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Medicare, Medicaid and Commercial Insurance,
Post-Payment Audits, Appeals, and Pre-Payment Review:
The number one source for potential financial liability in EMS and Ambulance Service does not come from malpractice or negligence of personnel in the field, it comes from your administrative office in the form of post-payment audits. These audits can result in huge financial loss to your company.
Over the past 20 years, EMS Consultants has represented hundreds of EMS and Ambulance services in Medicare and Medicaid related payment disputes totaling more than $100 Million in claims. Most of these cases came as a result of post-payment audits. Below is a chart of a few of the cases we have handled in the past three years (since the changes to the appeals process were made by CMS).In the first column you will see the state in which our client was located (because the appeals process is done by written arguments and telephone hearings, we represent companies in every state in the country; geography is not a factor in our ability to assist you). In the second column you will see the initial dollar amount that Medicare or Medicaid demanded our client to repay. Finally, in the last column you will see the amount that our clients actually had to repay after we represented them through the appeals process.
As you can see, we have been extremely successful in helping our clients retain their money. Most of our clients have paid back less than one percent of the original overpayment amount. However these results may not be reflective of your case and circumstances. As set forth below, there are things which you should be doing now to prepare your company for post-payment review. The outcome of your case will be dependent in large part on your documentation and compliance with the current CMS or Medicaid regulations and guidelines. We can not guarantee you this kind of success, but we can give you the tools to make this possible if you follow the correct course of action. So let's turn to who we are, who will be looking at your claims, and what you should do to prepare and respond.
Our consulting team includes Rick Tibbetts, a life-long paramedic and EMS educator; Christopher Kelly, a nationally recognized EMS lawyer and legal expert; and Steve Everett, former Chief of Policy for Medicare's Southeast Region. We also use statistical and medical experts, at the discretion of our clients, when the case warrants additional review of these types of issues. For more information about our consultants, see our “About Us” page.
First it is very important to understand several points. Ambulance transport is the smallest program in Medicare and Medicaid. There are numerous specific regulations, laws, guidelines, and publications that apply ONLY to ambulance transport. Ambulance suppliers are the only group of healthcare professionals that do not primarily use ICD or CPT coding, and our HCPCS codes are unique to ambulance service. All of these issues are important in order to understand how we approach cases and why we are successful. We do occasionally represent suppliers and providers other than ambulance, however our focus is on ambulance service. Unlike most law firms and consulting groups, we have vast experience with ambulance reimbursement and we know and understand the regulations and laws that are unique to ambulance services. Because of this, we are better prepared to represent ambulance suppliers, and here is a brief look at how we do it:
We challenge these overpayment assessments on multiple grounds. First we compile patient data in a manner that is easily accessible and easy to understand for the reviewers and Administrative Law Judge (“ALJ”) who will ultimately make payment decisions on your claims. In any hearing, Rick Tibbetts will present patients in a manner that is clear and directly responsive to the payment issues being appealed. Rick has represented hundreds of ambulance services before Hearing Officers and ALJs, and he knows how to present patients and conditions while addressing the underlying justification for denying the claim, which can be difficult when dealing with individuals who are not familiar with ambulance services. Other medical experts, including physicians and nurses, may be used in developing your case and/or in presenting patient specific arguments.
Second, we address policy arguments and raise defenses based on CMS published guidelines. Steve Everett was active in CMS during the drafting and implementation of many ambulance related polices and he provides vital background and explanation of the application of these policies to the ALJ. Steve's experience and history with CMS brings vital information to the judge, and gives our clients a level of credibility and professional authority that is recognized.
Third, we raise legal defenses based on the statutes that govern payment, documentation requirements, re-opening of claims, and use of extrapolation. Attorney Christopher Kelly is a healthcare lawyer with more than 10 years of practice focused solely on the EMS and ambulance industry. His expertise and experience in EMS/Ambulance law allows us to make arguments that many lawyers do not even know exist.
Finally, depending on certain facts related to the statistical sampling and extrapolation used in the case, we will challenge the sampling on statistical and legal grounds. We may use statistical experts to refute portions of the sampling methodology, including sample size, defined universe, and other issues when appropriate.
- Recovery Audit Contractors: “RACs” are private companies that conduct post-pay audits of Medicare claims. They are paid, in part, based on the amount of improperly paid funds that they recover. The RAC demonstration project, enacted as part of the Medicare Modernization Act of 2003, was conducted between 2005 and 2008 in five States. It was a resounding success, identifying over $900 Million in overpayments while costing only a fraction of that amount. As a result of this success, in 2006, as part of the Tax Relief and Healthcare Act, Congress ordered the RAC program to be made permanent and expanded to all States. By 2010, all 50 States will have a RAC in operation. The RACs will begin provider/supplier reviews by looking for outliers, providers who have more than expected charges in a category, however there are NO limits on what they can look for, how they pick their targets, or who they can review. Therefore, even if you have had a Medicare audit in the recent past, you may be targeted again.
- Program Safeguard Contractors: “PSCs” took over the traditional audit functions from the Carriers several years ago, the concept being that having the Carrier look for overpayments that they might themselves have created was not the best way to identify the overpaid funds. Thus was born the independent PSCs, however many were merely spin-offs from the Carriers and not as independent or as aggressive as initially planned. With the new jurisdictions that are a part of the MACs, the PSCs are also being both re-aligned and reassigned. The new contractors will be called Zone Program Integrity Contractors (ZPICs), and, pursuant to CMS and OIG directives, they will be very active in reviewing data and conducting audits based on a small random sampling of your claims, generally from a two year time frame. CMS has made it clear that the RACs are not taking the place of the PSC/ZPICs. These two groups will be conducting audits independently of each other, the only limitation being that they will not review the same claims (but they may review the same provider/supplier).
- Medicare Administrative Contractors/Carriers: The RACs and PSCs/ZPICs are not the only eyes that will be looking for overpayments. The MACs will still have jurisdiction to review claims if their internal controls shows a pattern that is indicative of a possible overpayment. While the MACs do not have the same financial incentives to find overpayments that the RACs and PSCs do, they still have a responsibility to properly administer the program, and they will not want overpayments found by these other auditors to reflect poorly on their part, therefore it is likely that they will continue to conduct probe reviews when prompted by their internal controls.
- The OIG: The Office of Inspector General of the Department of Health and Human Services will also continue to conduct reviews of healthcare providers, which is their primary function. These investigations are usually initiated by an allegation of fraud or serious program abuse that comes to them from their fraud hotline or from any of CMS’s contractors (MACs, RACs, or ZPICs). In States where the OIG has investigated ambulance services in the past, we are seeing a continued focus on ambulance companies in those regions. It seems that once the OIG gets an understanding of issues that often arise in ambulance claims, they actively review other companies in their jurisdiction.
- CMS: CMS's main office continues to conduct “CERT” reviews. These reviews are designed to collect data for industry-wide statistical purposes, however any claim that goes through CERT review may be referred to the MAC for recoupment or to the ZPIC or OIG if fraud or systemic abuse is suspected.
- Medicaid Fraud Control Units: The Deficit Reduction Act made review of Medicaid payments mandatory for States that want to continue to receive Federal matching funds. Therefore, we are seeing many more Medicaid audits than we have in the past. Medicaid rules are often different than Medicare rules, and understanding those differences is very important. You must jump through the Medicaid specific hoops or risk an overpayment assessment in the event of an audit.
Why Are They Looking?
- Pre-payment Review: We are seeing an increasing trend in pre-payment reviews, especially those focused on R-J modifiers (Residence to Free Standing Dialysis). Due to the subjective nature of non-emergent claims payment determinations, it is difficult for providers running these transports to win these claims on initial submission. If properly supported and argued on appeal, most of these claims should ultimately be paid, however the appeals process, and even the appeals decisions, do not stop the pre-pay review for your company. Pre-payment review is a highly discretionary process that the Carriers/MACs are entitled, even encouraged, to pursue. To not only win payment on the claims, but to also get your company removed from pre-pay review often takes a substantial amount of time and documented correspondence with the Carrier/MAC.
- Post-pay Review: Medicare and most Medicaid programs require payment to be made to the provider within 30 days of the submission of the claim. This short time frame and the increasingly high volume of claims being processed make a detailed pre-payment review of claims impossible. Claims are basically paid if they meet some pre-determined criteria, often simply filling in all of the required fields of the claim. Therefore, post-payment review of claims will continue to be the rule, not the exception. You can count on being reviewed by one of the above auditing entities at least every few years, and, for the reasons set forth in the next section, you can count on them assessing a significant error rate.
- Ambulance Services are a Target: Ambulance claims are ripe for overpayment assessments due to the subjective nature of claims. Specifically, “medical necessity” for ambulance services is often highly debated and a very difficult phrase to place a standard set of determining criteria on. Key elements in overpayment cases for ambulance are usually: The medical necessity of non-emergent claims (whether the patient could have traveled by other means such as a wheelchair van), downcoding from ALS to BLS either because the ALS service was not necessary or was not actually performed, and facility to facility transfers where it is not apparent from the claim why the transfer was required.
- Extrapolation: Extrapolation is a mathematical formula that allows any of these auditors to pull a random sample of your claims and then determine that the entire universe of your claims is represented by that sample. More specifically, a sample of your claims is reviewed (usually over a two year period), a number of your claims are deemed to have been “overpaid” (usually for one of the reasons mentioned above), and an error rate is established by calculating the percentage of your claims that have been “overpaid”. Finally, this error rate is used to calculate the overpayment of not just the claims in the sample, but all of your claims for the time frame reviewed. For example: if 10 out of 40 claims reviewed were deemed overpaid, you have a 25% error rate. If you were paid $400,000 by Medicare in the two years reviewed (for ALL claims, not just the ones reviewed), then the extrapolated overpayment is roughly 25% of the $400,000, or $100,000. Thus, the 10 claims may have resulted in an actual overpayment of around $2,500, but an extrapolated overpayment of $100,000. (The math is a little more complex than this, but the result is basically the same).
So why are they looking? Because they can often assess huge overpayments by using extrapolation on just a small sample of your claims.
NOTE: This is just an example, often the error rates and actual overpayments are MUCH higher! You can look at your Medicare receivables for a two year time period and then apply a 50% to 90% overpayment error rate to assess your potential liability.
What You Need to Know:
- Medicaid Appeals Process Facts: There are as many Medicaid Appeals systems as there are States, and each one is different. Depending on the State you are in, there are unique arguments and defenses that can help you avoid overpayment assessments.
- Medicare Appeals Process Facts:
- They will take your money if you do not appeal immediately after assessment.
- They must stop once you appeal to the MAC/Carrier for re-determination.
- They will begin to take your money again if you do not appeal immediately after the re-determination decision is received.
- If you appeal to the QIC, they must stop off-set again, but you must include all of your arguments and documents at this level of appeal, so make sure you are ready before the re-determination decision is even received.
- After you receive the QIC’s decision, you can no longer keep Medicare from off-setting your payments (keeping the money they owe you and crediting the balance you owe them) during the remainder of the appeals process, but they must accept a payment plan. The application can take a while. Start gathering the documents early on so that you will be ready when you need to submit it.
- The Best Defense: The best way to prepare for the inevitable post-payment review is to maintain proper documentation and keep abreast of the changing rules and regulations. For example, the “clarification” to the signature rule that CMS made two years ago is still not reflected in many providers trip report forms. When reviewed in a post payment audit, this “technicality” can cause denials in otherwise payable claims. This is just one small example of the kind of regulatory compliance issues that we see ambulance companies struggling with daily. A yearly review of your policies and practices should be done as part of your Risk Management. The OIG recommends that healthcare providers review their records for Medicare compliance every year. We provide an on-site, 2-day business review that covers all of the potential risk categories for EMS and ambulance services, and provides you with a written summary and corrective action plan. You have likely heard it said that “an ounce of prevention is worth a pound of cure”, and our risk analysis of your company is designed to be exactly the ounce of prevention that you need in order to avoid the pounds liability that can come with an overpayment assessment.
We also provide this service as a part of due-diligence in ambulance company sales and acquisitions.
- We CAN Help: EMS Consultants has appealed more than $28 Million in assessed Medicare and Medicaid overpayments for our clients over the past three years alone. Of that amount, most of our clients have had to pay back less than 1%, and the extrapolated amount has rarely been upheld. Since the facts and patients in each case are different, we can not guarantee that this type of result will be typical of every case we take. However, our team of attorneys, former CMS officials, paramedics and physicians has more experience in handling EMS and Ambulance cases than any other consulting group in the country. The diversified members of our consulting team allow us to address overpayment cases from all angels: legal, regulatory, and medical. We know the system, we know the arguments, we have the experts, we have the experience. We can help. To find out how, call us for your free initial consultation. And you don’t have to wait until you are audited, call us now for more information on how you can prepare your company in advance for the inevitable day when one of these auditors asks for your medical records. Call us at (800) 342-5460 or email to firstname.lastname@example.org.
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