Payor Audits: Preparation, Response and Opportunities

1. Payor Audits:Preparation, Response and Opportunities David E. Jose, Esq. One Indiana Square, Suite 2800 Indianapolis, IN 46204 (317) 238-6211 djose@kdlegal.com July 29, 2010

2. 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”

3. 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

4. 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

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

6. Sources for Concern • Disgruntled Employees • Disgruntled Patients • Senior Medicare Patrol • Increase Awareness of Whistleblowing Opportunities • News Reports

7. 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

8. 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

9. Government Enforcement Activities • Amounts Recovered • “Fraud” • Reducing Expenditures • High Profile Practices and Activity • Trolling for Excluded Individuals • Increased Funding Under Reform

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

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

20. 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

21. OIG Risk Areas • Reasonable and Necessary Services • Documenting diagnosis and treatment • Seeking denial for secondary payer

22. OIG Risk Areas • Coding and Billing • Services not rendered • Supplies or services not reasonable and necessary • Duplicate billing • Non-covered services • Unbundling • Clustering • Upcoding

23. 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

24. “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.”

25. 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

26. 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

27. American Association of Medical Audit Specialists • Billing Audit Guidelines • Use as Standards • Internal audit • External auditor relationship • Purpose for Health Records

28. 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

29. 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

30. Repayment or Recoupment • Regular Repayments • Provider Self-Disclosure Protocol • Audit Appeal Settlement • ** New obligation to repay within 60 days of “knowledge”

31. Audits with Potential Criminal Exposure • Confidentiality • Compliance with Subpoenas • Legal Ethics • Joint Defense Arrangements

32. 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

33. 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”

34. 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%

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

36. 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

37. 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”

38. 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

39. 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

40. Audits, Risks and Quality • Regulatory Compliance • Medical Performance • Medical Records • Patient Safety • Supervision

41. Questions David E. Jose, Esq. Krieg DeVault LLP One Indiana Square, Suite 2800 Indianapolis, IN 46204 djose@kdlegal.com Office: (317) 238-6211 Cell: (317) 695-1084 Fax: (317) 636-1507