David E. Jose, Esq.One Indiana Square, Suite 2800

Indianapolis, IN 46204(317) 238-6211

djose@kdlegal.com

July 29, 2010

Payor Audits:Payor Audits:Preparation, Response and Preparation, Response and

OpportunitiesOpportunities

Audits:Here, There and Everywhere External audits increasingly common Use of audits as mechanism to recoup

“overpayments”, but other purposes and consequences

Financial, regulatory and criminal penalties associated with billing “errors”

Audits:Here, There and Everywhere

Recognize threats and opportunities posed by external audits

Compliance program needs to include a credible internal audit system

Internal audit system addresses external audit, quality of care and performance improvement purposes

Topics for Presentation

Appreciating the Context for Audit Activity RAC Audits as a Representative Sample Preparing for and Responding to an Audit Learning from the Audit

Constituencies Government Payers Commercial Payers Enforcement Authorities Civil Lawsuits Other Treating Providers Staff Patients Competitors

Sources for Concern

Disgruntled Employees Disgruntled Patients

• Senior Medicare Patrol

Increase Awareness of Whistleblowing Opportunities

News Reports

OIG Testimony

ROI of $17 for $1 of Medicare and Medicaid Oversight

FY 2008• 455 Criminal Actions• 337 Civil Actions• 3,129 Excluded Individuals and Entities• 1,750 New Fraud Investigations Opened

OIG FY 2010 Report

$3.1 Billion for first half of FY 2010 $667 Million in Audit Receivables $2.5 Billion in Investigation Receivables 293 Criminal and 164 Civil Actions

Government Enforcement Activities Amounts Recovered

• “Fraud”• Reducing Expenditures

High Profile Practices and Activity Trolling for Excluded Individuals Increased Funding Under Reform

OIG 5-Principle Strategy Scrutinize enrollment Establish payment methodologies responsive to

marketplace Assist providers in adopting practices promoting

compliance, including quality and safety standards

Vigilantly monitor for fraud, waste and abuse Respond swiftly and impose punishment to deter

Examples from OIG Medicaid vulnerabilities relating to school-

based services 2010 Work Plan focus on provider-based

status Implications

• Site-based services• Physician partnering relationships• Procedures vs. outcomes billing debate

RAC Audits Expanding

Health care reform extends RAC program to state Medicaid programs

Recent support in other areas of government contracting announced by President Obama

RAC Audits – What Can Be Learned Automated vs. Complex Review Priority of Targeted Providers (Volume and

Value) Targeted Claims

• Medical Necessity• Coding• Incorrect Payments• Duplicate Claims

Contingency Fee Payments for Independent Audit Contractors

Issues for Claims Review Process

“Certainty Standard” vs. “Good Cause Reason” Request for medical records and timely response Licensed health care professional involvement Notice of full or partial overpayment Recoupment options and time frames

RAC Appeals Process Rebuttal to auditor vs. direct appeal Redetermination Appeal

• Avoiding recoupment pending appeal Reconsideration – Qualified Independent

Contractors Administrative Law Judge

• First judicial-type review• Review can go beyond “the record”

Medicare Appeals Council Review Federal District Court Review

RAC Management Program

Enhancements to Compliance Program Focus on Target Areas (e.g., one-day

stays) Timely Response to Records Requests File Rebuttals and Appeals Tracking System Corrective Actions Opportunities for Improvement

Preparation for Audits

Review Policies• Clinical documentation• Financial billing and collecting• Responding to audit inquiries

Identify Risk Areas Train Employees Protocols for Pre- and Post-Audit

Issues for Billing Audits Retrospective or Prospective Sample Type and Size

• Random• Payer specific• Procedure specific

Issue or Criteria to be Applied Risk Areas

• Coding• Documentation• Modifiers• Medical Necessity

Top Medicare Billing Errors Duplicate Non-Covered Service Medical Necessity Bundled Services Beneficiary Eligibility Incorrect Carrier Medicare Secondary Payer Provider Eligibility Place of Service

OIG Risk Areas

Documentation• Timely• Accurate and legible• Complete (e.g., reason for encounter, history,

examination findings, diagnostic test results, etc.)

• Comparison of denial rates with peer practices

OIG Risk Areas

Reasonable and Necessary Services• Documenting diagnosis and treatment• Seeking denial for secondary payer

OIG Risk Areas Coding and Billing

• Services not rendered• Supplies or services not reasonable and

necessary• Duplicate billing• Non-covered services• Unbundling• Clustering• Upcoding

OIG Risk Areas

Improper Inducements and Relationships• Financial arrangements with potential referral

sources• Joint ventures• Consulting contracts or medical directorships• Office and equipment leases• Gifts and gratuities

“Medical Necessity”

“… unless otherwise required by statute or regulation, means that a Health Service is compensable, as determined by [Insurer] for the treatment of an injury, sickness, or other health condition and is : (1) appropriate and consistent with the diagnosis or symptoms, and consistent with accepted medical standards; (2) not chiefly custodial in nature; (3) not investigational, experimental or unproven; (4) not excessive in scope, duration or intensity…; and (5) not provided only as a convenience to the Covered Individual or professional provider or health care facility.”

Background Preparations

Web Site of Commercial Payers• Provider education• Binding (?) pronouncements

Web Site of Government Payers and Agencies• OIG web site for Corporate Integrity

Agreements Web Sites of Audit Contractors

• Targeted issues

Audit Coordinator Advising personnel of pending audit Ensuring authorization for disclosure of

records Gathering records Overseeing auditor’s on-site activity Organizing exit interview Follow-up communications with auditors

for clarifications or additional documents

American Association of Medical Audit Specialists

Billing Audit Guidelines Use as Standards

• Internal audit • External auditor relationship

Purpose for Health Records

Purpose for Health Record

“Health records exist primarily to ensure continuity of care for a patient; therefore, the use of a patient’s health record for an audit must be secondary to its use in patient care.” - American Assoc. of Medical Audit Specialists

Preparing to Respond Tracking System and Specific Payer/Authority Time Frames, Issues Raised, and

Documentation Needed Medical Necessity or Coding Assistance Internal or External Assistance (including peer

and association support) Statistical Issues Costs, Benefits, Distractions, and

Consequences

Repayment or Recoupment

Regular Repayments Provider Self-Disclosure Protocol Audit Appeal Settlement ** New obligation to repay within 60 days

of “knowledge”

Audits with Potential Criminal Exposure

Confidentiality Compliance with Subpoenas Legal Ethics Joint Defense Arrangements

Preparing to Appeal

Time Frames for Each Stage Venue and Issues Importance of the Record Repayment vs. Delay Designated Staff Assistance Getting the “F-Word” Off the Table

Medicare Audit Defenses: What Can Be Learned?

“I’m right, you’re wrong, and here’s why.” “Treating Physician Rule”

• Best position to opine on medical necessity for patient

Waiver of Liability”• Clarity of contract and provider

communications

Provider Without Fault”

AMA Report on Claims Processing Accuracy

Claims processing inaccuracies cost $15.5 Billion

Potential for errors in commercial audits Most accurate: Coventry @ 88.41% Least accurate: Anthem @ 73.98%

Creative Arguments

Context for the Services Supporting Documentation Technical vs. Fundamental Defect Late Entries and Affidavits Engaging Legal Counsel for Settlement

Operational Benefits from the Audit Policies and Procedures on Outside

Investigations• More than payer audits

Enhanced Corporate Compliance Program• Improvements to internal self-audits• Connecting audits, compliance and quality

Improved Payer Communications Getting Off the “Radar Screen” Limiting Repayments

OIG Corporate Integrity Agreement Employee Training

• Covering a variety of topics

Engagement of Independent Review Organization

Claims Review Process Repayment of Overpayments’ Reporting of “Reportable Events”

Mandatory Compliance Programs

Health care reform legislation authorizes mandated compliance programs

Mandated core elements Potential rigorous self-auditing and self-

reporting features Potential penalties for not having a

credible program

Compliance and Audit Functions

Importance of independence from operations

Clear lines of reporting and authority Management responsible for compliance

and controls Collaborative support for investigations Ensure follow-up on recommendations

Audits, Risks and Quality

Regulatory Compliance Medical Performance Medical Records Patient Safety Supervision

Questions

David E. Jose, Esq.Krieg DeVault LLP

One Indiana Square, Suite 2800Indianapolis, IN 46204

djose@kdlegal.comOffice: (317) 238-6211Cell: (317) 695-1084Fax: (317) 636-1507