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
Effect on Future Updates
440
420
400
w/o MFP
w/ MFP
380
360
340
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Temporary Adjustments
• Current
–
–
–
–
temporary adjustments:
2% urban
3% rural
22.6% super-rural
“hold harmless” for air ambulance
• Initially
2011
scheduled to expire on December 31,
Temporary Adjustments
• December
–
–
Adjustments extended through February 29, 2011
Temporary “payroll tax” holiday
• Middle
–
–
23, 2011
Class Tax Relief and Job Creation Act
February 23, 2012
Adjustments extended through December 31, 2012
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
Sequestration
• 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
Permanent Ambulance Relief
• 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
H.R. 1005
House 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.”
1099 Repeal
• 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
CLASS ACT
• 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
IPAB
•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
2012 House Budget
• 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
Proposed Rule
On Return of
Overpayments
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 Catch-22
• 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?
Solution for Repetitive Patients
• 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
Medicare Revalidation
• 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
PECOS
• 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!!
The Nightmare Scenario
• 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.
2.
3.
4.
Complete PECOS enrollment
Get web user account
Gather information to revalidate
Complete revalidation process
Air Ambulance Enrollment
• 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
“3 Day Payment Window”
• Transmittal 2373
– December 21, 2011
– Clarifies CMS policy regarding diagnostic and related nondiagnostic 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
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
The Scope of the Problem
•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!!
A Bipartisan Consensus
• 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
Funding for Anti-Fraud Measures
•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!!
ACA Anti-Fraud Provisions
• 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
Provider Enrollment
• 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
Probationary Period
• 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)
Power to Suspend Payments
• 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
Termination of Billing Privileges
• 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
New Time Limits
• 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
Exceptions to Time Limit
• 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
Moratoria on New Enrollments
• 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
Harris County, Texas
•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
Changing Audit Landscape
•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”
Dialysis in Texas
“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.”
TrailBlazer’s Response
• 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!!
Texas Dialysis
Allowed #
600,000
550,000
500,000
450,000
Allowed #
400,000
350,000
2007
2008
2009
2010
Texas Dialysis
Medicare Paid $
100,000,000
50,000,000
Medicare Paid $
0
2007
2008
2009
2010
Texas Dialysis
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
% of Claims Denied
National Average
2007
2008
2009
2010
Puerto Rico – Dialysis
• 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
First Coast’s Response
•100% Prepayment Review for dialysis
transports in PR and USVI
•Selected prepayment reviews in South
Florida
– e.g., Miami-Dade County
Puerto Rico – Dialysis
Medicare Paid $
60,000,000
40,000,000
20,000,000
Medicare Paid $
0
2009
2010
First Coast – Florida
• Hospital discharges to nursing homes
– “HN”
– High error rate
• Prepayment review
–December 14, 2011
–Denial rates:
– 12-15% statewide
–Higher for some providers
NGS – New York
• 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
Palmetto – NC, SC & VA
•Prepayment reviews for:
–ALS Emergency (A0427)
–BLS Non-emergency (A0428)
–Mileage (Ao425)
Palmetto – Railroad
•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
Comparative Billing Report
Comparative Billing Report
Comparative Billing Report
A Flawed 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”
However…
•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!!
“All ALS” Billing
• 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
Brian Werfel, Esq.
Werfel & Werfel, PLLC
631-582-3283
bwerfel@aol.com