MMSEA Section 111 Alert Regarding Risk Management Write-Offs by Health Care Providers

Posted on June 16, 2010 by Adil Daudi

On May 26, 2010, CMS officials finally clarified one of the outstanding issues for insured health care providers relative to the mandatory reporting requirements contained in Section 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007. Section 111 imposes an affirmative duty on certain “reporting entities” to make reports to the Centers for Medicare & Medicaid Services (CMS) of personal injury claims settled with Medicare beneficiaries.

For some time now, insured health care providers have been in a holding pattern as they wait for promised guidance from CMS as to whether a common practice by some health care providers to offer something of value to a patient as a risk management tool triggers a Section 111 reporting obligation. Typically, in these instances, a Medicare beneficiary does not retain legal counsel, does not come in making a demand for anything per se, but will have a complaint. And occasionally a provider will attempt to resolve the complaint with the Medicare beneficiary by, for instance, giving him/her a gift certificate for the hospital cafeteria.

CMS had previously indicated that it considers at least some write-offs of charges and other offers of items of value to Medicare beneficiaries to be a form of “self-insurance” that may trigger Section 111 reporting obligations. CMS' recent Alert, which addresses risk management write-offs, clarifies that reductions in the amount due on a medical bill and other efforts at offering something of value, constitutes self-insurance for the purpose of the Medicare Secondary Payer provisions. CMS notes, however, that the specific factual scenario will determine whether reporting under Section 111 is required. According to the Alert:

• No Report Required. In instances where the entity is a physician, provider or supplier and has reduced its charges or written-off a portion of the charge to a Medicare beneficiary as a risk management tool, the provider, physician or other supplier is expected to submit a claim to CMS reflecting the unreduced permissible (e.g., limiting charge) charges and showing the amount of the reduction provided or write-off as a payment from liability insurance (including self-insurance). CMS indicates that its interests are protected through this billing procedure and no Section 111 reporting is required.

• Reporting Required. In instances where a provider, physician, or other supplier has provided property of value to a Medicare beneficiary as a risk management tool when there is evidence, or a reasonable expectation, that the individual has sought or may seek medical treatment as a consequence of the underlying incident giving rise to the risk, the entity shall report the write-off or value of the property provided as a TPOC from liability insurance (including self-insurance). Significantly, CMS states in the Alert that if the value of the property provided is less than the TPOC reporting threshold, it need not be reported under Section 111.

With respect to the first instance, providers, physicians and other suppliers should assess internal practices to determine whether claims submitted to CMS reflect the unreduced permissible charge and also show the amount of the reduction provided or write-off. Per CMS’ Alert, deductions or discounted services must be reflected in the provider's original billing and are therefore not subject to reporting.

In instances where a provider, physician or other supplier provides property of value to a beneficiary, the critical inquiry in evaluating whether a report will be required concerns whether there is a “reasonable expectation the individual has sought or may seek medical treatment as a consequence of the underlying incident giving rise to the risk.” Providers should take to care to develop plans to internally document the basis for this conclusion.

Finally, CMS officials also disclosed that they plan to issue an updated Version 4.0 of the User Guide in July 2010.

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CMS Updates Signature Guidelines

Posted on June 11, 2010 by Adil Daudi

On May 16, 2010, the Centers for Medicare and Medicaid Services (CMS) issued Transmittal 327 which revises the signature requirements for medical review activities of Medicare claim review contractors. Transmittal 327 has an effective date of March 1, 2010 and an implementation date of April 16, 2010, but the changes are effective retroactively to the November 2010 report period for comprehensive error testing. The transmittal updates Chapter 3, Section 3.4.1.1 of the Medicare Program Integrity Manual to require that services provided or ordered for medical review purposes are authenticated by the author. The previous version of this section only required authentication by a legible identifier. Specifically, Transmittal 327 amends Section 3.4.1.1 to:

  1. Expressly state that stamp signatures are not acceptable. The transmittal clarifies that the method of authentication for services provided or ordered for medical review purposes must be by handwritten or electronic signature.
  2. Add a new exception for clinical diagnostic tests when a treating physician, who authenticates medical documentation by handwritten or electronic signature, indicates that he or she intended the clinical diagnostic test be performed. The amended section suggests that such medical documentation could be in the form of a progress note.
  3. Provide that if handwritten signatures are illegible, reviewers should consider evidence in a signature log or attestation statement to determine the identity of the author.
  4. Finally, when providers fail to meet handwritten signature requirements of Section 3.4.1.1, reviewers should contact providers to inquire as to whether they want to submit an attestation statement or signature log within 20 calendar days.

Interestingly, Transmittal 327 appears to reconcile with similar regulations concerning signatures and authentication of orders, which are contained in the Medicare Conditions of Participation at 42 CFR 482.24(c)(1), by expressly indicating that other regulations and CMS instructions take precedence over signature guidelines set forth in Section 3.4.1.1. Thus, only when the relevant regulations, national or local coverage determinations, and CMS manuals lack specific signature requirements and/or guidelines to determine legibility or presence of signatures for medical review purposes, should Section 3.4.1.1 requirements be followed.

Therefore, based on the new information from CMS in Transmittal 327, acceptable methods for handwritten signatures are:

  • a legible full signature;
  • a legible first initial and last name
  • an illegible signature accompanied by signature log or attestation statement;
  • initials over a printed or typed name; and
  • initials accompanied by a signature log or attestation statement.

On the other hand, unacceptable signature methods are as follows:

  • Rubber stamp signatures, except for clinical diagnostic tests when a treating physician who authenticates medical documentation by handwritten or electronic signature, indicates that he or she intended the clinical diagnostic test be performed;
  • illegible signatures with no additional documentation to identify the signature;
  • initials with no additional documentation identifying them;
  • an unsigned note; and
  • a note with the statement “signature on file.”

Smith Haughey Rice & Roegge will continue to monitor developments in this area and distribute updated information as it becomes available.

Summer clerk Charissa Huang contributed to this post.

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New Compliance Rules Stemming from the Medicare, Medicaid, SCHIP Extension Act Delayed, But Compliance Efforts Continue...

Posted on March 10, 2010 by Adil Daudi

For over a year now, the health care team at Smith Haughey Rice & Roegge has been busy assisting insurers and third-party administrators as they develop plans and procedures to comply with Section 111 of the Medicare, Medicaid, SCHIP Extension Act (MMSEA). On February 25, 2010 CMS posted new information on its Web site informing liability insurers, workers’ compensation insurers and self-insured entities (defined as “NGHPs”) that reporting of live claim input files is moved from the original deadline of April 1, 2010 to January 1, 2011. The immediate impact of this change is that entities subject to the reporting requirements now have additional time to register and test their processes for reporting claims to CMS. Additionally, CMS indicates that in February they will publish the next version of the “NGHP Section 111 User Guide” and alerts related to particular policy issues.

By way of background, Section 111 of the MMSEA amended the Medicare Secondary Payer Statute to impose mandatory data reporting requirements on liability insurers, no-fault insurers and workers’ compensation insurers. MMSEA Section 111 now places an affirmative obligation on insurers to: (a) determine if a claimant is entitled to Medicare; and (b) notify CMS of said entitlement and report specific information regarding the claim directly to CMS.

MMSEA builds off of a separate federal statute called the Medicare Secondary Payer (MSP) Statute. Under the MSP Statute, Medicare is designated as the secondary payer for Medicare beneficiaries who also have group health plan (GHP) coverage, as well as for Medicare beneficiaries who receive settlements, judgments, awards or other payment from liability insurance (including self-insurance), no-fault insurance, or workers’ compensation (non-group health plans or NGHPs). The purpose of the Section 111 mandatory reporting requirement is to notify CMS of instances when Medicare beneficiaries receive payments that relieve CMS of its obligation to cover medical costs.

Notwithstanding the recent delay in the reporting schedule, we have begun to see the first stages of action by some responsible reporting entities (RREs), which is the term used under Section 111 to identify those GHP and NGHPs that will be making reports. These entities are beginning to gather the information necessary to generate the necessary reports. Specifically, a NGHP RRE is now required to report to CMS:

  1. any claim that is addressed or resolved, fully or partially, through a settlement, judgment, award or other payment;
  2. on or after October 1, 2010;
  3. with a Medicare beneficiary (broadly defined to include all persons age 65 years of age or older or certain people under 65 years of age with qualifying disabilities);
  4. where medicals are claimed or paid;
  5. regardless of whether there is a determination or admission of liability.

The registration period for NGHPs on the Coordination of Benefits Secure Web site (COBSW) began on May 1, 2009 and by now most RRE’s are registered and ready to begin the Claim File Testing process. Significantly, in light of CMS’ recent delay in the reporting schedule, the targeted claims subject to reporting are claims made on or after October 1, 2010. CMS has indicated that RREs may choose, from a process perspective, to report claims prior to October 1, 2010. However, pursuant to the new information, the only claims subject to reporting are those occurring after October 1, 2010.
 

Additionally, some lingering questions remain in the insurance industry about whether the Section 111 rules have now added a requirement that Medicare Set Aside (MSA) arrangements be implemented in liability settlements involving a Medicare beneficiary. From the start of the Section 111 “rule-making” process, CMS has made it clear that MMSEA Section 111 does not change or alter any legal obligation/requirements under the Medicare Secondary payer statute. Therefore, insurers are still responsible for protecting Medicare’s interest and Medicare still needs to be considered for both past (conditional payments/liens) and future payments. Satisfying Medicare’s interest for future injury-related care in liability settlements has a host of issues that do not exist in the workers’ compensation context, were MSAs are regularly employed.

As a general principle, the standard relative to evaluating whether an MSA should be considered in a liability settlement is based on the concept of whether the parties have “properly considered Medicare’s interest” in negotiating the liability settlement. Some factors to consider in this regard include: (1) whether the parties have addressed Medicare’s past “conditional payments” (e.g. issuing third-party checks listing Medicare as payee) and (2) whether future injury related care is expected (if not, is there physician written certification of this fact). All this being said, in some cases, the sheer size of some liability settlements, for instance in catastrophic injury cases, may suggest that there will necessarily be some future costs of care that Medicare will likely be paying for. These instances should be evaluated on a case-by-case basis to determine whether a MSA Arrangement may be appropriate.

Importantly, on February 25, 2010, CMS also published an Alert outlining information for RREs regarding how to remain in compliance with the reporting requirements. According to CMS, RREs seeking to test their compliance with the Section 111 requirements should consider three factors: (1) has the RRE completed the registration process; (2) has the RRE engaged in file data sharing testing; (3) has the RRE begun and continued to engage in ordinary live data exchanges. Moreover, on its most recent conference, CMS stressed, once again, that the goal of the program is to generate quality data and RREs demonstrating a good faith effort to report accurate information to CMS will not likely be subject to penalties.

CMS is continuing to hold policy and technical related conference calls to resolve some still outstanding issues in this area. Additionally, an interesting future concern relates to how CMS plans on using the information generated in reports to initiate recovery action against, for instance, insurers.

Smith Haughey Rice & Roegge will continue to monitor developments in this area and distribute updated information as it becomes available.
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RAC Audit Update

Posted on August 14, 2009 by Veronica Marsich

We have been waiting all summer for something to happen with the RAC audits.  Finally, as of August 4th, it looks like the action may beginning to break.  Connolly Consulting, the Recovery Audit Contractor for Region C, has just released a list of seven issues that have been approved by CMS for its initial automated reviews.  These seven "issues" are:

1. Blood Transfusions.
2. Untimed Codes.
3. IV Hydration Therapy.
4. Bronchoscopy Services.
5. Once in a lifetime procedures.
6. Pediatric codes exceeding age parameters.
7. J2505: Injection, Pegfilgrastim, 6 mg.
 

While is it not clear whether these issues are specific only to Connolly and Region C or whether the other RAC auditors will be using this same list to begin their automated reviews, health care providers would be wise to take this list and begin to run some internal data to assess accuracy in coding and billing as it relates to these topics.  Problems should be corrected immediately and over-payments refunded.

For those located in Region B (including Michigan), it is probably a good idea to get in the habit of checking the CGI website on a regular basis going forward to make sure that you have as much advance notice as possible, in the event CGI posts its own list of approved issues for automated review.

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MMSEA Section 111 - Medicare Secondary Payer Mandatory Reporting

Posted on May 27, 2009 by Veronica Marsich

I have read Section 111 and all of the guidance put out by the Centers for Medicare and Medicaid Services ("CMS"), listened to most of the the teleconferences sponsored by CMS on the subject and had the opportunity to talk to different clients and stakeholders about the new requirements and what they are hearing from various consultants and legal advisers about the new reporting requirements.  And, what I have concluded from all of this reading, listening and talking is the following:

  • There are lots of attorneys and consultants out there scaring and confusing hospitals and hospital insurers about Section 111 and what CMS is going to do with this new reporting system;
  • The Medicare Secondary Payer system and these new reporting requirements are a much greater burden for workers' comp and no fault carriers than other NGHP liability insurers (and I never appreciated that until recently);
  • CMS keeps saying that this new reporting system is, for them, at least for now ... about collecting data and NOT about trying to find liability insurers who they can make "pay twice" for a Medicare beneficiary's medical expenses;
  • As it relates to what goes on in health care, with respect to patient complaints and disputes and the settlement of those disputes, there is A LOT that CMS is still trying to understand and figure out so, there is A LOT we don't know yet about what does and does not have to be reported;
  • If you are a self-insured hospital ... if you are "first dollar" self-insured ... unless your excess carrier is telling you that they will act as your reporting agent, it is probably a good idea to register with CMS some time over the next month or two and test your system so that you can report if you have to;
  • CMS has said on numerous occasions that you don't have to register if you don't think you will have anything to report so, for now, if you are an insured hospital that doesn't expect to "settle" a dispute with a Medicare beneficiary outside of your insurance policy, for more than $5,000, you can relax a bit ... let's wait and see what CMS does;
  • If you are an insured hospital and you have a "deductible" your insurer can and probably will work with you to establish a system so that you don't have to report anything ... talk to them and if they say there is nothing they can do ... might be time to shop for insurance; 
  • CMS is still learning and thinking about health care providers and the little patient related settlements you enter into from time to time with your patients when they are unhappy ... they understand that they don't need to know about all of those, despite the way the current guidance reads and there will likely be better guidance in the future to carve some of that out of the reporting requirements; and
  • CMS is not, in this particular instance, looking for the "gotcha" moments ... i.e. this is not about CMS looking for opportunities to slap $1,000 per day fines on insurers and self-insured providers.  If you make a good faith effort to understand what you have to report and if you try to report correctly, you will get a chance to learn how to do it right.

Bottom line, if you are a liability insurer or a TPA for a self-insured health care provider, you have to register and you should get working on that right away ... developing the appropriate procedures and working through the IT issues will take time so don't delay.  If you are a self-insured hospital or other health care provider, you have two options: (1) register and set up the internal systems to begin reporting, or (2) hire a Section 111 reporting agent (a new cottage industry ... part of the federal stimulus plan!!!).  If you are an insured health care provider, take a breath and sit tight, there is more to come on what if anything you might have to report and since the registration deadline has been extended to September 1 and you don't have to report any settlements that occur before January 1, 2010, lets just wait and see what CMS does.   CMS may clarify some of the confusion over the next few months and things might not be so bad after all.

 

 

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CMS 2009 Physician Fee Schedule - The Revised Anti-Markup Rules are Here

Posted on November 10, 2008 by Veronica Marsich

CMS has submitted its 2009 Physician Fee Schedule Final Rule to the Officer of the Federal Register for publication and the document should be published some time in November.  As is usually the case, CMS has loaded the Physician Fee Schedule Final Rule with lots of interesting information.  In addition to an updated list of the CPT codes that constitute "designated health services" under the Stark Law, and a re-opening of the comment period for the proposed Stark exceptions on gain sharing arrangements, this Final Rule contains a set of newly revised Anti-Markup Rules relative to the reassignment of billing for diagnostic testing services.

Originally, 42 CFR 414.50 contained a rule that prohibited a physician, who intended to bill for the technical component (TC) of a diagnostic test that was performed by someone other than the physician,  from "marking up" the charge for the TC component of the diagnostic test above the actual cost of the test.  In other words, if a physician wanted to purchase certain TCs of diagnostic tests from a hospital and then bill globally for the test (billing the hospital's TC and his own professional interpretation (PC) of the same test) the physician was prohibited from billing more for the TC of the test than what the hospital charged the physician to perform the test.  This rule was generally known as the "Anti-Markup Rule."

In 2008, CMS revised the Anti-Markup Rule so that if a physician or other supplier bills for the TC or PC of a diagnostic test that was ordered by the physician or other supplier (or ordered by someone related to that physician or supplier through common ownership or control) and if the diagnostic test is either purchased from an outside supplier (such as a hospital) or performed at a site other than the office of the billing physician or supplier, the payment to the billing physician or supplier for the TC or PC of that diagnostic test cannot exceed the lowest of : 

  1. the performing supplier's net charge to the physician;
  2. the billing physician or supplier's actual charge; or 
  3. the fee schedule amount for the test that would be allowed if billed by the performing supplier directly.

Needless to say, this 2008 Final Rule was a mess!  So much so that application of that Rule was delayed until January 1, 2009 due to the complexity of the Rule and the number of existing arrangements that needed to be unwound.  And then, in the mean time, CMS has decided to further revise the Rule altogether.

Thankfully, and perhaps as evidence that CMS does listen to the provider communities concerns, CMS has adopted a revised Anti-Markup Rule that provides two different alternative ways to avoid  the general prohibitions set forth in the 2008 Rule.  Specifically, under Alternative 1, if the physician or supplier performing the test (i.e. the physician supervising the TC or a diagnostic test or performing the PC of a test, or both) performs "substantially all" (at least 75 percent) of their services for the billing physician or supplier, then none of the services provided by the performing physician or supplier on behalf of the billing physician or supplier are subject to the Anti-Markup Rule, irrespective of where (in terms of location) those services are performed.  If the performing physician/supplier does not meet this "substantially all" test, but the TCs conducted or supervised or the PCs performed are done in the office of the billing physician or other supplier by an employee or independent contractor physician of the billing physician or supplier, then the services can still avoid application of the Anti-Markup Rule limitations.  Under this Alternative 2, the focus is on where the performing physician or supplier provides that service rather than on for whom substantially all of his or their services are provided. 

Unfortunately, CMS has not, despite these new amendments to the 2008 Rule, seen the need to delay application of the Anti-Markup Rule and all of its changes.  So, providers for whom the Anti-Markup Rule is applicable ... particularly physician groups and other suppliers who purchase diagnostic testing services or any component of such services need to be in full compliance with these billing rules as of January 1, 2009.

 
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Signature Stamps - Probably Best to Toss Them!

Posted on September 17, 2008 by Veronica Marsich

Hospitals periodically develop anxiety over the use of signature stamps by medical staff members.  Many institutions have gone so far as to say "no" to any and all signature stamps.  Others have limited use of signature stamps so that only the physician him or herself can use the stamp and, frankly, if the physician is the only one who can use the stamp ... "What is the point?"

Well, based upon CMS Transmittal 248, issued early in the spring, it would appear that there is no point in having signature stamps for physicians because they are not acceptable and will not be given any credit if CMS audits for signed orders or other medical record documentation where a physician signature is required.

What is perhaps even more troubling about the language in this Transmittal is not that CMS appears to be putting an end to the usefulness of the signature stamp,  but that CMS has cleared the way for auditors to deny claims based solely on the type or lack of physician signature.  This is true even if all other aspects of the documentation support the medical necessity and appropriate delivery of the service. 

So, at this point, hospitals should be sending out alerts to their medical staff members, advising them that signature stamps are not allowed for use anywhere in the medical record.  Outpatient diagnostic departments such as lab and radiology should be advised that orders for services that come with a stamped signature as the authorization for the service cannot be accepted.  Failure to take this approach could result in overpayment problems during an audit. 

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Hospital Disclosures of Financial Relationships with Physicians

Posted on August 29, 2008 by Veronica Marsich

When the physician self-referral statute (the Stark Law) was first enacted in 1989, it contained a financial relationship reporting requirement.  Although the initial regulations issued in 1991 contained information and details on that reporting requirement (42 CFR 411.361), CMS never initiated or implemented the requirement .... until now.

CMS first began to hint at its intention to begin to ask for disclosure of information on hospital/physician financial relationships in 2007 and, in its FY 2009 IPPS proposed rule suggested that it planned to send a formal information collection instrument known as the "Disclosure of Financial Relationships Report" (DFRR) to 500 hospitals (both acute care and specialty hospitals).   CMS suggests that the purpose for collecting this information is to: (1) identify arrangements that potentially may not be in compliance with the Stark Law; and (2) identify practices that may assist CMS in future rule making regarding the Stark Law.

Although CMS originally estimated that the effort associated with providing it with the information required on the DFRR would be minimal, it now acknowledges that hospitals may need to work with accounting and legal advisers in order to complete the DFRR.  Still CMS has indicated in the final IPPS rule for FY 2009 that each hospital who receives a DFRR will have only 60 days to complete the Report.  In implementing this reporting requirement, CMS believes that the information it is requesting is that which a hospital should be keeping in the normal course of its business activities.  CMS also hopes that hospitals who receive the DFRR will elect to submit their responsive information electronically, but hospitals will be able to submit information, including supporting documentation in a paper copy.

Fortunately, at least for now, CMS has determined that the DFRR will be used only in a one-time collection effort ... at least for now.  A final PRA notices will be published in the Federal Register in the near future that will include a revised DFRR, including revised instructions for completion.  Following a 30 day comment period, CMS will then be in a position to begin formal distribution of the DFRR to a randomly selected group of 500 hospitals across the country. 

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