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HCCA Delaware ValleyJune 5, 2015

Robert F. Bacon, MHA

AVP & Billing Compliance Officer

Audits, Appeals &

Other Emerging Compliance Risks

Disclaimer

• Opinions expressed are my own and do

not represent any guarantees,

warranties or endorsements by the

University of Pennsylvania or its

Trustees

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• Emerging issues in the

field of Billing Compliance

oGovernment Audits

o Consumer awareness &

media

o 2 Midnight Rule

o Telemedicine

• Risk based auditing

Course Objectives

• Penn Medicine offers comprehensive clinical services throughout the greater Philadelphia region

• Practice Plans

– Clinical Practices of the University of Pennsylvania

– Clinical Care Associates

• Hospitals

– Chester County Hospital

– Hospital of the University of Pennsylvania (the nation's first teaching hospital)

– PENN Presbyterian Medical Center

– Pennsylvania Hospital (the nation's first hospital)

– Penn Medicine at Rittenhouse

• Home Care & Hospice Services

– PENN Care at Home / PENN Home Infusion Therapy

– Wissahickon Hospice

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From the beginning…Medicare 1965

And how things have changed…… Medicare 2015

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Regulatory Environment

� Federal & State Authorities

� Office of the Inspector General

� Department of Justice

� Centers for Medicare & Medicaid Services� Office of the State Attorney General

� Federal False Claims Act

� Pennsylvania False Claims Act

� Anti-Kickback Statute

� Beneficiary Inducement Law

� “Stark” law: Physician self-referral law

� Obamacare

Increased Government &

Non-Government Scrutiny

• Renewed interest in Federal audits focused on high level

Evaluation & Management services

� CMS Medicare Administrative Contractor performing

pre-payment audits

� Recovery Audit Contractors (RACs)

� Office of the Inspector General

• Significant increase in audits by private payors to include

coding validation and medical necessity

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Pace of Change with Post Payment

Audits Continues to Accelerate

Who What

RAs Recovery Auditors

MACs Medicare Administrative Contractors

PSCs Program Safeguard Contractors

ZPICs Zone Program Integrity Contractors

CERT Comprehensive Error Rate Testing

MIP Medicaid Integrity Plan

MIG CMS Medicaid Integrity Group

MICs Medicaid Integrity Contractors

MIGs Medicaid Inspector Generals

PERM Payment Error Rate Measurement

OIG Office of Inspector General

DOJ Department of Justice

FBI Federal Bureau of Investigation

Emerging Compliance Risk

• Implications of data mining

– “Pay and chase” is

yesterday’s news

– Common work file

– Government audits

predicated upon results of

data mining

– Requirement for providers

to self audit with

presumption that all

reported data is incorrect

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OIG Evaluation &

Management Coding

May 2014 report released addressing coding of E&M

services

� 55% of the claims reviewed were incorrectly coded

� There was a concentration on providers identified as

“high-coding” physicians

• Providers average code level was in the top 1%

for their respective specialty

• Individuals billed at least 100 E&M services

• Highest levels billed 95% of the time

� Majority of the findings were ± 1 level of service

http://oig.hhs.gov/oei/reports/oei-04-10-00181.pdf

Health Care Fraud Prevention &

Enforcement Action Team

(HEAT)

• Joint Medicare Fraud Strike Force

– Department of Justice, HHS/OIG & CMS

• Mission

– Help prevent waste, fraud & abuse

– Reduce cost & improve quality of care

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Medicare Audit Improvement Act of 2015

(H.R. 2156)

• Penn Medicine supports Federal lawmakers

efforts to reform the RAC program

• Substantial legal and administrative costs

attributable to the RAC program must be

reduced

• Misaligned financial incentives must be

eliminated

• Disproportionate audit sampling not addressed

Skewed Audit Sampling

by Recovery Auditors• Effective 8/5/13, record limit revised

– 70% of claim types such as inpatient

• Medical record limitation of 2% remains

– 160,000 x 2% = 3,200/year (max records)

– 2,240 limit per claim type (e.g. 70% Acute I/P)

– Inpatient fee-for-service admissions of

8,000/year (5.5% of total claims population)

28% of annual admissions in audit

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Medicare Appeal Process –

5 Levels

• Redetermination – Medicare Administrative Contractor (MAC)

– 120 days to file

– 60 days for decision

• Reconsideration – QIC (Qualified Independent Contractors)

– 180 days to file

– 60 days for decision

• Administrative Law Judge (ALJ) hearing

– 60 days to file – minimum $ amount in controversy

– 90 days for decision

• Department Appeals Board

• Federal District Court – Judicial review

Preparing for Audits

• Assume ALJ hearings for all appeals and prepare files accordingly

• Submit copies of supporting documentation beyond medical records

– Coding clinics

– Applicable Federal or local regulations

– Professional literature to include morbidity & mortality data

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View from the Trenches

• Providers must have aggressive appeal strategies

• Prepare appeals with expectation of ALJ hearings

• Consider external assistance with appeal expertise

& proven success rates

– Executive Health Resources (EHR)

Practical Considerations &

Key Decision Points

• Are findings related to coding or medical

necessity?

• File an appeal?

– Stop recoupment?

• Financial risk associated with interest

(9.625% as of December 2014)

– Probability of favorable outcome?

• File appeals with expectation of ALJ hearing

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Practical Considerations & Key

Decision Points

• Risk associated with extrapolations

– Integrity & validity of statistical sample

– What is the population subject to the

extrapolation?

– Need for external consultant?

– Applied in recent OIG audits of hospitals and

IRF

– Connelly previously approved for level 5 E&M

audits

Automated Tracking Essential

• Ability to mange medical record request is

vital

• Ability to manage and track audit and

related appeals

– Timely filing

• Informative reporting to all stakeholders

– Informed decision making

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View from the Trenches

• Substantial increase in operating costs to

manage audits and related appeals

• Hospitals must incorporate monitoring activity

with benchmarking data

– Risk avoidance

– Identification of opportunities

• Consider in your annual audit plan

Public Awareness

• Consumer awareness & media attention

• Reputational risk

• Justification of charges

• Accurate CDM

� CDM Manager

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Medicare Provider Utilization

& Payment Data

…billed for the most costly,

most complex visits

almost exclusively…

far more than their peers.

Electronic Medical Record

• All rules apply� No different than paper

• Integrity� Do not share sign-on and

password

• Credibility� Copy & Paste

• Complete, accurate, timely� Audit trail

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Cloned and Default

Documentation

Cloned defined:– Exact wording or similar to previous entries

– Documentation is exactly the same from patient to patient

Default data: – May document a more extensive history and physical examination than is

medically necessary

– Differentiation of new findings or changes in a patient’s condition could be overlooked

Documentation must reflect:– Condition necessitating treatment

– Treatment rendered

– And if applicable the overall progress of the patient to demonstrate medical necessity

Medicare Medical Review Letter

Electronic Medical Record

Documentation

Medical Necessity

Provider Performance

PatientSpecificity

• Documentation and Performance should be consistent with

patient’s presenting problem and provider’s clinical

judgment

• Ensure documentation reflects services provided during

the encounter

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2014 IPPS Final Rule

2 Midnight Rule

Material Changes in Admission Criteria

• Changes effective October 1, 2013

• 24 hour benchmark no longer applies

• Level of care and patient risk factors to include comorbidities does not determine cause for admission

• Newly created time based admission guideline

• Generally appropriate for inpatient Part A stay if patient-beneficiary crosses 2 midnights

• MAC conducted ‘Probe & Educate’ audits� unfavorable findings with 1 day stays

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2 Midnight Rule

• Physician expects patient-beneficiary to remain in the hospital

crossing at least 2 midnights

� Transfers: time spent in the sending hospital counts towards the

2 MN rule

• Outpatient if less than 2 midnights

�Exceptions

�Procedures listed as OPPS inpatient only;

�Patient expires; or,

�Patient transferred to another acute facility

• New guideline is consistent with CMS’s application of Medicare

utilization days

� Based upon number of midnights crossed

IPPS: Inpatient Prospective Payment System…..

The 2 Midnight Rule

�Admission order must be present in the medical

record • Order must be placed at or before time of admission

• Order must be evaluated in the context of the evidence in the medical

record

o Supported by admission & subsequent progress notes

�Physician must certify need for inpatient stay

• Must be signed and documented in medical record prior to discharge

• Recertify as of day 20 of admission and every 30 days thereafter

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Unforeseen Circumstance

• May result in a shorter beneficiary stay than the physician’s expectation (that the beneficiary would require a stay greater than 2 midnights)

– Death

– Transfer

– Departure against medical advice (AMA)

– Election of hospice care

– Unforeseen recovery

• Such claims may be considered appropriate for hospital inpatient payment

• Physician’s expectation & any unforeseen interruptions in care must be documented

Probe & Educate:

Lessons Learned

• Physician must document the ‘reason why’ they

would expect the patient to stay for two midnight

– Be specific, expand concerns

• Avoid use of the word “Observation”

– Use words like “monitor”, “watch”, and “follow

up”

• In the case of paper documentation – legibility is key

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2015 OIG Work Plan Inpatient

Admission Criteria

• Determine impact of new inpatient admission criteria on hospital billing, Medicare payments, & beneficiary copayments

• Determine how billing varied among hospitals in FY 2014

• Previous OIG work found overpayments for short inpatient stays, inconsistent billing practices among hospitals, and financial incentives for billing Medicare inappropriately

Ongoing since 2014

Innovations In Medicine & Technology Versus

Government Barriers

• Laws of supply & demand

– Managing scarce resources & improving quality of

life

• Significant government imposed billing obstacles

associated with telemedicine restricts use and access

– Geographical constraints;

– Credentialing/Privileging; and,

– Licensure

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Statutory Barriers to

Telemedicine

• Geographical constraints

– CMS restricts coverage to rural health professional shortage areas

– Metropolitan statistical areas excluded

• Physicians must be credentialed and hold privileges to practice in the hospital where patient is located

– Risk associated with delegated credentialing

• Physicians must be licensed to practice in the state

– Professional liability exposure

Risk Based Auditing

• Consider modifying audit scope/plan from

routine random sample selection to risk based

• Internal audit program must adopt data mining

techniques and tools

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Risk Based Auditing

• Identify risk areas such as providers billing patterns compared

to established benchmarks

– Analyze external data (e.g. Faculty Practice Solution Center) and

internal practice patterns

– Concentrate on high level E&M services rather than full random

sample

• Utilize external data for hospitals

�Program for Evaluating Payment Patterns Electronic Report

(PEPPER)

�MedPar (Medicare claims data)

• Review Internal denial reports for medical necessity

• Identify high risk DRGs for coding validation and medical

necessity audit

View from the Trenches

Hospital Audit Programs

� Inpatient programs must consider:

– High Risk DRGs

• MCC & CC’s supported by only 1 diagnosis

– One Day Stays

– Post Acute Care Transfers

– Clinical coding denials – loss of cc or mcc

� Use of claim editor systems

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Value Added Auditing –

Risk Based

• Audit sample

– Is audit population timely & reflective of current operations?

– Does sample consider institutional risk?

• Accurate & timely communications

• Audit findings

– Report unfavorable findings & opportunities

– Explain why in addition to what

– Management must recognize service orientation

Value Added & Risk Based

Auditing

• Recommendations

– Results must be timely

– Use audit results to make a difference

– Improve performance, efficiency and reduce risk

– Identify causation (I.e. go beyond identification

of discrepant data)

– Offer management a “road map” to correct

issues

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Audit Sampling

• Regular & periodic compliance reviews

– Sample size & tolerable error rate

– Focus on risk versus full random sample such as high

level E&M services

• Types of testing

– Trend analysis

– Transaction testing

�Documentation and related billing

�Requisition forms

– Interviews

AMC Audit Challenges

• “Cutting Edge” of medicine

– Introduction of new procedures &/or techniques that do not agree with CPT code descriptions (e.g. approach using arthroscopy versus open fashion as described in CPT)

– Use of unlisted codes

• Technological advances in medicine

– Extended timeframe for development of new codes

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AMC Audit Challenges

• Tertiary/quaternary care institutes

– Patient acuity

• Teaching Physician New Rules (TPNR)

– Required attestation & tethering language

– Service fully documented by resident but

insufficient documentation by teaching

physician (e.g. demonstrate participation &

management)

Summary

• Material increase in external audits by

government and private payors

• Risk associated with public awareness

• Innovations in medicine and technology subject

to government barriers such as telemedicine

• Adopting risk based audit programs is essential

in todays healthcare marketplace

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Actual clinical notes on patient charts:

10. Patient has left his white blood cells in

another hospital

9. Occasional, constant, infrequent headaches

8. The patient has been depressed ever since

she began seeing me in 2008

7. Patient has two teenage children, but no

other abnormalities

Actual clinical notes on patient charts:

6. The patient will need disposition, and therefore we

will get Dr. Smith to dispose of him

5. Rectal exam revealed a normal size thyroid

4. By the time he was admitted, his rapid heart had

stopped and he was feeling better

3. While in the emergency room, she was examined,

X-rated and sent home

2. Patient was seen in consultation by Dr Jones, who

felt that we should sit on the abdomen and I agree

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Actual clinical notes on patient charts:

1. Patient left the hospital feeling much

better except for her original

complaints