MEDICARE AND MEDI-CAL INVESTIGATIONS AND COORDINATION OF ENFORCEMENT PROCEEDINGS - RECENT DEVELOPMENTS

Vince Blackburn Harry NelsonSenior Counsel Fenton Nelson, LLP Office of Legal ServicesCalifornia Department of Healthcare Services

OVERVIEW OF PRESENTATION

Overview Medi-Cal

Understanding the Investigation and Enforcement Tools of the Medi-Cal Program

Medicaid Integrity Contractor Audits Medicare

MAC’s ZPIC’S RAC’s

Latest Developments/Trends

BACKGROUND: REDUCING HEALTH CARE SPENDING VIA FRAUD ENFORCEMENT

Government

Medi/Medi financial

obligations (2020 CBO

est. $1t Medicare/$458b

Medicaid; +7%yr)

How much

spending is

fraud or waste?(Est. 3-10%)

"Medicare has at least $80 billion worth of fraud a year. That's a full 20 percent of every dollar that's spent on Medicare goes to fraud.“—Sen. Tom Coburn“It is not possible to measure precisely the extent of fraud in Medicare and Medicaid.“-- Daniel Levinson, HHS Inspector GeneralCBO Estimate: Every $1 invested to fight fraud yields approx. $1.75 in savings.

DEFINING MEDI/MEDI FRAUD AND ABUSE42 CFR 455.1 (Program Integrity: Medicaid) definitions:

Fraud means an intentional deception or misrepresentation made by a person with the knowledge that the deception could result in some unauthorized benefit to himself or some other person. It includes any act that constitutes fraud under applicable Federal or State law related to Medicaid.

Abuse means provider practices that are inconsistent with soundfiscal, business, or medical practices, and result in an unnecessarycost to the Medicaid program, or in reimbursement for services thatare not medically necessary of that fail to meet professional recognized standards for health care. It also includes recipient practices that result in unnecessary costs to the Medicaid program

RESPONSIBLE ENTITIES

Medi-Cal Department of Health Care Services California Dept of Justice Bureau of Medi-Cal Fraud and Elder Abuse

(California’s Medicare Fraud Control Unit (MFCU) Medicaid Integrity Program Contractor (MIP, MIC)

Medicare DOJ/FBI/HHS-OIG Medicare Administrative Contractor (MAC) Recovery Audit Contractor (RAC) Medicare Secondary Payor RAC (MSP RAC) Zone Program Integrity Contractor (ZPIC) (formerly Program

Safeguard Contractor (PSC)) Qualified Independent Contractor (QIC)

For full contractors list, see http://www2.cms.gov/ Medicare ContractingReform/Downloads /FunctionalEnvironment.pdf

MEDI-CAL INVESTIGATIONS

DEPARTMENT OF HEALTH CARE SERVICESENFORCEMENT OVERVIEW

FIRST LINE OF DEFENSE:PROVIDER ENROLLMENT GATEWAY

“A complete application package includes the application, provider agreement, disclosure statement and all required attachments … .”

Directions on medi-cal.ca.gov Provider Enrollment website

ONSITE WORK: AUDIT

“Amounts paid for services provided to Medi-Cal beneficiaries shall be audited by the department in the manner and form prescribed by the department.”

“[C]ost reports and other data … shall be considered true and correct unless audited or reviewed within three years after the close of the period covered by the report … .”

Welfare and Institutions Code § 14170

ONSITE WORK: INFORMAL REVIEW

“The department [of Health Care Services] may make unannounced visits to any applicant or to any provider for the purpose of determining whether enrollment, continued enrollment, or certification is warranted, or as necessary for the administration of the Medi-Cal program.”

Welfare and Institutions Code, § 14043.7(a) “During normal working hours, the department [of

Health Care Services] may make any examination of the books and records of, and may visit and inspect the premises or facilities of [providers.]”

Welfare and Institutions Code, § 14124.2(a)(1)

REMEDIAL AND PREVENTATIVE MEASURES: PPM AUDIT

“Postservice prepayment audit … is review for medical necessity and program coverage after service was rendered but before payment is made. Payment may be withheld or reduced if the service rendered was not a covered benefit, deemed medically unnecessary or inappropriate.”

Welfare and Institutions Code, § 14133(b) “Special claims review may be imposed on a

provider upon a determination that the provider has submitted improper claims, including claims which incorrectly identify or code services provided.”

California Code of Regulations, title 22, § 51460(a)

REMEDIAL AND PREVENTATIVE MEASURES: PRIOR AUTHORIZATION

“The director, or a carrier acting under regulations adopted by the director, may require that any individual provider shall receive prior authorization before providing services when the director or carrier determines that the provider has been rendering unnecessary services.”

Welfare and Institutions Code, § 14103.6

FRAUD CONTROL: CIVIL MONEY PENALTIES

A variety of improper billing scenarios may be grounds for “a civil money penalty of not more than three times the amount claimed for each item or service.”

Welfare and Institutions Code, § 14123.2 Improper claims “for a service or item about

which the provider has received two or more warning notices of improper billing, [may] subject [the provider] to a civil money penalty of one hundred dollars ($100) per claim, or up to two times the amount improperly claimed for each item or service, whichever is greater.”

Welfare and Institutions Code, § 14123.25(c)

FRAUD CONTROL:PROCEDURE CODE LIMITATIONS

“The department [of Health Care Services] may limit, for 18 months or less, the [CPT-4, NDC, HCPCS, or HIPAA codes] for which any provider may bill” if:

“The department determines, by audit or other investigation, that excessive services or billings, or abuse, has occurred” or

“The Medical Board of California or other licensing authority or a court of competent jurisdiction limits a licensee's practice of medicine or the rendering of health care.”

Welfare and Institutions Code, § 14044(a)

FRAUD CONTROL:WITHHOLDING OF FUNDS

“Upon receipt of reliable evidence that would be admissible under [Section 11500 et seq.] of the Government Code, of fraud or willful misrepresentation … the department may … [w]ithhold payment for any goods, services, supplies, or merchandise, or any portion thereof.”

Welfare and Institutions Code, § 14107.11

FRAUD CONTROL:TEMPORARY SUSPENSION

“If it is discovered that a provider is under investigation by the department or any state, local, or federal government law enforcement agency for fraud or abuse, that provider shall be subject to temporary suspension from the Medi-Cal program.”

Welfare and Institutions Code, § 14043.36

FRAUD CONTROL:PERMISSIVE SUSPENSIONS

“The director may suspend a provider of service from further participation under the Medi-Cal program for violation of any provision of [Welfare and Institutions Code sections 14000 through 14499.77] or any rule or regulation promulgated by the director [of the Department of Health Care Services] pursuant to those chapters. ”

Welfare and Institutions Code, § 14123(a)

FRAUD CONTROL:MANDATORY SUSPENSIONS

“The director shall suspend a provider of service for conviction of any felony or any misdemeanor involving fraud, abuse of the Medi-Cal program or any patient, or otherwise substantially related to the qualifications, functions, or duties of a provider of service.”

Welfare and Institutions Code, § 14123(a)

PROVIDER REMEDIES:MEET AND CONFER

“The department shall develop, in consultation with provider representatives … a process that enables a provider to meet and confer with the appropriate department officials within 30 days after the issuance of a letter notifying the provider of a temporary withhold of payments, pursuant to Section 14107.11, or a temporary suspension, pursuant to subdivision (a) of Section 14043.36, for the purpose of presenting and discussing information and evidence that may impact the department's decision to modify or terminate the sanction.”

Welfare and Institutions Code, § 14123.05

MEDI-CAL INVESTIGATIONS

THE MEDICAID INTEGRITY AUDIT INITIATIVE

20

DEFICIT REDUCTION ACT OF 2005 Section 6034 (42 U.S.C. § 1396u-6):

Creation of Medicaid Integrity Program (MIP) Significant Increase of CMS and HHS-OIG

Resources to Fight Medicaid Fraud Funding - $560M over 5 Years

$255m for Medicaid Integrity Program $180m for National Medi-Medi Expansion $125m for OIG for Medicaid Fraud

Staffing - 100 FTEs for CMS First national anti-fraud program for

Medicaid

DEVELOPMENTS: THE MEDICAID INTEGRITY PROGRAM (“MIP”)

1st federal attempt to audit Medicaid programs based on suspected higher error rates

CMS delegated responsibility for the MIP to the Medicaid Integrity Group ("MIG"). Office of the Group Director oversees:

1

•Division of Medicaid Integrity Contracting (Oversees MIC’s)

2

•Division of Fraud Research and Detection (identifying fraud patterns and trends and reporting to MIC’s and states)

3

•Division of Field Operations (SF)

•program integrity reviews of the states

•technical assistance/training to states

TYPES OF MEDICARE INTEGRITY CONTRACTORS (MIC’S)

Education MICs responsible for educating providers, beneficiaries, and

others on program integrity and quality of care issues review MICs

Review MICs (California (Reg. IX): AdvanceMed) analyze Medicaid providers‘ claims data for evidence of atypical billing practices that

could result in overpayments. Audit MICs (California (Reg. IX): Health

Management Solutions (HMS) post-payment audits of Medicaid providers. leads received from CMS, state agencies, or review of MIC’s

MIC AUDIT PROCESS

Focus: responsibility for monitoring and compliance with contract provisions relating to fraud and abuse prevention and reporting (recipients, providers, representatives)

Process: Identify potential audit targets through data analysis Vet potential audits with State and law enforcement

Assignment to Audit MIC Actions following audit can include:

prepayment review recommendations for termination site visits sanctions

THE MEDICARE-MEDICAID DATA MATCH PROGRAM (“THE MEDI-MEDI PROJECT”)

CMS partnership with the State of California to improve coordination of Medicare and Medicaid program integrity efforts. Integrity program launched in California in 2001 to detect and prevent Medicaid fraud and abuse.

Expanded to other states after the Deficient Reduction Act of 2005 increased funding to $480 million over a 10-year period for nat’l roll-out.

Objective: match Medicare and Medicaid data to proactively identify program vulnerabilities and potential fraud and abuse that may have gone undetected by reviewing Medicare and Medicaid program data individually.

MEDICARE INVESTIGATIONS

MAC’s

ZPIC’s

RAC’s

MEDICARE ADMINISTRATIVECONTRACTORS (MAC)

Responsible for ensuring payment of correct amounts for covered and correctly coded services rendered to eligible beneficiaries by legitimate providers

Review billing errors California (Reg. IX): Palmetto (Parts

A/B); Noridian (DME)

MAC’S, CONTINUED

MAC is required to review Medicare claims in the course of processing contractor and to analyze claims data and other information (e.g., complaints) to identify suspected billing problems

When MAC verifies that an error exists through a review of a small sample of claims, the contractor classifies the severity of the problem as minor, moderate, or significant and imposes corrective actions, e.g. pre-payment/postpayment review

MEDICARE INTEGRITY PROGRAM (MIP) Focus:

Detect and prevent fraud in FFS, Medicare Advantage and Part D programs;

Ensure integrity of FFS enrollment process; Promote compliance with Medicare rules.

Includes: PSC’s ZPIC’s MAC’s can qualify as ZPIC’s

THE ZONE PROGRAM INTEGRITY CONTRACTOR (ZPIC) AUDIT INITIATIVE

Focus: Identify cases of potential fraud, waste, and abuse in

Medicare, develop them thoroughly and in a timely manner, and take immediate action to ensure that Medicare Trust Fund monies are not inappropriately paid out and that any mistaken payments are recouped.

Impose Administrative Actions Support federal law enforcement in the

investigation and prosecution of Medicare fraud cases The PSCs and the ZPICs function into Seven zones based on MAC jurisdictions;

California is one of five “hot spots” (also FL, IL, NY, TX); many states still using PSC’s

ZPIC ANTI-FRAUD PROCESS

Identify program vulnerabilities Proactively identify incidents of potential fraud that exist within its

service area and taking appropriate action on each case Pursue leads through data analysis, Internet, the Fraud Investigation

Database (FID), news, etc Generate and/or identify leads by internal data (claims processing, data

analysis, audit and reimbursement, appeals, medical review, enrollment) Investigate allegations of fraud made by beneficiaries, providers, CMS,

OIG, and other sources Initiating appropriate administrative actions to deny or to suspend

payments that should not be made to providers where there is reliable evidence of fraud;

Refer cases for civil and criminal prosecution and/or application of administrative sanctions

Initiate and maintain educational, networking, and outreach activities to ensure effective interaction and exchange of information with internal components as well as outside groups;

ZPIC MODEL

Replacement of program safeguard contractors (PSC’s) with seven zone program integrity contractors (ZPIC’s).

Coordinate benefit integrity activity nationwide - “rapid response teams with a more aggressive fraud fighting mandate”--Kim Brandt, director of the CMS Program Integrity Group.

Five of the seven ZPICS will be assigned to “hot spot” areas -California, Florida, New York, Illinois and Texas….

Trend reflected: resolve more fraud and abuse and overpayment matters administratively, including sanctions and education

TYPES OF COMPLAINTS REFERRED TO PSCS/ZPICS

Incorrect reporting of diagnoses or procedures to maximize payments (Upcoding)

Billing for services not furnished and/or supplies not provided

Billing that appears to be a deliberate application for duplicate payment for same services or supplies

Misrepresenting as medically necessary, non‐covered services by using inappropriate procedure or diagnosis codes

ZPIC FOCUS

Soliciting, offering, or receiving g, g, g a kickback, bribe, or rebate Unbundling or “exploding” charges Completing Certificates of Medical Necessity (CMN) for patients not

personally and professionally known by the provider Using an incorrect or inappropriate provider number in order to be

paid Participating in schemes involving collusion between a provider and

a beneficiary resulting in higher costs or charges to the Program Altering claim forms, electronic claim records, medical

documentation, etc., to obtain a higher payment amount Billing based on “gang visits” Misrepresentations Billing non-covered or non-chargeable services as covered items Using another person's Medicare card to obtain medical caream

THE RECOVERY AUDIT CONTRACTOR (RAC) AUDIT INITIATIVE

3-year RAC Demonstration Project (CA, NY and FL, 2005-2008) returned $992.7m in overpayments to Medicare (net savings $693m)

Made permanent by Section 302 of the Tax Relief and Health Care Act of 2006 -- 50 state expansion mandated by 2010

Expanded by PPACA (Medicaid, Part C, D) by 12.31.10 (§ 6411)

Focus: to reduce Medicare improper payments through efficient detection and collection of overpayments, identification of underpayments and the implementation of actions that will prevent future improper payments detect and correct past improper payments so that

MACs et al. can implement actions that will prevent future improper payments.

RAC OVERVIEW

RACs seek to identify improper payments resulting from Incorrect payments; non-covered services (e.g. no medical necessity) incorrectly coded services duplicate services

Methods of RAC review: automated review (claims data without records; based on certainty that

overpayment occurred) Complex review (medical record review based on high probability of

overpayment) No random review

RAC’s charged with “targeted review”: using proprietary “data analysis techniques” to determine claims likely to contain overpayments

Medicare Prescription Drug, Improvement, and Modernization Act of 2003, § 935)

RAC MODIFICATION FROM DEMONSTRATION PROGRAM TO PERMANENT PROGRAM

Look-Back Period

Demo: reopen claims up to 4 yrs

following the date of initial payment (criticized as

violative of SSA “provider without fault” provisions)

Permanent: Claims reopened only up to three years following date of initial payment

Reviewer Qualifications

Demo: No physician

medical directors or qualification

requirements for reviewersPermanent:

Mandatory employment of contractor physician med. directors (CMD); medical necessity determinations by RN or therapist; coding review by certified coders

RAC Fees

Demo: contingent fee (avg >14%) based on

1st stage appeal decision, even if later overturned (AMA: “a

bounty hunter-like program”)

Permanent: RAC gets no contingency fee

and must repay CMS the amount it

received If provider appeals and prevails

at any level. Fee capped 9-12.5%

RAC FOCUS

California: HealthDataInsights, Inc. (HDI), Recovery Audit Contractor Region D

List of specific new issues approved by CMS for review: http://racinfo.healthdatainsights.com

Examples of issues Pharmacy Supply and Dispensing Fees Wheelchair Bundling Untimed Codes

PPACA: RELEVANT DEVELOPMENTS Increased Grounds for Exclusion/Suspension/CMP’s Increased funding for health care fraud and abuse control

programs and enforcement Increased screening/scrutiny of enrollment applications Broadened disclosure requirements, e.g. beginning

3.23.2011, applicants for enrollment or revalidation of enrollment must disclose current or previous affiliations with any provider or supplier who has: Uncollected debt Payment suspended Been Excluded from federal health care programs Had Billing Privileges Revoked

State Medicaid agencies required to terminate participation of any individual or entity if participation in Medicare or any other state’s Medicaid program te

PPACA: NEW DATA COLLECTION/SHARING

CMS required to integrate data repository to include claims from all programs, including Medi-Medi, VA, etc., to match HHS data in fighting Medicare and Medicaid fraud (§ 6402)

New national health care fraud and abuse data collection program of certain adverse events (§ 6403)

OIG and Attorney General given access to HHS and HHS contractor claims and payment data to conduct law enforcement and oversight activities

CMS PROPOSED RULE CMS-6028-P (9.23.10) Medicare, Medicaid, and CHIP; Additional Screening

Requirements, Application Fees, Temporary Enrollment Moratoria, Payment Suspensions and Compliance Plans for Providers and Suppliers: Establishes requirements for suspending payments to

providers and suppliers based on credible allegations of Medicare and Medicaid fraud;

Establishes authority for temporary moratoria on enrollment on providers and suppliers when necessary to help prevent or fight fraud, waste, and abuse without impeding beneficiaries’ access to care.

Strengthens provider enrollment and screening procedures to more accurately assure that fraudulent providers are not gaming the system and that only qualified providers/suppliers are allowed to enroll/bill;

Outlines req’t for states to terminate providers from Medicaid/CHIP when terminated by Medicare, other state Medicaid /CHIP;

Solicits input on how to best structure and develop mandatory provider compliance programs

http://www.gpo.gov/fdsys/pkg/FR-2010-09-23/pdf/2010-23579.pdf

NEW CMS CENTER FOR PROGRAM INTEGRITY (CPI) (SEPT. 2010)

Newly created to serve as CMS focal point for all national and State-wide Medicare and Medicaid programs and CHIP integrity fraud and abuse issues.

Focus Promoting integrity of the Medicare and Medicaid programs and CHIP through

provider/contractor audits and policy reviews, identification and monitoring of program vulnerabilities, and providing support and assistance to States. Recommends modifications to programs and operations as necessary and works with CMS Centers, Offices, and the Chief Operating Officer (COO) to affect changes as appropriate.

Collaborate with the Office of Legislation on the development and advancement of new legislative initiatives and improvements to deter, reduce, and eliminate fraud, waste and abuse.

Oversees all CMS interactions and collaboration with key stakeholders relating to program integrity (i.e., U.S. Department of Justice, DHHS Office of Inspector General, State law enforcement agencies, other Federal entities, CMS components) for the purposes of detecting, deterring, monitoring and combating fraud and abuse, as well as taking action against those that commit or participate in fraudulent or other unlawful activities.

Develop and implement a comprehensive strategic plan, objectives and measures to carry out CMS' Medicare, Medicaid and CHIP program integrity mission and goals, and ensure program vulnerabilities are identified and resolved.

TRENDS IN FRAUD PREVENTION

Tighter enrollment review Increased education of providers and

beneficiaries; Early detection (medical review, data

analysis) Enhanced data collection and information

sharing Increased coordination between agencies,

contractors, and law enforcement

GAO IDENTIFIED PRIORITIES/STRATEGY FOR COMBATTING MEDI/MEDI FRAUD (JUNE 2010)

1. Strengthening provider enrollment process and standards. Provider background checks pre-enrollmt - identify bad actors, esp.

vulnerable areas 2. Improving pre-payment review of claims.

ensure that Medicare pays correctly the the outset via additional automated pre-payment claim review

3. Focusing post-payment claims review on most vulnerable areas. More post- payment reviews identify payment errors and recoup

overpayments. More targeting of most vulnerable areas.

4. Improving oversight of contractors. Expanded oversight of contractors’ activities to address fraud, waste,

and abuse Criticized CMS oversight of prescription drug plan sponsors’

compliance programs 5. Developing a robust process for addressing identified vulnerabilities.

Insufficient CMS process to ensure prompt resolution of identified vulnerabilities

Need for new mechanisms in place to resolve emerging improper payment areas

Testimony of GAO Director of Healthcare Kathleen King (http://www.gao.gov/new.items/d10844t.pdf), June 2010

TRENDS: DATA MINING CAPACITY

Increasingly robust capacity to analyze and leverage data internally and across programs/contractors

Provider data-analysis tools and data-analysis methods for Medicare and Medicaid fraud and-abuse detection CMS’s One PI (One Program Integrity System Integrator) -

Medi-Medi integration: perceived success MMIS (Medicaid Management Information System) –

master claims database regional office reviews subset of the MMIS database,

reviews to identify algorithms, identifies potential Medicaid claims problems, pulls the provider number, notifies state

TRENDS: DATA REVIEW

Encounter data use to detect fraud and abuse.

Data Pattern detection: Service provider and recipient identifiers Procedure codes Product and service descriptions Provider payment

Data Mapping: identify referral relationships (Stark/AKS Tool)

TRENDS: JOINT INVESTIGATIONS

DRA (2005) included funds for Medi-Medi coordination in detecting improper billing and utilization patterns by matching Medicare and Medicaid claims information on providers and beneficiaries to reduce fraudulent schemes that cross program boundaries. Also: coordination of actions by CMS, State agencies, the Attorney

General, and the HHS OIG to protect Medicaid and Medicare expenditures

HHS/DOJ Health Care Fraud Prevention and Enforcement (HEAT) (2009) Cabinet-level joint task force consisting of senior level leadership from

both departments under leadership of HHS Secretary Sebelius and Attorney General

Took over Medicare Strike Force teams--inaugurated in Miami (2007) ” now teams in Los Angeles, Houston, Detroit, Brooklyn, Tampa and Baton Rouge

500+ health care fraud criminal indictments to date

CONCLUDING THOUGHTS Increasing levels of

funding for Medi/Medi fraud enforcement scrutiny of enrollment applications, claims

data data sharing inter-agency coordination (Medi-Medi and

enforcement-oversight) and collaboration Increasing risk of sanctions Increasing overlap (decreasing

demarcation) between federal and state responsibilities

QUESTIONS

Vince Blackburn – vince.blackburn@dhcs.ca.gov

Harry Nelson – harry@fentonnelson.com