+ medicare, legislative and regulatory update for clinical laboratories what does washington have in...

+Medicare, Legislative And Regulatory Update For Clinical Laboratories

What Does Washington Have in Store For Clinical Laboratories? Legislative and Regulatory Updates For Clinical Laboratories Kansas City CLMA Conference 2012Presented by: Christopher P Young, CHC : [email protected]

+ Objectives

Understand what the government intends to do in the area of regulatory and Medicare and Medicaid compliance and how it will affect clinical laboratories

Plan for upcoming regulatory and billing changes that may be imposed by the government by hearing specific “best practices” for these changes

Get specific information about questions participants may have concerning their own laboratory problems and issues during the question and answer portion of the program

+Current Issues

Medicare fee schedules for laboratory services will be reduced in 2013

Molecular testing and coding will go into effect this year with pricing still uncertain

Election year will bring more intensive scrutiny of Medicare and Medicaid fraud and billing issues

New compliance challenges will begin to emerge in 2013 The spread of electronic health records will introduce new

opportunities for fraud and abuse by some providers Payment increases for meeting quality measures will also

add compliance risks for laboratories

+Current Issues

Increased activity by Medicare audit and fraud subcontractors RACs, ZPICs, CERT and MICs likely to increase number and

kind of audits Contractor’s knowledge and skill in conducting audits, in

target selection and data analysis will improve Young government attorneys trying to “make their bones”

by prosecuting big health care cases

+Current Issues

Changing of the guard at the OIG’s office Long time chief counsel Lew Morris retires from the OIG

CLIA Proficiency Testing (PT) issues puts additional pressure on labs to be more diligent in their compliance efforts beyond billing and coding

New effort to find HIPAA violations Shift from waiting for reports to auditing

ICD-10 delayed until October 1, 2014

+The Fee Schedule

Best case for 2013 – a negative 2.95% update to the fee schedule Based on the current update formula of CPI-U (1.7%)-

productivity adjustment (0.9%)-1.75% from competitive bidding negotiations = 0.95%

Then take additional 2.0% cut to help pay for physician fee schedule fix

Total is 2.95% cut no matter what

Worst case so far – negative 4.95% update In addition, potential -2.0% from the deficit reduction deal

cut in 2011 = Total = -4.95%

+Budget Cuts

The additional -2.0% is the sequestration for across-the-board cuts to obtain at least $1.2 trillion in savings over the next 10 years Cuts are split equally between defense spending and non-

defense spending

Already raising controversy, particularly in defense spending, and may change Even if changed, the money will have to be saved and

providers will fight over who gets cut the most

Other potential loss of revenue could come as a result of the the medical device tax if it doesn’t get repealed

+Compliance Perspective

When revenue gets tight, competition gets ruthless and cost cutting occurs Labs may cut compliance budgets Take bigger risks in the marketplace as competition gets

fierce

Compliance officers must meet this challenge Find ways to reap revenue benefits from compliance

program activities like auditing Closely monitor “deals” to find ways to make them work

while remaining compliant Requires compliance officers to step up and be true experts

in rules and regulations

+Coding and Billing Still High Risk With Some Areas of Focus More Important

Make sure that test ordering and claims processing are without error Requires automated editing systems

Toxicology and billing for pain management clinics is a high risk area in 2013

Date of service where the 14 day rule for complex genetic tests is involved

Molecular and genetic testing with the new codes and pricing scenarios

Skilled Nursing Facilities (SNF) billing, ESRD testing and Hospice

+Errors vs Fraud

Simply, errors are unintentional violations of Government or Medicare billing and/or coding rules and regulations

Fraud is intentional violations of Government or Medicare billing and coding rules and regulations

Both “errors” and “fraud” can result in improper payments

Improper payments was defined in the ‘‘Improper Payments Information Act of 2002” as:

(A) means any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements; and

(B) includes any payment to an ineligible recipient, any payment for an ineligible service, any duplicate payment, payments for services not received, and any payment that does not account for credit for applicable discounts

+Errors vs Fraud

Prevention of making improper payments is the duty of the payer Usually accomplished by using computer edits to identify and deny

improper claims Educating providers and suppliers about billing errors and claims

submittal problems

Prevention of submitting claims that result in improper payments is the duty of the provider or supplier Usually accomplished by using computer edits to prevent improper

claims from being sent to the payer Educating employees and clients about billing errors and claims

submittal problems

Improper payments can result in the appearance of fraud when there is no fraud

+Causes of Improper Payments

Medically Unnecessary Services Claims are placed into the medically unnecessary category

when claim review staff identifies enough documentation to make an informed decision that the services billed were not medically necessary based on Medicare coverage policies or other medical necessity criteria.

Insufficient documentation errors An insufficient documentation error occurs when the

provider does not submit sufficient documentation to determine whether the claim should have been paid

+Claims Review Programs

The overall goal of CMS’ claims review programs is to reduce payment errors by: “identifying and addressing billing errors concerning

coverage and coding made by providers” and suppliers

10% of all Medicare fee for service claims payments are improper

CMS employs various contractors to process and audit claims submitted by providers and suppliers

+Contractors and Responsibilities

+Prepayment and Postpayment

+AC/MAC Medical Review

Tracks and monitors error rates produced by the CERT program, the Recovery Audit (RA), analysis of claims data and other information and sources

Identifies suspected billing problem

Targets Medical Review (MR) activities at the identified problem and reviews a sample of claims

Verifies an error exists and classifies the error for severity as minor, moderate or significant

Imposes corrective action appropriate for the severity of the problem

+Corrective Actions

Informs the provider of proper billing procedures

Imposes a prepayment review process that may include MR of a sample of claims, or all claims, depending on severity which requires review BEFORE claims are paid Results in delays in payment for the claims under MR

Imposes postpayment review which involves an MR of a sample of claims without requesting all records from the provider Sometimes none are requested

+Review of Records

Either prepayment or postpayment reviews may require providers or suppliers to provide medical records or other documentation in support of the claim

Providers should supply all documentation requested or provide a reason for not providing a document

Providers should supply the information within the time frame required or the claims will be denied

+Demands, Appeals and Voluntary Refunds

Becomes important as auditing activity increases on both sides

There are risks associated with each demand for a refund Paying the refund without challenge could be seen as an admission of

inaccurate billing The 60 day refund time frame does not leave a lot of room for review

and internal audit

Your own audits may result in your laboratory making “voluntary refunds” Risks associated with voluntary refunds include exposure to wider

audits by contractors Challenges of your auditing result especially when the refund is based

on a sampling and not a 100% population review Could expose your lab to prepayment reviews or even payment

suspensions if seen as egregious

+ Recovery Audit Program (RA)

Recent RA statistics (1/1/12 - 3/31/12) published by CMS show: National totals are $588.4 million in overpayments

collected and $61.5 million in underpayments returned to providers

None of the top issues, per region, directly involved laboratories however many laboratories are reporting RA audits occurring in their laboratories

Some of the issues they are seeing include audits related to SNF billing, Hospice and ESRD billing errors, still seeing some physician signature issues, Auditors asking the lab to get records from the provider


• For the 1st time CMS has published a new report on the RA program which is titled “Recovery Audit Program Appeals Update”– The update was published June 2012

• The report is important because RAs are paid on a contingency basis and CMS retracts any contractor payment that are later overturned on appeal

• The report includes aggregate data for Fiscal Year 2011


The report provides information as overall numbers, claims by the type of review (automated, complex, unknown) and appeals by the type of claim whether they were Part A, Part B Or DME

The report shows that providers have had some success in overturning overpayment determinations on appeal


Findings of the report: There were 903,372 claims with overpayment

determinations Of these providers appealed 56,620 and were successful in

overturning 24,548 (43.4% of appealed claims were overturned)

Unfortunately, many providers chose not to appeal overpayment determinations so the overall percentage of claims overturned is just 2.7%


• Findings of the report (continued):– There were 31,297 automated claims appealed with 17,893

(57%) of those overturned resulting in $5.94 million provider saved by appealing

– There were 22,188 complex claims appealed resulting in 4,426 overturned and $29.95 million saved by providers

– In the unknown category there were 3,135 claims appealed, 2,229 of those overturned resulting in $1.98 million saved by providers

• Many laboratory claims fall into the automated category and because they often come to the laboratory in small batches or refund amounts are relatively small, laboratories tend to not appeal them


• Findings of the report (continued):– Looking at the appeals by the type of claim, there were

197,739 Part A claims and 410,208 Part B claims (607,947 total) with overpayment determinations

– Of these, 47,564 were appealed with 20,618 decided in the provider’s favor (43.3% as noted previously)

– The report has a comment on this section that says “Often times Part B and DME claims are corrected through the appeals process which means the reasons for denial is upheld but the provider is allowed to correct the claim and rebill using the appropriate code(s)”

– Most laboratory claims are likely Part B for the purposes of this report

+ Recovery Auditor Program (RA)

In my experience, working with laboratories who are dealing with RA audits, the supporting documents for the audits and the interpretations made by the auditors often contain inaccuracies and inconsistencies in terms of the overpayment determination

Laboratories need to make a decision concerning RA audits and the information provided in those audits of whether they will appeal or not

In many cases, laboratories do not appeal because the cost of the appeal process often is financially not beneficial, in other words, it’s cheaper to write them off then to appeal them, in the minds of the laboratory’s administrators

There may be unintended consequences of taking this course of action and the laboratory should carefully consider how they respond to demands for overpayments by RAC contractors and other fraud subcontractors

+ Potential Consequences

Generally speaking, the audits are conducted on a sample of claims representing a specific time frame

Auditors may extrapolate over payment amounts based on the sample resulting in larger refund determinations then may actually exist

If the laboratory agrees that the overpayments are justified and repays them, it must consider how to deal with similar cases that are outside of the timeframe used by the auditors In other words, the laboratory may find itself deciding on self reporting

additional refunds it suspects exist based on the findings of this particular audit

The results of these audits are reported to the Office of the Inspector General (OIG) and eventually could lead to other investigations

Prepayment review and medical review scrutiny is increasing

+The 60 Day Rule

A Medicare provider or supplier has 60 days to return an identified overpayment to the program or it faces potential liability under the False Clams Act (FCA)

Proposed rule published in February 16th Federal register, final rule pending

According to ALL sources I reviewed or talked to, the refund requirement has been in effect since March 23rd, 2010, the day PPACA became law because there is no provision deferral until regulations are finalized

+Reporting and Returning If a person has received an overpayment, the person “shall”

Report and return the overpayment Report means a written statement of the reason for the

overpayment Report shall be to the “Secretary, the State, an intermediary, a

carrier, or a contractor, as appropriate, at the correct address”

The deadline for returning and reporting is 60 days from the date the overpayment is identified or the date a cost report (if applicable) is due

Failure to report and refund by the 60 day deadline constitutes an actionable violation of law (an obligation) so, missing the deadline turns a simple error and refund into a potential FCA violation

+Various Provisions

An overpayment is anything that results in the provider or supplier receiving more than they are entitled to under the Medicare program

The “60 day clock” starts when overpayments are identified According to the rule, when a person has actual knowledge

of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment, the overpayment is considered “identified”

+Various Provisions

Providers must make a reasonable inquiry with all deliberate speed however, the rule does not specify what evidence triggers an inquiry When in doubt, investigate, document and act on the results

10 year “look back” period in the proposed rule requires providers to report and refund overpayments during the past 10 years Extraordinarily long period of time Reflects outer limit of FCA Unclear if this applies to overpayments prior to the March 23rd,

2010 effective date

CMS expects ALL providers will report some overpayments every year

33+Example Refund vs FCA

Example: Overpayment caused by computer error discovered in a routine audit – Test X @ overpayment of $10.00 per test. Test X volume is 15 tests/day

Refund example: Example – Test X @ $10.00/test – volume of 15/day for 3 months (21 days x 3=63 days) = 945 tests with a refund of $9,450.00

If not refunded in 60 days it becomes an “obligation” and is an FCA violation. Here is what happens under FCA Treble Damages - 3x amount of the overpayment or $28,350.00 (refund

part) Penalties - $5,500 - $11,000 per false claim filed

@ minimum penalty = $5,500/claim x 945 claims = $ 5,197,500 @ maximum penalty = $11,500/claim x 945 = $10,867,500.00

For a $9,450.00 refund problem not paid back in 60 days, FCA sanctions could go as high as $10.8 million

+Auditing And Being Audited

One of the best defenses for coding and billing risks is an effective auditing plan focused on high risk areas Routine auditing to catch problems Defensive audits when demands for refunds are received

Government auditors have not been very good so far and a fairly high percentage of refund demands are overturned if challenged with an appeal Problem is many providers do not appeal

Cost of appeal outweighs refund amount Fear of contractor retaliation Unsure or coding and billing regulations

+Appeals

There are 5 levels to the appeals process Redetermination Reconsideration (QIC) Administrative Law Judge Hearing (ALJ) Appeals Council Review Judicial Review in US District Court

Beginning with the Administrative Law Judge Hearing, there is a minimum monetary amount that must remain in contention after the first two levels of appeal

+Know What You Are Doing and/or Get Expert Help

Develop auditing skills through education, conferences and self study

Practice your skills by conducting mock audits or real audits of your own billing and coding

Make sure you thoroughly understand the rules and regulations and the appeals process or hire an expert that does

Read all government documentation that accompanies a demand for a refund carefully and critically, looking for errors and misquotes etc.

Make certain you supply the appropriate documents requested and make note or comment on anything that is missing or cannot be provided

Conduct your own review of the requested records and documents

+New Codes for 2013

No code by code analysis for the changes in 2013 as reported by CMS in its “Preliminary Payment Determinations” document published on their website

http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ClinicalLabFeeSched/Downloads/CLFS-CY2013-Preliminary-Payment-Determinations.pdf

Or, Google “2013 CMS laboratory cpt payment determinations” without the quotes and click on the appropriate link

+Main Focus – Molecular and Genetic Tests

AMA is deleting the molecular stacking codes from the CPT book for 2013

All entities submitting claims for these tests must use the new molecular codes for which pricing has not yet been set

CMS has decided that many of these tests, but not all, are clinical laboratory tests and should be paid under the clinical lab fee schedule

Some of these tests require physician work and should be placed on the physician fee schedule

They will publish that information simultaneously with the release of the final physician fee schedule rule in November

+Gap Fill, Crosswalk or RUC Valuation for Pricing

For those tests on the lab fee schedule, CMS has decided that they should be gapfilled rather than crosswalked to set the prices Most laboratory associations recommended crosswalking the

tests to the existing stacking codes Gapfill has been used infrequently in the past as crosswalk is

easier and well understood

Their rationale: Industry did not provide sufficient information for crosswalk

determinations Laboratories often use different code stacks for the same test

and stacks change over time Some of these tests are currently coded with miscellaneous

codes


Gap Fill: A process used when no comparable existing test is available Local Medicare Administrative Contractors (MAC) determine a MAC

specific amount for use in the first year the new code is effective MACs should examine:

Charges and routine discounts for the test Resources required to perform the test Payment amounts from by other payers Charges, payment amounts and resources required for

comparable tests

After the first year, the MAC specific amounts are used to calculate the National Limitation Amount (NLA) for subsequent years


Crosswalk: a process used if a new test is comparable to an existing test or its description One test may be crossed walked to multiple other tests if

appropriate The new test is given the local fee schedule amount and

the NLA Sometimes results in inappropriate pricing because it is

based on the local fee schedule amount


RUC Valuation: RUC means “Relative Value Scale Update Committee” and is a AMA committee that develops relative value recommendations for CMS for new or revised CPT codes Only applies to test paid under the physician fee schedule

The RUC is made up of physicians who represent most medical specialties There is a representative from pathology on the RUC

Payments for services are determined by dividing the resources used to provide this service into three components, physician work, practice expense and liability insurance

Payments are also adjusted for geographical differences in the resource costs

+Pros and Cons Between the CLFS and MPFS

There are no copayments for tests on the CLFS

There is a 20% co-pay for test on the MPFS

There is no standardized process that assures test prices will increase on the CLFS

To date, the MPFS has enjoyed regular annual increases in payments

Physician fee schedule tests are often split into a technical and professional components that may be billed separately Requires the use of modifiers and sometimes creates

additional compliance billing risks

+MAAAs? What Are These?

Multi-analyte Assays with Algorithmic Analysis (MAAA) These tests were previously called In-vitro Diagnostic Multivariate Index Assays

(IVDMIA)

An MAAA is a numeric score or probability based on the results of laboratory tests, and in some cases, patient information or other clinical data

The AMA’s Molecular Pathology Workgroup has developed a system for coding these assays

CMS has decided that it will not pay for the algorithmic analysis but will only pay for the underlying tests It considers these to be simple calculations like a creatinine clearance when they

are clearly much more complex than that The true value of the test lies in the algorithmic assessment and the score it

provides

This decision has the potential to stifle innovation in this area of personalized medicine

+CLIA Proficiency Testing Issue

Ohio state University’s Wexner Medical Center has been threatened with revocation of its CLIA certificate for violating proficiency testing standards under CLIA

Wexner referred proficiency testing (PT) samples to another laboratory because of a literal interpretation of the rules

The rule in question says that PT specimens must be tested in the same manner as specimens of regular patients

In the OSU case microbiology samples were referred for confirmation or for testing to another laboratory because that is what it would do with a patient sample

+Self Reporting No Benefit

Wexner reported its error to the Ohio Department of Health

However, after conducting a survey of the Center’s lab and receiving more than 100 pages of documents in support of its explanation, CMS revoked the lab certificate and its Medicare and Medicaid approval

The lab has since appealed and the sanctions are on hold for now

+CLIA; 493.801 Enrollment and Testing of Samples

Each laboratory must enroll in an approved program for each specialty or subspecialty in which it is certified

Testing requirements are included in 493.801(b) “Testing of proficiency testing samples” (1-4) PT samples must be tested with the regular test workload and by the

personnel who routinely test patient samples Samples must be tested the same number of times as patient

samples The laboratory may not discuss proficiency test results with any other

laboratory before the reporting date for the PT including other testing sites or locations owned by the same laboratory

The laboratory may not refer its PT samples to another laboratory for testing or reporting

The laboratory must report to CMS if it receives a PT sample from another lab for testing

+Legislation Required

The existing law does not allow CMS any flexibility in the case of a laboratory inadvertently violating the PT testing rules in CLIA

Errors can be made in high quality labs and samples can be referred or results discussed by mistake for a variety of reasons

Preventing a laboratory from providing critical testing services because of an inadvertent or unintentional error does not serve the purpose or intent of those who wrote CLIA regulation

Drastic action like revoking a lab’s certification can affect patient care goals and may cause harm to a patient because critical testing is not available when the patient’s physician needs it

+Taking Essential Steps for Testing (TEST) Act

The TEST Act, House bill HR 6118 and S 3391 (Senate Version), would change CLIA to allow the certifying agency an opportunity to make a case-by-case judgment in PT testing violations

Here is the “Official Summary”

Amends the Public Health Service Act to revise sanctions for laboratories that intentionally refer proficiency testing samples required for certification to another laboratory for analysis by: (1) giving the Secretary of Health and Human Services (HHS) discretion to substitute intermediate sanctions for such violations instead of the two-year prohibition against ownership or operation which would otherwise apply, and (2) making the one-year certificate revocation for such a laboratory optional rather than mandatory.

It also changes a word from “shall” to “may” in the context of the action it can take

+Taking Essential Steps for Testing (TEST) Act

The House version of the Bill (HR 6118) has been passed

The Senate version is still pending but is out of committee and up for floor consideration

Supporters hope it can be passed before Congress recesses for the election

©2012 MFME

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+ Objectives

Understand what the government intends to do in the area of regulatory and Medicare and Medicaid compliance and how it will affect clinical laboratories

Plan for upcoming regulatory and billing changes that may be imposed by the government by hearing specific “best practices” for these changes

Get specific information about questions participants may have concerning their own laboratory problems and issues during the question and answer portion of the program

+Questions and Discussion

We can discuss the information I provided during the presentation today or any other questions you may have

If others would like to add comment or share their experience don’t be shy

Networking among participants is one of the real benefits of these kinds of programs

Thank you for inviting me

+ medicare, legislative and regulatory update for clinical laboratories what does washington have in...

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