The Medicare Appeal Conundrum

Written By Nate Trexler

We have previously discussed in a number of forums the success achieved by providers in appealing Medicare claim audits and denials to the Administrative Law Judge (“ALJ”) level of the statutory appeal process.  Because of the success in overturning claim decisions, more and more providers have exercised their rights to appeal claim determinations or audits resulting in alleged overpayments.  The number of appeal requests submitted to the Office of Medicare Hearings and Appeals (“OMHA”) increased from approximately 1,250 per week in 2012 to 15,000 per week in 2014.  This incredible increase has caused a log jam, where the average processing time for an appeal request is now 464 days and providers are awaiting ALJ hearings in over 1 million appeals.

The OMHA simply cannot keep up.  This backlog resulted in a Center for Medicare Advocacy class action suit filed in August, seeking declaratory, injunctive, and mandamus relief to compel the federal Department of Health and Human Services to meet the 90-day statutory deadline for reviewing appeals of claim denials.  The American Hospital Association filed a similar lawsuit.

At the end of last year, faced with a backlog of pending appeals involving over 460,000 claims for services and entitlement, the OMHA suspended the assignment of new provider appeals to ALJs for at least 24 months.  Many in the healthcare industry point to increasing RAC audit denials as the reason for the strain on the appeal system.  The American Hospital Association reported that there was a 30-fold increase in RAC denials since 2010.  Hospital appeals have seen a corresponding increase from around 17 per hospital in 2010 to more than 300 per hospital in 2013.  According to the American Hospital Association, hospitals won nearly 70% of the claims for which the appeals process was completed.

In an effort to reduce the pending appeals, CMS has offered an “administrative agreement” to acute care hospitals and critical access hospitals that agree to waive their right to an appeal in exchange for a partial payment of 68% of the net payment amount.

CMS also announced two new initiatives it hopes will reduce the backlog: the Settlement Conference Facilitation Pilot and the Statistical Sampling Initiative.

The Settlement Conference Facilitation Pilot adopts an alternative dispute resolution process in order to negotiate settlements, rather than litigate the claims dispute through the administrative appeal process.  There are a number of criteria that must be met to be eligible, including the fact that it is only available to Part B claims and appeals filed in 2013 but not currently assigned to an ALJ.  This may be a viable alternative for physicians with Part B claims currently stalled in the process.

The Statistical Sampling Initiative is available to claim appeals currently assigned to one or more ALJs or filed during a specific time period.  The Initiative is designed to streamline the appeal process for providers with a large number of claims.  A statistician will select a sample and the ALJ will make a decision based on the sample.  After a decision is reached, a CMS contractor will extrapolate the result of the sample to all of the claims at issue.

These programs will not work immediately, and the 24-month delay remains until OMHA can handle the backlog.  This delay can have a noticeable impact on providers with solid defenses that claims were payable under the Medicare program.  While we strongly encourage an appeal through all levels of the statutory process, providers may face waiting years from when CMS recoups alleged overpayments to when an appeal is fully adjudicated and any potential funds are returned to the provider.  There is no doubt that the audit appeal process should be overhauled.  Likewise, the RAC program should be modified to avoid erroneous denials that tie up providers’ funds for long periods of time. 

In the meantime, providers should focus on internal compliance efforts to prepare for that next audit.

Delaware Facilities that Perform Invasive Medical Procedures: Prepare for Enforcement

Written by Nathan Trexler

Back in February, the Delaware Department of Health and Social Services published a final rule setting forth standards for never before regulated Delaware health care facilities: medical and dental offices.

Pain management physicians, podiatrists, and dentists that perform “invasive medical procedures” in their respective offices are now required to comply with new patient care, medical record, infection control, patient rights, and physical/environmental standards never before applicable to medical or dental offices.  Many Delaware providers may not realize that these regulations could apply to their practices.

An “invasive medical procedure” is defined as any medical procedure, including dental or podiatric procedures, in which the accepted standard of care requires anesthesia, major conduction anesthesia or sedation.  As you can see, whether the procedure is actually “invasive” does not factor into the meaning of the term at all.  For example, manipulation under anesthesia is not “invasive” in any sense, but the standard of care does require anesthesia.  Finally, “anesthesia” is defined broadly to include anxiolysis, conscious sedation, deep sedation, major conduction anesthesia, minimal sedation, moderate sedation or general anesthesia.  The definition of “anesthesia” explicitly excludes (1) local anesthesia, (2) the administration of less than 50% nitrous oxide in oxygen with no sedative or analgesic medications by any route, or (3) a single, oral sedative or analgesic medication administration in doses appropriate for the unsupervised treatment of insomnia, anxiety, or pain.

One of the more strenuous requirements for these offices is accreditation.  The regulations, per statutory direction, require any medical or dental office where invasive medical procedures are performed to be accredited by one of five different accrediting organizations.  The accreditation process can be lengthy and can pose considerable costs.  One accreditation organization that has been contacted reported that the minimum survey fee is roughly $4,300, with an application fee of $775.  This of course does not take into account the costs on a medical or dental practice for the staff time and effort necessary to help complete the accreditation process.  One accreditation organization reported that the accreditation process can take 4-6 months from the submission of an application. 

More problematic, however, is that accreditation organizations are not simply certifying Delaware facilities’ compliance with the Delaware regulations; they impose their own requirements.  For example, one accreditation organization requires a facility to have a governing body that is fully and legally responsible for the performance of the organization, which must satisfy a long list of specific governance requirements.  One such governance requirement is to establish a system of financial management and accountability and formulate long-range plans in accordance with the goals of the organization.  Other requirements govern the actual administration of the organization.  Many of the additional requirements not contemplated by Delaware law are entirely foreign to small medical and dental practices that are not accustomed to being treated like larger, formalized entities.

What is clear from correspondence with the Delaware Office of Health Facilities Licensing and Certification is that the standards, including accreditation, are ready to be enforced.  There are formalized complaint procedures contained in the regulations, and facilities are subject to sanctions, up to an order of closure or order to cease invasive medical procedures, for violations of the regulations.

All such facilities in operation as of July 5, 2011 were required to submit proof of accreditation or the application for accreditation by August 14, 2014.  The deadline has passed, so immediate steps must be taken to achieve compliance.  As for facilities that become operational after July 5, 2011, proof of accreditation must be submitted within 12 months of the first day of operation.  Compliance with the remaining requirements of the regulations must be achieved immediately.

DELAWARE OFFICE OF CONTROLLED SUBSTANCES ISSUES EMERGENCY REGULATION RESTRICTING PRESCRIPTIONS OF EXTENDED RELEASE HYDROCODONE

On June 18, 2014, the Office of Controlled Substances issued an emergency regulation imposing a number of conditions on prescribing extended release hydrocodone that is manufactured without an abuse deterrent formulation (ADF).  The move is apparently Delaware’s reaction to the FDA’s approval last year of Zohydro ER, which approval has prompted concern among members of Congress and public health officials in a number of states.  According to those officials, because Zohydro does not have an abuse resistant formulation, it can be crushed and inhaled or injected, making the full dose of hydrocodone available immediately, which some fear may lead to opioid addiction and overdose fatalities.  In April a federal court blocked Massachusetts’ attempt to ban sales of Zohydro on the ground that the state could not ban the sale of a federally-approved drug. 

The new prescription requirements in Delaware are aimed at minimizing use of Zohydro and, for those who are prescribed the drug, minimizing the likelihood of abuse.  Effective as of June 18^th, practitioners must do (and document) the following prior to prescribing extended release hydrocodone that is manufactured without ADF: 

• conduct and document a thorough medical evaluation and physical examination as part of the patient's medical record
• evaluate and document relative risks and benefits for the individual patient of the use of such a hydrocodone.
• document in the medical record that the prescription of a hydrocodone without an ADF is required for the management of pain severe enough to require daily, around-the-clock, long-term opioid treatment, for which alternative treatment options, including non-pharmacological treatments, are ineffective, not tolerated, or would otherwise be inadequate to provide sufficient pain management
• receive a signed informed consent form from the patient, or if the patient is not competent to provide informed consent, from the patient's legal representative.  The form must include information regarding the drug's potential for addiction, abuse, and misuse and of the drug’s risks of
• life-threatening respiratory depression
• overdose as a result of accidental exposure, potentially fatal especially in children
• neonatal opioid withdrawal symptoms
• potentially fatal overdose when interacting with alcohol.
• receive a signed Controlled Substance Treatment Agreement from the patient, which includes requirements such as urine screening (no less frequently than every 120 days), pill counts, safe storage and disposal, and other appropriate conditions as determined by the practitioner to reasonably and timely inform the practitioner if the patient is misusing the prescribed substance.
• query the Delaware Prescription Monitoring Program (PMP) and review other controlled substances prescribed to the patient. For any patient prescribed 40 mg or greater per day, the practitioner must query the PMP no less frequently than once every 120 days for as long as the patient possesses a valid prescription for that amount.
• determine a maximum daily dose or a "not to exceed value" for the prescription to be transmitted to the pharmacy.

The prescription must be filled within seven days and must not exceed 30 days in duration.

The emergency regulation also requires a practitioner to schedule “periodic” follow up visits with a patient prescribed hydrocodone not manufactured with ADF to evaluate and document whether to continue treatment or if there is an available alternative, whether to refer the patient for pain management or substance abuse consultation, and whether to implement a plan for discontinuing the hydrocodone if the patient has failed to adhere to the Controlled Substance Treatment Agreement.

Practitioners considering prescribing extended release hydrocodone that is manufactured without an ADF, such as Zohydro, should review the full text of the emergency regulation at http://dpr.delaware.gov/boards/controlledsubstances/documents/Emergency_Rule.pdf

Balick & Balick is prepared to assist practitioners with putting procedures in place to meet the requirements of the emergency regulation. 

Medication Diversion as Abuse in Facilities

On February 14, Governor Markell signed into law House Bill No. 154, amending Titles 16 and 24 of the Delaware Code, as another action to help curb prescription drug abuse and diversion in Delaware.  The law creates a new criminal offense and imposes penalties for diverting prescription drugs from a patient in a facility.  More specifically, the law includes in the definition of “abuse” medication diversion “by knowingly, or intentionally, interrupting, obstructing, or altering the delivery or administration, of a prescription drug to a patient or resident” so long as the drug was prescribed or ordered by a healthcare provider for the patient or resident and where the diversion occurred without a prescription or order of a healthcare provider. 

            The law allows for a safe harbor of sorts, providing that a person is justified in diverting the prescription drug if the person is a healthcare provider who acted in good faith within the scope of his/her practice and/or employment, or if the person was acting in good faith while rendering emergency care at the scene of an emergency of accident.  This safe harbor may raise issues about the scope of practice of particular health care providers and the existence of written and/or verbal orders to stop the administration of a drug.

             If a person knowingly causes medication diversion of a patient or resident, the person shall be guilty of a class G felony.  If the person is a healthcare professional, he/she shall be guilty of a class F felony.  Delaware healthcare providers who work in facilities should clarify their scope of practice and employment related to the interruption of prescription medications, even if only temporarily.

The 2014 OIG Work Plan as a Guide to Fraud and Abuse Focus Areas

            After a delay of several months, the Department of Health and Human Services, Office of Inspector General (“OIG”) released its Fiscal Year 2014 Work plan on January 31, 2014.  After combing through Work Plan, we noticed new areas of OIG focus, which it believes may be ripe for fraud, waste, and abuse.  The Delaware healthcare community—from physician practices to institutional providers—can stand to gain a great deal of insight by understanding the OIG’s focus and trends for the new year.  Most importantly, the Work Plan can help providers identify potential areas of compliance risk before an issue arises.  We have identified a few key OIG initiatives below.

For Hospitals

• Outpatient evaluation and management (E/M) services billed at the new-patient rate.  The OIG will review Medicare outpatient payments made to hospitals for E/M services for clinic visits billed at the new-patient rate
• Nationwide review of cardiac catheterization and heart biopsies.  The OIG will review Medicare payments for right heart catheterizations and heart biopsies billed during the same operative session and determine whether hospitals complied with Medicare billing requirements.
• Selected inpatient and outpatient billing requirements.  The OIG will continue to review Medicare payments to acute care hospitals to determine compliance with select billing requirements and recommend recovery of overpayments.
• Outpatient dental claims.  The OIG will continue to review Medicare payments for dental services to determine whether payments were made in accordance with Medicare requirements.  Current OIG audits have revealed significant overpayments in this area.

For Physicians

• Inappropriate payments for evaluation and management (E/M) services.  The OIG will continue to determine the extent to which providers were overpaid for select E/M services.  Medicare contractors have noted an increased frequency in identical documentation across services and beneficiaries.  The OIG will determine the extent to which EMR and paper health records have documentation vulnerabilities.
• Diagnostic radiology—medical necessity of high-cost tests.  The OIG will continue to review Medicare payments to determine whether they were medically necessary.
• Noncompliance with assignment rules and excessive billing of beneficiaries.  The OIG will review whether participating physicians accepted claim assignment and whether they complied with all Medicare requriements.

For Chiropractors

• Questionable billing and maintenance therapy.  The OIG will determine the extent of questionable billing for chiropractic services, as previous OIG work has demonstrated a history of inappropriate payments for chiropractic services.

For Nursing Homes

• Medicare Part A billing by skilled nursing facilities.  Prior OIG work that SNFs increasingly billed for the highest level of therapy even if beneficiary characteristics remained largely unchanged.
• Questionable billing patterns for Part B services during nursing home stays.

The entire OIG Work Plan can be viewed at http://oig.hhs.gov/reports-and-publications/workplan/index.asp. All providers should consider potential areas of compliance risk that affect their organization and act upon those risks when necessary.

General Assembly Puts Limits on In-Office Dispensing of Controlled Substances

Practitioners who have established in-office dispensing as a convenience to patients, as well as the patients who look to their doctor to dispense medications, are going to see those systems impacted by a recent bill signed by the Governor.  In yet another measure intended to address the prescription drug abuse epidemic in Delaware, Senate Bill 119 was signed into law on July 3, 2013 to limit the in-office dispensing of controlled substances. 
 
The law provides that any practitioner permitted to dispense controlled substances shall only be permitted to dispense the amount deemed medically necessary for a 72 hour supply.  The synopsis of the bill indicates that this represents an “emergency supply,” though those words do not appear in the statute.  Therefore, there is some indication that the General Assembly does not believe practitioners should be dispensing controlled substances from their offices as a matter of course, but only in cases of emergencies.  The dispensing practitioners are also explicitly subject to the reporting requirements of the Delaware Prescription Monitoring Program.
 
It is clear that lawmakers want to monitor who is dispensing, when that person is dispensing, and how much that person is dispensing. It is important to note, however, that the law only limits dispensing, and does not impact the prescribing of controlled substances.

Shared Responsibility for Proper Prescribing and Dispensing of Controlled Substances

Delaware pharmacists have recently been reminded of their “corresponding responsibility” under Delaware and federal law.   Regulations provide that while “the responsibility for the proper prescribing and dispensing of controlled substances is upon the prescribing practitioner . . . a corresponding responsibility rests with the pharmacist who fills the prescription.”  21 CFR § 1306.04; Delaware Controlled Substances Act Regulation 4.3.1

This responsibility can create tension between prescribing practitioners and pharmacists, who are at times obligated to confirm the validity and appropriateness of a controlled substance prescription.  Many prescribing practitioners are reporting receiving frequent calls from pharmacists, who are asking questions about the reasons certain controlled substances have been prescribed.  

Earlier this week, the federal government sent a significant remainder to the health care community that pharmacists and pharmacies can and will be held accountable for the failure to comply with these regulations. On June 11, 2013, the Walgreen Company (the nation’s largest pharmacy operator) agreed to pay $80 million to resolve DEA charges that several Walgreens pharmacies did not properly control oversight and handling of narcotic painkillers, particularly oxycodone.  The $80 million settlement is the largest ever paid by a pharmacy chain.

According to the DEA, six Florida Walgreens pharmacies were responsible for “an unprecedented number” of record keeping and dispensing violations under the federal Controlled Substances Act, allowing prescription painkillers to be diverted for abuse or to the black market.  The DEA alleged that the retail pharmacies knew or should have known that the prescriptions were not for legitimate medical use.

Delaware pharmacists and prescribers are partners in guarding against prescription drug diversion and misuse.  As with any good partnership, open communication will benefit the partnership.