Krieg DeVault

CMS issued a proposed rule on May 11, 2012 that implements sections 1902(a)(13), 1902(jj), 1905(dd), and 1932(f) of the Social Security Act, which were amended by the Affordable Care Act, and provide for Medicaid payment for specified primary care services furnished by physicians with a specialty designation of family medicine, general internal medicine, or pediatric medicine, in calendar years 2013 and 2014, at rates not less than Medicare rates in effect for those years or, if greater, the payment rates that would be applicable in the years using the calendar year 2009 Medicare physician fee schedule ("MPFS") conversion factor.   The proposed rule extends eligiblity for increased payment to physicians with a subspecialty, recognized in accordance with the American Board of Medical Specialties, related to family medicine, general internal medicine, or pediatric medicine, and to services provided by nonphysician practitioners if the services are under the personal supervision of a physician, and billed under the provider number of the supervising physician who is enrolled as one of the specified primary care specialist or subspecialist.  The amount States will be required to pay for such physician services will be the lesser of the MPFS rate applicable to the site of service and geographic location of the service at issue, or the provider's actual billed charge for the service.  Because the MPFS rates are updated throughout the year, States have the option of either adopting the annual MPFS rates, or by using a methodology to update MPFS rates to reflect changes made by Medicare throughout the year.  States will receive 100% FFP for expenditures equal to the rate differential, which is calculated as the difference between the amount required to be paid under the proposed rule, and the amount equal to the Medicaid rate under the approved Medicaid state plan inclusive of all supplemental or increased payments.  The proposed rule provides general guidelines on implementing such increased payment for Managed Care plans.  The proposed rule also implements provisions relating to the Vaccines for Children (VFC) Porgram, and updates the interim regional maximum charges for the VFC program, which had not been updated since 1994.  If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

On the premise that volume or value outliers may correlate with payment errors and lack of medical necessity, CMS is using data mining in order to find as many potential errors as possible based on volume and value trending.  One MAC performed a data analysis of short-term care hospitals and identified eight hospitals that were outliers.  Based on this analysis, the MAC sent the eight hospitals letters stating they have “billing characteristics significantly different than other providers billing the same services,” and therefore, the hospitals will be subject to a probe review.  The hospitals had to submit unusually comprehensive documentation for all line items on the 40 claims stated in the letter.  The MAC’s medical reviewers were then going to examine the documentation to determine if the services billed were medically reasonable and necessary and meet other Medicare coverage requirements.  The MAC letter may be vague, because MACs may be trying to achieve multiple objectives with the letter, or may be trying to practice good auditing, as vague letters make it so hospitals cannot do any manipulation of the evidence, because the hospital does not know what to manipulate.  Also, because the demands in the letters are so comprehensive and extensive, it is very difficult for a large hospital to go back and look at the areas of claims administration and correct any mistakes prior to responding to the MAC letter.  These probe reviews are also unusual due to the method used to select hospitals, as reviews are being issued based solely on trending analysis and outlier status with no proof of any wrongdoing.  However, outlier status may be misleading, as some hospitals attract more acute patients due to the services they provide, not because the hospital performs medically unnecessary procedures.

In addition to CMS,  the OIG and the Department of Justice are also using data analysis and trending to identify outliers as a proxy for potentially inappropriate activity.  The OIG and the Department of Justice have been doing recent reviews, similar to CMS’ sweeping audits, of cardiac stent implants for medical necessity.  The OIG and Department of Justice are looking at targeted hospitals’ volume of MS-DRGs and APCs associated with stents and how they compare to peer hospitals.  Such data trending is being used on providers related to stent implantation either as a reason for investigation or to substantiate a whistleblower’s claim.  Because stents are not fully addressed by national coverage decisions, stents are ripe for a regional or national investigation and therefore hospitals should have a procedure for trending stent implantation data.

If a hospital is selected for such probe review, it is recommended that the hospital conduct their own review before submitting the comprehensive documentation to the MAC.  The board, senior management and key program staff should all be aware of the specifics and assess the associated risks for their particular facility and area of operations.  These individuals should proceed through the list of documents requested and evaluate each document for implied risks and whether any of the items can create legal, compliance or financial exposure for the hospital.  If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

Previously under the look-back rules for Stark self-disclosure, providers had to disclose the amount of remuneration  received by physicians for noncompliant relationships for as many years as the physician relationship was noncompliant.  However, in a recent answer to a frequently asked question on the CMS website, CMS stated “[a] disclosing party will satisfy section IV.B.2.c of the [Self-Referral Disclosure Protocol (“SRDP”)] by disclosing the total amount of remuneration received by a physician as a result of the disclosed actual or potential violation based upon the time frame established for reopening determinations at 42 C.F.R. §405.980(b).”   This means that CMS is conforming the “look-back” period to the Medicare claims reopening period, and therefore providers only have to report four years’ worth of payments stemming from noncompliant physician relationships, even if they were out of compliance with Stark for a longer period of time, unless there is fraud.  However, even though repayment will be limited to four years, CMS is still requiring providers to quantify the remuneration for the duration of the noncompliant relationship.  If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

On April 17, 2012, the Indiana Health Coverage Programs (“IHCP”) published a banner page to clarify billing and reimbursement for transportation of Medicaid recipients between hospitals.  In the event a Medicaid recipient is discharged from an inpatient stay at the original hospital and is transferred to another hospital, using transportation services, the provider transporting the patient may bill for the services and receive payment for the transportation if the provider is enrolled with the IHCP as a transportation provider.  

Payment for the transportation of a patient while still in inpatient status in not payable separate from the inpatient payment for the original inpatient hospital stay.  An example of such transportation, would be if while maintaining inpatient status with the original admitting hospital, the patient needs specialized services in another hospital.  In this case, the transportation is not a separately billable Medicaid transportation service.  The original admitting hospital should record the services obtained at the other hospital, including the transportation, in the appropriate ancillary cost center relating to the services obtained.  The original admitting hospital should not use revenue code 54X (Ambulance).  If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

Medicare administrative contractors (“MACs”) are beginning to focus on the medical necessity of inpatient admissions for transurethral prostatectomy (“TURP”) and are reviewing MS-DRG714 (transurethral prostatectomy without complications and comorbidities or major CCS) before paying claims.  Some MACs are requiring hospitals to submit documentation that supports the medical necessity for admitting TURP patients on an inpatient basis, rather than performing the procedure on an outpatient basis with post-op observation. With the recent advances in TURPs, these procedures have been pushed to the outpatient side.  However, hospitals may still admit patients when medically necessary, for example, if the patient is frail, has comorbidites, or are at risk for adverse outcomes.  MACs are concerned that hospitals are admitting patients out of habit, or because hospitals are unaware that InterQual removed TURPs from the admission list in 2010, rather than due to medical necessity.  Currently physicians make the ordering decisions, and if Medicare denies claims, hospitals are the only ones to suffer financially.  However, after certain prepayment reviews, one MAC is adjusting payments to surgeons if hospital claims are denied, so physicians and surgeons are also affected by the denials, along with hospitals.

Because TURP is no longer on the InterQual automatic admission list, these cases should be reviewed and evaluated on an individual case-by-case basis for complexity of the patient and procedure.  To ensure compliance with TURP medical necessity requirements, documentation should include: (1) a clearly stated order for level of care before the surgery; (2) a clearly stated patient status order on the post-surgery destination, with an explanation; (3) changes in order for the patient status; (4) documentation for the level of care; and (5) daily detailed progress notes by physicians and nurses describing the patient’s condition.  Hospitals should also pay close attention to InterQual or whatever admission screening criteria is used, to make sure they stay current with what procedures are on the Medicare inpatient-only list.   If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

Under Affordable Care Act §6402(a), providers are required to return Medicare and Medicaid overpayments within 60 days of identifying them.  Because time is of the essence, providers are bumping up their internal reviews and adopting shorter time periods for their internal reviews to ensure it does not fall outside the 60-day timeframe for returning the overpayment.  The following are tips for structuring an internal review: (1) determine the natural boundaries for the review, as the review should focus on the problem at hand, yet still cover all reasonably related exposure; (2) define the population of claims that the audit sample will be chosen from; (3) verify the accuracy and completeness of the data in the claims population before starting a review; and (4) keep the review team focused on the payment matter at hand and make sure review criteria are clear, to keep from straying into ancillary errors.   After quantifying the overpayment in a sample, providers are faced with the issue of whether to extrapolate the error in the sample to a large claim error to be repaid.  There is no clear error rate threshold, except in CIAs, which requires providers to do a full review when an initial sample error rate is greater than 5%.  Hospitals may be able to circumvent this issue of whether to extrapolate or not, by: reviewing all the claims that might be in the wrong, if the population is small enough; basing the repayment on benchmarks; or repaying all claims meeting the relevant criteria rather than undertaking the costs of a claim-by-claim review.  Another issue is whether to seek MAC approval for the hospital’s review and sampling process upfront or to conduct the review first and go from there, each of which has pros and cons.  The greatest question involving reviews and overpayments, is when the 60 day repayment clock begins.  Because CMS has not finalized the rule on interpreting the 60 day repayment period, most people are using the reasonable inquiry standard that was in the proposed rule.  The reasonable inquiry standard states that when providers learn about a potential overpayment, they are obliged to make a reasonably inquiry to prove or disprove its existence, and the 60-day clock begins running at the end of the reasonably inquiry period, which is when the provider has a sense of what was overpaid and why.  If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

Several Medicare administrative contractors (“MACs”)  are beginning prepayment audits of hospital admissions for total knee and hip replacements, focusing on MS-DRG 470 (joint replacement or reattachment of lower extremity without major complications and comorbidities).  Because these are high-dollar procedures (Medicare pays about $25,000 for knee replacements and $35,000 for hip replacements) MACs are focusing on documentation and medical necessity for such surgeries.

MACs are focusing on whether the procedure itself is medically necessary and are not concerned with the site of service or observation services.  In order for joint replacement to be considered medically necessary and worthy of payment, there must be documentation of all failed alternative, less-radical treatments.  This is difficult because documentation supporting these less-invasive treatments is often spread throughout non-hospital locations, such as orthopedic practices, physical therapy, and imaging centers.  Adding to the difficulty, documentation of injections and medication experiences are often times completely missed.  Lack of documentation can also effect skilled nursing facilities claims, if the patient was admitted into the SNF for rehab after major joint replacement.  Because SNF admissions require a three-day inpatient acute-care hospital stay right before, if the hospital’s inpatient claim is denied, that throws off the basis for the SNF admission.

Because MACs set out the documentation required for a patient to be considered a candidate for Medicare coverage of major joint replacements, in their local coverage determinations (“LCDs”) or other MAC documentation, it is recommended providers and physicians review these requirements to help reduce the number of denied claims for major joint replacement, due to lack of documentation.  If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

Section 6401 of the Patient Protection and Affordable Care Act (“PPACA”) requires, as a condition of enrollment in government programs, that health care providers establish a compliance program that includes certain “core elements.”  In accordance with PPACA, the Secretary of Health and Human Services (“HHS”) shall consult with the Office of Inspector General (“OIG”) and define “core elements,” for each type of health care provider.  Although these core elements have not been established yet, CMS has solicited comments for the future rulemaking regarding the core elements.  Section 6102 of PPACA, relates specifically to nursing facilities and requires such providers to establish a compliance program with certain core elements, but PPACA itself lays out eight elements.  The HHS was required to issue regulations with additional requirements by March 23, 2012, but as of the date of this memo, such regulations have yet to be issued.

Although HHS has not issued regulations defining the core elements for providers (other than nursing facilities) under section 6401, it is expected that HHS will keep with previously issued guidance material and PPACA section 6102.  The following are the common elements suggested in these materials: establish written compliance policies and procedures and distribute to employees; designate a specific individual or individuals to monitor compliance; commit to conducting formal training and education programs; develop internal system for communication of suspected compliance violations; commit to auditing and monitoring to evaluate compliance and identify potential problematic areas; maintain and consistently enforce disciplinary policies; and develop a process for investigating suspected violations and reporting to government and law enforcement authorities as necessary.

The OIG’s FY2012 Work Plan provides compliance-related action areas such as claim accuracy, review of nursing home incorporation of compliance plans into operations, and provider training.  Because of the increased enforcement and increased emphasis on compliance programs by the OIG, if a provider has yet to impose a compliance plan that adheres to the guidelines, it is recommended that that provider adopt such plan as soon as possible, and incorporate the above elements into it’s plan. 

If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

In an effort to transform Medicare from a passive payer to an active purchaser of high-quality, efficient care, the government has instituted three mandates: a readmission reduction program which penalizes hospitals for higher-than-expected readmission rates with a cut in the hospital’s base DRG payment (1% cut in 2013, 2% in 2014, and 3% in 2015); a hospital acquired condition (“HAC”) program beginning in 2015 which will impose a 1% penalty on all discharges at hospitals that are in the top 25%, with regard to HACs; and a value-based purchasing (“VBP”) program which will take away 1% of the MS-DRG rate for all hospitals starting Oct. 1, 2013 (and 2% by FYE 2017), however hospitals can get that money back by performing well on clinical process measures, patients’ experience-of-care measures, and outcome measures.   When all three programs are fully implemented, up to 6% of a hospitals bottom line will be affected by quality of care.

These new quality of care programs are also creating compliance challenges.  Sloppy documentation could subject hospitals to false claims under value based purchasing, which may be intensified by shortcuts in electronic health record (“EHR”) systems, such as copy/paste.  If hospital EHRs prepopulate the administration of drugs, they should document that the drug was in fact administered in the time frame that was in the EHR documentation.  Hospitals must also be aware of physician compensation risks.  If hospitals pay physicians for quality-related activities, they could run afoul of the fraud and abuse laws, as these activities should be performed as an integral part of their professional duties.  However, hospitals may incentivize physicians to adhere to quality improvement programs, as long as the incentive falls within a Stark exception.

Rather than simply responding to these government mandates, hospitals should look overall at how they can reform their health care delivery systems to benefit patients, and how they can deliver optimal care to patients using consistent, reliable methods.  The following identifies examples of how hospitals can begin to implement consistent quality of care:

• Ensure all caregivers are comfortable identifying their concerns regarding inappropriate patient care with their colleagues;
• Use meetings to educate physicians regarding meaningful clinical process issues and to share data with them to garner their support and promote behavior change;
• Rather than comparing hospital statistics to publicly available information, which may be too old to be meaningful, use current results at every level and tie to Joint Commission core measures; and
• To reduce readmissions, ensure clinicians follow-up with patients after discharge from the hospital, whether by phone or an in-person visit. 

If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

Medicare administrative contractors (“MACs”) are cracking down on physician signatures and certifications.  But, if the MAC is relying on a Medicare manual provision that goes beyond the statute or regulation for denying payment due to lack of signature, physicians may have grounds to fight back.  According to the Medicare Program Integrity Manual, if physician signatures are missing from any other piece of documentation, the MAC or comprehensive error rate testing (“CERT”) contractor must accept an attestation from the author of the medical-record entry.  Generally, the attestation statement is required to be signed and dated by the author of the medical record entry and contain enough information to identify the beneficiary.  Even though the Medicare Program Integrity Manual states that physician orders must be signed, providers may not necessarily be out of luck if the claim is denied because of a lack of signature.  The Program Integrity Manual, is a manual, not a regulation, and lacks the force of law.  Furthermore, Medicare regulations set forth requirements for each services, but not all requirements include signatures, some just state the order must be written.

There are conflicting rules on durable medical equipment and prosthetics and orthotics supplies (“DMEPOS”).  The Program Integrity Manual states that unless suppliers obtain a signed, detailed, written order prior to billing DMEPOS, Medicare contractors will deny their claims as medically unnecessary, whereas, the law says that CMS may require a written order before delivery.  Another twist in the rules, is that according to the Medicare Benefit Policy Manual, Medicare Part B covers artificial eyes, arms and legs, and braces and trusses when furnished incident to a physician’s services; so arguably an order may not be required as long as the incident-to requirement is satisfied.  For home health, the physician must certify the patient is confined to their home and needs intermittent skilled nursing care or physical, occupational, or speech therapy.  A face-to-face encounter to assess the need for home health care must occur, within 90 days before home health care starts of 30 days after, by a physician, or by a physician extender if the extender must communicate their findings to the physician.   Home Health must also be recertified every 60 days, but there is no subsequent face-to-face encounter requirement.  Hospice benefits require physician certification, that the patient’s prognosis for life expectancy is six months or less, before billing. Such certification and brief narrative of clinical findings supporting the prognosis must be signed and dated by the physician.  Hospice certification lasts for two 90-day periods, and if the stay is expected to extend into a third period, there must be a face-to-face encounter with a physician or nurse practitioner.  With the crack down on home health and hospice documentation, it is imperative that physicians get the certifications and signature requirements correct.

Although the Medicare manual does not have the force of the law, it is recommended that the hospital and physicians still make an effort to make sure orders are written and signed, as this will help protect reimbursement and promote compliance.  If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

On April 9, 2012, CMS announced the one-year delay of ICD-10 implementation.  It is recommended that hospitals use this extra one year to further prepare for the drastic change in coding.  While ICD-9 has 13,000 diagnosis codes and 3,000 procedure codes, ICD-10-CM has 68,000 diagnosis codes and ICD-10-PCS has 87,000 inpatient procedure codes.  The ICD-10 codes are more descriptive and require more detailed documentation.  Hospitals are warned against having a false sense of security that electronic health records (“EHR”) will take care of ICD-10, because EHR information is only as good as the provider using it.  If the provider does not provide sufficient documentation and data, which lacks the required specificity, payors will reduce reimbursement.  ICD-10 procedure codes will likely be more difficult to comply with than diagnostic codes, as procedure codes will require coders to think more three-dimensionally, beef up their anatomy knowledge, and understand what is considered a full body part.  It is also recommended that the one-year delay be used to bring compliance officers in on the ICD-10 transition.  Compliance should work with the health information management department to ensure adequate training and certification. Hospitals may consider hiring temporary codes while the hospital is training their own staff, and training community physicians and their office staff as their coding will affect hospital billing compliance. 

The following are steps compliance officers should take during the ICD-10 preparation process: (1) monitor milestones related to software application testing and validation; (2) educating all levels and types of staff, including physicians, coders, and clerks who deal with managed care authorizations; (3) monitor claims edit software to determine which types of claims fail edits before they leave the hospital and monitor payer data to track payment, denial, and suspension; and (4) follow software application upgrades and programs after ICD-10 has been implemented.   If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

Often times the issue arises where a patient indicates to a medical provider that he or she will require an interpreter for a scheduled appointment, the medical provider then arranges for an interpreter to appear, and then the individual does not show up for the scheduled apointment.   The question then arises: "Can the provider charge the "no show" patient for the cost of the interpreter fees?".  The answer is no.

Under Title III of the Americans with Disabilities Act (“ADA”), no individual shall be discriminated against on the basis of disability by a place of public accommodation.  Such public accommodation shall take steps necessary to ensure a disabled individual is not excluded or treated differently than other individuals because of the absence of auxiliary aids and services, and must ensure effective communication by furnishing appropriate auxiliary aids.  Auxiliary aids include on-site qualified interpreters. Furthermore, a surcharge may not be imposed on a disabled individual to cover the cost of auxiliary aid measures that are required to be provided under the ADA.  There is an exception from such requirement to provide auxiliary aids, in the event the public accommodation can demonstrate that taking those steps would fundamentally alter the nature of the goods or services being offered or would result in an undue burden, such as significant difficulty or expense.

Appendix A  to 28 CFR 36 (page 758) states that because the imposition of surcharges to cover the costs of necessary auxiliary aids and services are prohibited, medical providers cannot pass along the cost of obtaining an interpreter to their patients with disabilities, even in the event that the individual cancels his or her appointment or is a “no-show” for the scheduled appointment.  The medical provider may only charge for the missed appointment if all other patients are charged  for last minute cancelations or “no-shows”.  Therefore, unless all patients are charged in the event of a last minute cancelation or “no-show,” a disabled individual cannot be charged for the cost of an interpreter scheduled for an appointment in which the disabled individual did not show up to.  If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Susan E. Ziel at 317-238-6244.

On December 17, 2010, the OIG released a report summarizing its review of payments for ambulatory surgery center (ASC) services provided to beneficiaries in skilled nursing facility (SNF) stays under Medicare Part A in calendar years 2006 to 2008.  The report may be found here:
http://oig.hhs.gov/oas/reports/region1/10900521.pdf. 

SNFs are responsible for billing Medicare for virtually all services furnished to residents of the SNF during a Part A covered stay regardless of whether services are provided by the SNF or an outside supplier, including an ASC.  Under this concept, known as consolidated billing, the outside supplier will bill the SNF, and not Medicare Part B, for services performed for SNF residents.  Physician professional services are not subject to this consolidated billing.

The report, which was based on a sample of 100 services provided by 88 ASCs, concluded that at least $6.6 million in overpayments were made from 2006 to 2008 when ASCs billed Medicare Part B for services provided to SNF residents at the same time that the SNF received Part A payments for such resident.

This report will likely lead to greater enforcement against both SNFs and ASCs and will make it more critical for these facilities to address and finalize payment arrangements between the parties before services are performed for SNF residents.

If you would like additional information, please contact Brian M. Heaton  at bheaton@kdlegal.com or (317) 238-6354.

On November 1st, The Centers for Medicare & Medicaid Services (CMS) issued a final rule to update payment policies and rates for services provided at ambulatory surgery centers (ASCs) and hospital outpatient departments (HOPDs) starting in 2012. 

This final rule will increase payment rates in calendar year 2012 by 1.6% for ASCs and by 1.9% under the Outpatient Prospective Payment System.  Designated cancer hospitals received a much larger payment adjustment, as required by the Affordable Care Act, with an increase of 11.3%.

The final rule finally creases a new quality reporting program for ASCs, establishes an electronic reporting pilot to report clinical quality measures, and strengthens the hospital value-based purchasing program for inpatient stays beginning October 1, 2012.

The final rule will appear in the November 30th Federal Register, and comments to the final rule are due by January 3, 2012.  A copy of the full final rule is available here: 

If you have any questions regarding the impact of these developments on your organization, please contact Brian Heaton at bheaton@kdlegal.com or (317) 238-6354.
 

As required by §6411 of the Affordable Care Act (“ACA”), Medicaid RACs were to be up and running on January 1, 2012.  Although the Medicaid RACs are not quite there, 21 states selected a Medicaid RAC contractor as of March 20; and three states, New Jersey, South Carolina, and Indiana, have hospitals that have received requests for medical records from their new Medicaid RACs.  Due to CMS’ past experience with Medicare RACs, it is requiring some basic standards for Medicaid audits, including, Medicaid RACs must: hire a licensed doctor of medicine or osteopathy to act as the RAC’s medical director, hire certified coders, and accept electronic medical record submissions from providers and notify them of audit findings within 60 days.  The Medicaid RACs must operate a toll-free customer service phone line during normal business hours and each RAC must work with the state to develop an education and outreach program for providers.  RACs must also review fee-for-service claims, however it is up to the States to decide if Medicaid managed care will be reviewed.  States will decide whether to require Medicaid RACs to post their audit targets the way Medicare RACs do.  The States will decide how many medical records the RACs can request from providers and how often, whether RACs are permitted to do medical necessity reviews, whether RACs will extrapolate findings into larger overpayment determinations, and how to handle appeals.  The States will also report fraud to Medicaid fraud control units or other law enforcement.  There is a three-year look-back period for Medicaid RAC audits.

In a February 2012 presentation by HMS (Indiana’s Medicaid RAC) and Thomson Reuters it stated that Medicaid providers will be subject to Medicaid credit balance reviews, automated reviews and complex reviews and that the Indiana Medicaid agency will provide “final approval of the type of audits the RAC will deploy for each provider and/or audit project.”  It is not clear whether Indiana will require HMS to notify providers and suppliers of approved audit issues before launching the audits.

The government has high hopes for overpayment recovery from the Medicaid RACs as the Medicaid integrity contractor (“MIC”) audits have been a bust so far.  MICs audit Medicaid claims based on leads from “review MICs.”  Upon OIG review, 81% of the audits assigned to audit MICs did not identify overpayments or are unlikely to.  The OIGs reasoning for the low finding of overpayments is because Audit MICS were hindered, in part because audit targets were poorly identified and were often inappropriate, and in part because there were problems with the Medicaid Statistical Information System (“MSIS”) data used in MIC audits, which would sometimes send audit MICs on a wild goose chase.  Based on its finding, OIG is recommending more collaborative audits, better selection of audit targets and possibly the consolidation of review and audit MICs under one program integrity contractor.  If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

Section 6004 of the Affordable Care Act, codified at 42 U.S.C. 1320a-7i, requires all "manufacturer[s] and authorized distributor[s] of record of an applicable drug" to file electronic reports to the FDA concerning drug samples. This law required reporting to begin as of Sunday, April 1, 2012.  Other than providing some technical background on the reporting process, until recently the FDA had been silent about issuing regulations or other guidance on this reporting.  

This morning, the FDA finally published guidance which states it will "not object" if companies postpone complying with reporting obligations until at least October 1, 2012. Therefore, it appears that reporters need not begin submitting electronic reports on April 1.

The FDA also provided further information on their website on this issue:

http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/ucm292040.htm.

If you have any questions on Section 6004's requirements, or other issues involving the Health Reform Act, please contact Mark Bina in Krieg DeVault LLP's Chicago Office at 312-423-9305 or at mbina@kdlegal.com.  

Due to an increase in false claims allegations of manipulating secondary diagnoses, RACs’ and DOJ’s interest in secondary diagnoses is increasing.  The presence of certain secondary diagnoses may increase Medicare inpatient reimbursement if they are complications/comorbidities (“CCs”) or major CCs (“MCCs”).  Such secondary diagnoses include malnutrition, post-op malnutrition, post op anemia, post-op pain, and  post-op ileus.  Malnutrition is susceptible to coding errors because there are subtle distinctions between the types of malnutrition which affect the MS-DRG payment if they are the only CC or MCC in the record.  “Protein malnutrition” documented by a physician may be interpreted as Kwashiorkor, severe protein calorie malnutrition,  or other and unspecified protein-calorie malnutrition (which has four subcategories of: moderate malnutrition, other protein calorie malnutrition, unspecified protein-calorie malnutrition, and arrested development following protein-calorie malnutrition).  Each of these are different in their status as CC, MCC, or neither, and each have a different MS-DRG reimbursement.  Post-op patients also tend to have low protein counts after surgery.  Unless the physician specifically states the patient is malnourished due to protein deficiency, such low protein count should not be coded to protein malnutrition because it is only temporary.  Post-op anemia is another CC that may inappropriately increase MS-DRG reimbursement. Lower hemoglobin and hematocrit counts after surgery are normal and do not necessarily mean the patient is anemic.  With IV fluids and recuperation time, such hemoglobin and hematocrit levels will rise.  Post-op pain is encountered by most patients after surgery, but unless it is acute or chronic it should not be coded as a CC. Post-op ileus is also susceptible to increased MS-DRG reimbursement as most patients that have surgery in the abdominal area have unpleasant intestinal symptoms, but unless there is a bowel obstruction, post-op ileus should not be CC.  As these areas are under increased scrutiny by RACs and the DOJ, hospitals should take care to ensure such secondary diagnoses are not improperly coded.  If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.