime–Part of ACA

• February 8, 2012 –House of Representatives votes to repeal–Secretary Sebelius previously suspended implementation

–Acknowledgement that it could not be adequately funded

CLASS ACT

•Independent Payment Advisory Board•Board would oversee Medicare costs

–Will have authority to recommend policy–If Congress does not act on their recommendations, the IPAB recommendations become policy

•March 22, 2012–House votes (223 – 181) to repeal IPAB–Unlikely Senate will vote before election

IPAB

• March 29, 2012

• 228 – 191 vote –Split basically along party lines–10 Republicans voted “no”

• Medicare–Would raise Medicare eligibility age to 67–Those 55 and under would get a “premium support” payment

–To be used to purchase private insurance

2012 House Budget

Proposed Rule On Return ofOverpayments

Background

• Section 6402(a) of the Affordable Care Act

• New 60 day requirement to report and return overpayments

• False Claims Act liability• Proposed Rule (Feb. 16, 2012)

Contents of Proposed Rule

• Overpayment must be returned:– 60 days after it has been “identified”– By next cost report

• An overpayment is “identified”:– Provider has “actual knowledge”, or– Acts in “reckless disregard or

deliberate ignorance” of overpayment

“In some cases, a provider or supplier may receive information concerning a potential overpayment that creates an obligation to make a reasonable inquiry to determine whether an overpayment exists… failure to make a reasonable inquiry, including failure to conduct such inquiry with all deliberate speed after obtaining the information, could result in the provider knowingly retaining an overpayment because it acted in reckless disregard or deliberate ignorance of whether it received such an overpayment.”

Examples of Identified Overpayment

• Incorrect coding of claims• Services provided by an unlicensed

or excluded individual• Results of an audit by a Medicare

contractor• Significant increase in Medicare

reimbursement, without any obvious explanation

A.A.A. Comment Letter

• A.A.A. submitted a comment letter asking CMS to clarify when an overpayment has been “identified” in the context of a post-payment audit– What if you agree only in part with the auditor’s

findings?– Do you return portion you agree with?

• A.A.A. is asking that the overpayment not be “identified” until the later of:– Exhaustion of appeal rights– Expiration of time to appeal to next level

• A.A.A. submitted second comment letter on issue of “scienter”

Patient Signature

Requirement

Authorized Representative

• CMS Claims Processing Manual (Pub. 100-04), Chapter 1, Section 50.1.3

• When a person signs on patient’s behalf, Manual seems to imply that you must list the address of the person that signs– WPS announced that it will enforce this

requirement

• CMS is aware of requirement, but not focused on its enforcement at this time– CMS looking into changing Manual

requirement

Common Problems

Lifetime Signature

Contractor Interpretation

• Contractors that currently do not accept lifetime signature – WPS – Palmetto GBA– Railroad Medicare– Q2 Administrators

– QIC for Southern half of country

Q2A Decision

• The current regulation clearly indicates that ambulance services can use a lifetime signature

• CMS says the signature proves a trip was done

But how can a signature you get today prove that you did a trip a

year from now?

The Catch-22

• Contractors are interpreting regulation to state that a signature cannot be used for future trips

– No prohibition on using signature for past trips

• A possible approach:– Make sure your signature language includes a

reference to past claims– Hold claims for patient until you get actual

patient’s signature

Solution for Repetitive Patients

• CMS has indicated that it will require all existing Medicare providers and suppliers to “revalidate” their Medicare enrollment information

• Original target date: March 2013

• Extension: March 2015

• Medicare contractors given discretion on when to revalidate various provider groups

Medicare Revalidation

• Provider Enrollment, Chain and Ownership System

–Medicare’s electronic enrollment database

• CMS has indicated that it wants all providers and suppliers enrolled in PECOS by the end of this year

• Medicare contractors implementing this policy by requiring providers/suppliers to “revalidate”

PECOS

• Process:– Establish a web user account

– https://pecos.cms.hhs.gov/pecos– Complete questions to verify that person

completing process is an authorized person– Download and return Security Consent Form

• CMS has indicated that the PECOS enrollment process can take several weeks!!

PECOS

• Medicare contractor sends you a request to revalidate– You have 60 days to respond– Failure to respond can result in termination of your

billing privileges– 1 year ban on “re-enrollment”

• 60 days to:1. Complete PECOS enrollment2. Get web user account3. Gather information to revalidate4. Complete revalidation process

The Nightmare Scenario

• Transmittal 400 (November 2011) added new enrollment requirements for air ambulance providers

–Included providing a valid FAA 135 Certificate–Problem was FAA Certificate holder might be an “air services vendor”

• Transmittal 408–February 22, 2012–Amends earlier transmittal to permit submission of valid FAA Certificate held by air services vendor

Air Ambulance Enrollment

• Transmittal 2373–December 21, 2011–Clarifies CMS policy regarding diagnostic and related non-diagnostic services provided by physician groups affiliated with a hospital during the 3 days immediately preceding an inpatient hospital admission

–Confirms these services are bundled

• Ambulance not bundled–No change in policy

“3 Day Payment Window”

IRS Withholding

• Tax Increase Prevention and Reconciliation Act of 2005– Required 3% withholding of all

payments to federal contractors– Including health care providers– Scheduled to take effect on January 1,

2011• 2010 Stimulus Bill

– Delayed implementation until 2012

IRS Withholding

• Vow to Hire Heroes Act of 2011– November 21, 2011– Repealed 3% withholding

requirement

Veterans Administration

• Vow to Hire Heroes Act of 2011– Incentives for employers to hire

veterans– Provision revised payments to non-

contracted ambulance providers– Lesser of:

– Actual Charges, or– Medicare allowable

ICD-10 Codes

• October 1, 2013– Scheduled implementation date

•CMS has issued a proposed rule to delay enforcement to October 1, 2014

• ICD-9 Codes: ~ 17,000• ICD-10 Codes: ~ 150,000

If you want to laugh:http://www.youtube.com/user/findacode

Fraud and Abuse

The Post-Health Care Reform Landscape

•CMS estimates that Medicare lost more than $24 billion on fraud and abuse in FY 2009–Roughly 7.5% of total payments

•Other experts place the number at as high as $70 billion per year!!

The Scope of the Problem

• Both political parties agree that reducing fraud and abuse should be a top priority of CMS– Polls well– It allows each side to claim

“savings” without actually having to reduce benefits to Medicare beneficiaries or payments to providers

A Bipartisan Consensus

•ACA allocated an additional $250 million to fund additional audits

•New provisions that allow Medicare contractors to use recoupments to fund further anti-fraud activities

–Allow process to become self-sustaining!!

Funding for Anti-Fraud Measures

• Prepayment:– Enhanced enrollment screenings– Moratoriums on new enrollments– Power to suspend payment– Termination of billing privileges– Mandatory compliance programs– Shorter time limits for submitting claims

• Postpayment:– Requirement to report overpayments– New RACs for Medicare Advantage and Medicaid– Increased penalties for fraud and abuse

ACA Anti-Fraud Provisions

• Effective March 23, 2011

• All ambulance providers assigned to “moderate risk” category– License Checks– Site Visit

• Application Fee– $523 in 2012– Increased annually by CPI-U– Applies to all enrollment filings

• Not to simple updates to your existing information– e.g., adding a new vehicle to your fleet

Provider Enrollment

• CMS and the OIG are required to establish procedures for the creation of a probationary period following initial enrollment in Medicare, Medicaid and SCHIP programs– Not less than 30 days nor more than 1 year

• Providers/Suppliers would be subject to increased oversight during this period– Prepayment reviews– Manual review of claims (vs. electronic

processing)

Probationary Period

• Expanded rights to suspend payments to a provider based upon a “credible allegation of fraud”

• February 2, 2011 Final Rule– “Credible Allegation” includes an allegation from any

source that has an “indicia of reliability”• Fraud Hotline Complaints • Claims Data Analysis• Provider Audits• Whistleblower Suits

– State Medicaid Agencies are required to investigate allegation before CMS can act to suspend payments

Power to Suspend Payments

• CMS has the right to terminate a provider’s Medicare billing privileges to the extent their Medicaid billing privileges have been revoked for “cause”

• Reciprocal right to revoke Medicaid billing privileges upon revocation of Medicare billing privileges

Termination of Billing Privileges

• Effective January 1, 2010• Time limit for submitting claims reduced to 1 year from date of service

• Exceptions– Administrative error– Retroactive Medicare eligibility– Retroactive Medicare eligibility & Medicaid

recoupment– Medicare Advantage recoupment

New Time Limits

• Transmittal 2140• January 21, 2011• Time limit can be extended for:

– Administrative Error– Retroactive Medicare eligibility– Recoupment by Medicaid following retroactive

Medicare eligibility– Recoupment by Medicare HMO or PACE

organization following retroactive Medicare eligibility

Exceptions to Time Limit

• Under certain circumstances, CMS can temporarily prevent new providers from enrolling in Medicare, Medicaid or SCHIP

• Based on evidence of “systemic” fraud and abuse

–IG considering a freeze on enrollment of new ambulance providers in Los Angeles County, CA

Moratoria on New Enrollments

•Rep. Kevin Brady (R – TX 8th) is calling for hearings on Medicare ambulance fraud in Houston–Fallout from Houston Chronicle articles

•2009 Medicare Payment Data–$62 million spent on ambulance in Houston

–$7 million spent on ambulance in NYC

Harris County, Texas

• Sen. Orrin Hatch (R – UT)

• Sen. Charles Grassley (R – IA)

• February 2, 2012 letter to HHS Secretary Sebelius

–Asking for steps CMS is taking to curb ambulance abuses in Houston

–Focus on dialysis–Asking specifically why CMS has not imposed a temporary moratorium on new enrollments

Harris County, Texas

•The shift to targeted prepayment reviews represents a fundamental shift in the relationship between our industry and the Medicare Administrative Contractor

– From a simple “conduit for payment” to a true “gatekeeper”

Changing Audit Landscape

“In 2007, Medicare paid $38 million per year to Texas ambulance suppliers related to excess services per beneficiary, compared to services per beneficiary in the remainder of the U.S. Audit findings…show that much of the

excess is not justifiable based on the patients’ conditions.”

Dialysis in Texas

• Initial Response: –Pre-pay Review–A0428 RJ & JR–After 12th transport in a year

•90+ % denial rate!!!• Revised Response

–Effective July 1, 2011–Edits expanded to include transports originating from SNFs and ALFs

–Claims will now be denied!!

TrailBlazer’s Response

Texas Dialysis

350,000

400,000

450,000

500,000

550,000

600,000

2007 20082009

2010

Allowed #

Allowed #

Texas Dialysis

0

50,000,000

100,000,000

2007 2008 20092010

Medicare Paid $

Medicare Paid $

Texas Dialysis

0.00%5.00%

10.00%15.00%20.00%25.00%30.00%35.00%

2007 2008 2009 2010

% of Claims Denied

National Average

• 2008 Medicare Payment Data– Puerto Rico:

–620,497 beneficiaries–Allowed dialysis transports – 407,409

– CA, FL, NY Combined:– ~ 10.5 million beneficiaries–Allowed dialysis transports – 356,572

– i.e., 50,000 FEWER dialysis transports

Puerto Rico – Dialysis

•100% Prepayment Review for dialysis transports in PR and USVI

•Selected prepayment reviews in South Florida

– e.g., Miami-Dade County

First Coast’s Response

Puerto Rico – Dialysis

0

20,000,000

40,000,000

60,000,000

20092010

Medicare Paid $

Medicare Paid $

• Hospital discharges to nursing homes–“HN”–High error rate

• Prepayment review–December 14, 2011–Denial rates:

–12-15% statewide–Higher for some providers

First Coast – Florida

• Statewide sample of hospital discharges–124 claims reviewed–107 denied

• As of now, nothing further

• Could be prelude to a statewide prepayment review, similar to Florida

NGS – New York

•Prepayment reviews for:–ALS Emergency (A0427)–BLS Non-emergency (A0428)–Mileage (Ao425)

Palmetto – NC, SC & VA

•Prepayment reviews for:• Dialysis

• Prepayment review also creates the potential for problems with patient signature

• Railroad does not accept lifetime signature

• Hospital discharges• Air ambulance

Palmetto – Railroad

Comparative Billing Report

Comparative Billing Report

Comparative Billing Report

•The “peer group” against which you are measured includes not only private ambulance services, but also fire departments and volunteers that only do emergency transports

–Skews the comparison between you and your “peers”

A Flawed Report

•Confirmation that CMS and its auditors are focused on the non-emergency side of our industry–Dialysis in particular!!

•Auditors use similar methodologies to select providers for audit!!

However…

• City of Dallas–$2.5 million settlement–Allegations of improperly billing “all ALS”–Debate as to whether overbilling was fault of City or its billing agent

• 12 neighboring cities paid $1.2 million to settle similar charges

–Same billing agent

“All ALS” Billing

•Further Fallout:–U.S. Attorneys in Midwest are doing audits of large municipal providers to see if they have similar issues related to “all ALS” billing

–TrailBlazer doing selected prepayment reviews of providers with relatively high percentages of ALS emergencies

–Percentage of ALS-E runs vs. BLS-E runs

“All ALS” Billing

Brian Werfel, Esq. Werfel & Werfel, PLLC

631-582-3283bwerfel@aol.com