February 2007

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Reimbursement. Compliance. Overpayments. Auditing.

INTERVIEW
Robert Liles, Esq.
FEBRUARY | MARCH BC Advantage 11
Face to face

Douglas O'Dell: Were you surprised by the recent Congressional block of the 5.1% decrease in Medicare fees? And that they ultimately wound up with a 1.5% increase?

Robert Liles: Yes, I was surprised. Despite their best efforts, most special interest groups, representing specialty providers, have failed in maintaining reimbursement levels. If Congress thinks margins are too generous they haven't hesitated to seek cuts. While there has been some progress, it's unusual for associations to walk out with a complete win. Overall, associations and their lobbyists have only been marginally effective in convincing Congress that cuts are ill advised.

If you look back at reimbursement rate levels over the last 10 years, there's no question that Congress has consistently cut closer to the bone at every opportunity. When high margins are perceived in certain areas, cuts often ensue. The fact is that the Medicare program is more costly than ever before. Moreover, most providers have adopted business models that rely on Medicare reimbursement in order for the business to survive. This fact isn't lost on Congress. They recognize that they have providers over a barrel. Not many providers these days can afford to forego participation. At the end of the day, Medicare is going to be a low margin, relatively high volume business for many providers.

In a 2004 study conducted by Taxpayers Against Fraud, a national non-profit organization focused on the enforcement of the False Claims Act, health economist Jack Meyer estimated that for every dollar spent by the government, $13 is returned. So why doesn't CMS put more emphasis on better policing the system?

Over the last decade, both the Department of Justice (DOJ) and the Department of Health and Human Services, Office of Inspector General (HHS-OIG) have substantially increased the amount of prosecutorial and investigative resources dedicated to health care fraud enforcement. When you think of HIPAA, most people think of the privacy provisions. But with HIPAA's passage came a special appropriation of funds to be used for additional law enforcement resources to finance anti-fraud health care enforcement activities. In 1997, the appropriation available was $104 million. That amount grew to more than $240 million in fiscal year 2003 to the present.

In the first six months of 2006, this program had already netted $1.02 billion from its efforts to reduce fraud.

This focus on accountability and enforcement will only continue to increase. I think that it's also important to remember that the days when compliance was optional are numbered. We're already seeing this trend. For example, Starting this month (January) companies that do at least $5 million a year in Medicaid business are required under the Deficit Reduction Act of 2005 to have a number of compliance mechanisms in place in order to participate in the program. They will have to teach their employees and officers how to detect fraud, waste and abuse. Health care providers also must tell employees that if they report fraud, they will be protected against retaliation and may be entitled to a share of money recovered by the government. I think that it's just a matter of time until Medicare participants will also be required to have a compliance plan in place.

In implementing a compliance plan, it is important that a provider recognize that the only thing worse than not having a compliance plan is having one and not following it. If a physician has knowledge of how claims are supposed to be processed, identifies erroneous claims, and continues down the wrong path, the government may view their conduct as indicative of fraud. Additionally, training is an essential element of all effective compliance programs. Providers who choose to rely on coders and billers who aren't properly trained are just asking for problems.

I understand one trade-off for the reduction block was the expansion of CMS' Recovery Audit Program (RAC) to all 50 states. For readers not familiar with RAC's, this is the pilot program launched in three states in early '05 as part of the Medicare Modernization Act to supplement CMS efforts in securing improper Medicare payments. CMS contracts with RAC's to uncover Medicare underpayments and overpayments and to collect the overpayments. The RAC gets a percentage. I've heard it described as a "bounty-hunter" system. Thoughts?

RAC efforts should be a concern of all Medicare participants. Please understand, no one is suggesting that overpayments shouldn't be returned. Everyone agrees that providers have an obligation to ensure that billings are proper. Nevertheless, there is a certain balance that is necessary to maintain both program integrity and a level of fairness in the system. While RAC's have successfully identified millions of dollars in overpayments, I'm concerned that in many cases the basis for these overpayments may be technical errors or mistakes rather than substantive in nature. Over the last few years, I have seen instances where Program Safeguard Contractors (PSC's) have sought to collect essentially all of the Medicare monies paid to a provider, in some cases covering a period of years, based on technical or administrative errors (e.g. lack of a PIN number), despite the fact that the services were properly ordered, medically necessary, the patients benefited and the provider was an authorized Medicare program participant.

The RAC system is likely subject to the same type of “overreaching,” especially since the RAC will reap financial benefit from the assessment of overpayments. It has been my experience that both CMS and HHS-OIG have exercised their enforcement authorities in a reasonable fashion with a degree of fairness. I am concerned that PSC's and RAC's may not have the experience or the discretion to recognize that all errors are not the same and should not all be automatically treated as overpayments. I believe it is shortsighted for Congress to permit PSC's and RAC's to take such unreasonable positions with providers. At some point, providers may take the position that Medicare / Medicaid participation isn't worth the headaches, especially if CMS' agents intend to seek repayments based on mere technical mistakes or administrative omissions.

What happens when a provider asks a certified coder or an independent consultant to assess coding and billing procedures to ensure that the practice is getting all reimbursement it is entitled to, and the auditor instead finds that the provider has in fact been upcoding and submitting improper claims? What obligation or protection does the auditor have by law?

It's important for a physician to understand that when they engage an outside certified coder or independent consultant to conduct a billing review, the findings (regardless of whether they are positive or negative) are unlikely to be privileged. Prior to conducting such a review, a better practice would be for the provider to have outside counsel engage and direct the work of the billing consultant so that any findings are least arguably privileged. If a physician is calling an auditor up about discreet questions about a practice, that's one thing - but if the auditor contracts with the physician, and they run across evidence of fraud, those findings would likely be discoverable and may be subpoenaed by the government.

Regardless of whether an outside certified coder is retained by counsel or directly by a physician, if problems are identified they must be addressed. If an overpayment has occurred, it typically isn't a matter of whether the overpayment should be repaid, but rather how to best handle the repayment.

With regard to the scenario you have raised, outside certified coders and consultants who identify an overpayment should advise the physician to repay the monies. However, upon completing a review, they often move on to their next project and don't know if follow-through has occurred. In some cases, a provider may seek a second review or a legal assessment before deciding how to respond to the findings. An outside certified coder has met their obligation in this regard. The provider is responsible for ensuring that proper remedial steps are taken.

Another scenario might include a situation where an outside third-party billing company is engaged to handle the billings and collections for a physician. Suppose they advise the provider “Dr. Smith, we have identified a problem. In many cases, your accompanying documentation doesn't support what you're billing.” While the third-party billing company has properly alerted the physician of their concerns, they are in a precarious position. First, the physician will need to repay any overpayments that have been identified. Second, remedial steps need to be taken to ensure that the documentation and coding fully supports the billings. If the third-party billing company merely advises the physician yet continues to improperly bill for services (based on the lack of documentation or faulty coding submitted by the provider), they may find themselves included in a subsequent government investigation.

While they don't want to lose the business, the billing company could be putting itself at risk. If the physician continues to submit erroneous claims, the billing company must fire the client to ensure it isn't implicated along with the physician. An outside coder/consultant has a better defense than the third-party billing company who is an integral component in the billing process. Nevertheless, this situation may still be problematic. Over time, the government may question the degree of an outside coder's involvement and perhaps argue that they somehow played a role in the submission of wrongful billings. Certified coders working for a physician should diligently work to ensure that coding is accomplished consistent with applicable rules and regulations. In some cases, a physician may disagree with a coder's assessment. Work through the issues; help educate the physicians regarding proper coding practices. If a coder identifies improper coding, they should go to the doctor and advise them of the problem. More often than not, a physician will appreciate knowing that a mistake has occurred and will readily correct any errors than have been identified.

A team approach, comprised of dedicated physicians, certified coders and trained billing personnel can go a long way towards better ensuring that claims are properly submitted for payment.

Biography

Robert Liles, Esq., is a health care fraud defense attorney based in Washington DC. His firm, Liles Parker, represents health care providers in both civil and criminal proceedings around the country. Prior to entering private practice, Mr. Liles served as the first National Health Care Fraud Coordinator, responsible for coordinating the health care fraud enforcement efforts for all 94 U.S. Attorney's Offices. He was subsequently appointed to the position of Deputy Director for Legal Programs at the Department of Justice, Executive Office for United States Attorneys. He also worked as an Assistant United States Attorney in the Southern District of Texas, Houston office, where he primarily handled False Claims Act cases. He currently serves on the faculty for the Georgetown University / National Institute of Trial Advocacy. He is a member of the American Health Lawyers Association. Mr. Liles may be reached at (202) 298-8750 or he may be e-mailed at rliles@lilesparker.com.

Plaguing Issues

SEAN Weiss from the CMC Group talks with Republican U.S. Congressman from Georgia, in the 11th district, Phil Gingery, M.D. He discusses the recent congressional intervening, Medicare Physician Fee Schedule and the long-term plan on how to best deal with the issues plaguing physicians

Congressman Gingrey was a most pleasant interview and a person who has the best interests of his peers at heart. It was refreshing to hear Congressman Gingrey speak candidly and with conviction on the issues plaguing physicians and the fact that a lot of members of congress realize there are significant problems with how the fee schedule is calculated. There are recommendations currently on the table from the Republican Party to bring about change but unless we can get both sides to agree it is likely no change will be brought about and we will continue to delay the inevitable.

Georgia on my mind

Congressman Gingrey was born and raised in Augusta, Georgia. He attended Georgia Tech, completing his undergraduate studies in Chemistry. With a Bachelor’s of Science degree from Georgia Tech, he returned back to his home in Augusta to attend the Medical College of Georgia. Upon completing his studies he moved to Marietta, GA where he set up a pro-life OB-GYN practice. For 26 years, Phil built a successful practice and delivered more than 5,200 babies.

He was elected in 1998 to the state senate and re-elected in 2000 with 74 percent of the vote. Dr. Gingrey served four years in the Georgia State Senate before being elected to U.S. House of Representatives from the 11th District of Georgia in November 20 02.

In the U.S. House of Representatives, Congressman Gingrey is working to improve education, protect our nation, fight for the life of the unborn, and improve healthcare for all Americans. He is committed to lowering taxes for hardworking Georgians and protecting the traditional values so important to Northwest Georgia.

Currently, Congressman Gingrey serves on the powerful House Rules Committee. During his first term in Congress, he served on the House Armed Services Committee, the Committee on Education and the Workforce, and the Science Committee. In addition to his committee duties, Phil is Chairman of the Republican Healthcare Public Affairs Team and also chairs the Healthcare Reform Subcommittee of the Republican Policy Committee. He is Co-Chair of the Medical and Dental Doctors in Congress Caucus, as well as a member of the Immigration Reform Caucus, Second Amendment Taskforce, Victory in Iraq Caucus, Republican Study Committee, Textile Caucus, Washington Waste Watchers, and House caucuses for the Army, Air Force, Navy and Marine Corps.

Unresolved issues

Congressman Gingrey made his annoyance very clear with regard to Congress either putting off the problems of the healthcare industry for another day or for another congress to deal with.

“These are serious issues that need to be resolved now. The system used to calculate the Medicare Physician Fee Schedule (MPFS) is arcane and flawed,” said the congressman. There are several proposals on the table from the Republican Party on how to deal with the situation. However, according to the Congressman “Other than the recommendation of a National Healthcare System there really are no other solutions offered by the Democrats.”

The Congressman went on to say “We voted for a temporary fix,” “Now, Congress must act in the 110th Congress to permanently fix the system and ensure Medicare is paying physicians based on what it actually costs to provide a service, not some arbitrary formula. With the impending retirement of the baby boomer generation, our already strained Medicare program will fall into a crisis unless we act now to fix the payment formula”.

One of the main problems facing physicians today is the Sustainable Growth Rate (SGR). In 1997, Congress established the flawed sustainable growth rate formula for Medicare reimbursement. Unless Congress acts to change this formula, the Medicare Payment Advisory Committee has reported that physician payments will be cut by a total of 37% over the next nine years. I asked the congressman to give me a simple explanation on how the SGR is calculated to which he replied that he couldn’t do that because there is no simple explanation to the formula. However, the congressman proceeded to give me an explanation on SGR, which I found to be very useful.

SGR

The SGR targets are not direct limits on expenditures. Payments for services are not withheld if the SGR target is exceeded by actual expenditures. Rather, the fee schedule update, as specified in section 1848(d)(4) of the Act, is adjusted to reflect the comparison of actual expenditures to target expenditures. If the actual expenditures exceed the target expenditure, the update is reduced. If actual expenditures are less than the target expenditure, the update is increased. Under the statute, the update for a year is determined by comparing cumulative actual expenditures to cumulative target expenditures (referred to as “allowed expenditures” in the statute) from April 1, 1996 through the end of the year preceding the year at issue. For instance, the 2007 update will reflect a comparison of cumulative actual to cumulative target expenditures from April 1, 1996 through December 31, 2006. Target expenditures for each year are equal to target expenditures from the previous year increased by the SGR (which is a percentage figure computed by combining four factors, see figure 1).

Figure 1:

The statute specifies a formula to calculate the SGR based on our estimate of the change in each of four factors. The four factors for calculating the SGR are as follows:

The estimated percentage change in fees for physicians’ services.
The estimated percentage change in the average number of Medicare fee-for-service beneficiaries.
The estimated 10-year average annual percentage change in real gross domestic product (GDP) per capita.
The estimated percentage change in expenditures due to changes in law or regulations.

Prior to enactment of the Medicare Prescription Drug, Improvement and Modernization Act (also known as the Medicare Modernization Act, or MMA), the statute required the SGR to be calculated using estimated projected growth in real GDP per capita. That is, the Secretary was required to use an estimate of a single year’s real GDP per capita to determine the SGR. However, section 1848(f)(2)© of the Act, as amended by section 601(b) of the MMA, requires the Secretary to calculate the SGR using the 10-year annual average growth in real gross domestic product per capita.

Congressman Gingrey went on to say “I would like to see physicians reimbursed based on something similar to the Medicare Economic Index (MEI), which is how hospitals are reimbursed. It is what we refer to as “basket approach.” This would make more sense and would reimburse physicians for actual costs rather than reimbursement based on a system that does not work.”

The MEI is a measure of inflation faced by physicians with respect to their practice costs and general wage levels. The MEI includes a bundle of inputs used in furnishing physicians’ services such as physician’s own time, non-physician employees’ compensation, rents, medical equipment, etc. The MEI measures year-to-year changes in prices for these various inputs based on appropriate price proxies.

The economy-wide wage indices used in the MEI as a proxy for changes in the wages of physicians and their employees already include an adjustment for multi-factor productivity (MFP). If the MEI did not net out either the MFP in the wage index proxy or the MFP in the outputs furnished by physicians, it would effectively double-count productivity and result in an overstatement of the MEI.

Below are some excerpts from questions asked the Congressman during our interview on December 26, 2006:

Interview

A REPUBLICAN SOLUTION?

Sean Weiss (SW): Is it fair to assume that because the conversion factor remains the same that the fees themselves will remain unchanged? Will there be any adjustment to the RVUs or the Budget Neutrality Adjuster?

Congressman Gingrey (CG): There will be no change in the fees for 2007. Just as what happened in 2006, the conversion factor will remain the same, and the RVUs will remain unchanged. Additionally, there will be no adjustment to the Budget Neutrality Adjuster either. We realize physicians are losing ground in their reimbursement. Costs of running a medical practice, inflation and other components are driving costs up. Governmental committees such as the Ways and Means, and the Senate Finance Committee as well as other groups are looking into health care in this country. We are well aware of the issues and we are working to try and develop a realistic solution to the problems physicians face.

Sean Weiss (SW): What do the last 3 years of reversal in the conversion factor do to congress’ plan for the approximate 37% scheduled fee reduction through 2010?

Congressman Gingrey (CG): It simply puts it off. Unless there are offsetting cuts, all you are doing is pushing the inevitable back a bit further. It does nothing to adjust the problem. Unless we do away with the current arcane system as I said before we will continue to have to deal with temporary fixes as we have for the past few years.

SW: What specifically is congress looking at when they are trying to calculate the work RVU and the Practice RVU?

CG: As I said before, we are looking at a basket approach. We take into consideration things such as the physician time, non-physician time, malpractice costs, costs of supplies and other goods, equipment rent, etc…

SW: Can you explain what Sustainable Growth Rate is?

CG: The short hand version is an arcane formula. In a trailing year money is spent in physicians services in Part B. Drugs such as chemo drugs impact the formula even though only a small percentage of physicians use them. This is of course not fair because an entire industry is impacted based on utilization of only a few specialists. The more you spend in the previous year the fees in the next year have to go down. The more that is done, the lower the fees could be for the next year based on the trailing year. They are penalized for working longer hours and seeing more problems. It is just not a good system for reimbursing physicians for what they do.

SW: What is congress’ plan long-term for fixing the problem with the methodology for the SGR?

CG: The republican plans were to pay doctors based on something similar to a MEI, in the same manner as hospitals. They should be paid a fair return for the services provided. Drugs under part B should be taken out.

SW: I understand what it is that some of the Republicans are making as suggestions for correcting the problem with physician reimbursement but what have your counterparts offered as a solution?

CG: Other than recommending a National Health care program I really am not sure what the Democrats are offering as a solution.

SW: As I understand it, the work component for RVUs for an office visit requiring moderately complex decision-making and for a hospital visit also requiring moderately complex decision-making will increase by 29 percent and 31 percent respectively. Has this been affected by the freeze in the 2007 conversion factor?

CG: I honestly do not know the answer to that question. We are going to have to wait and see how all of this is going to play out.

SW: My understanding is that because both of these services rank in the top 10 most frequently billed physician’s services out of more than 7,000 types of services paid under the physician fee schedule there was consideration in making the adjustment.

CG: As I said, this is something we are going to have to wait and see on.

An optimistic view

It is unlikely physicians are ever going to be truly satisfied with the reimbursement of both Medicare and Medicaid. There are so many factors that go into calculating the formula for the MPFS that we may never have 100% agreement. For now it appears nothing is going to change in the way the MPFS is calculated but I still remain optimistic that one day Congress will wise up and get tired of having to keep correcting a system that just does not work. As long as we have individuals such as Congressman Gingrey in office there will always remain hope.

I would like to thank Congressman Gingrey for taking time out of his hectic schedule to speak with me about the issues facing physicians and physician practices and hope that someday soon we may actually have a system devised for reimbursing physicians in an appropriate manner.

Sean M. Weiss is a Senior Partner with The CMC Group a medical consultancy, legal research, education and products company based in Atlanta, GA. Sean has more than 15 years of experience working with solo doctors all the way through integrated delivery health care systems. For more information on Sean, other partners of his firm, products or The CMC Group visit them online at www.thecmcgroup.net or to contact Sean directly email to msean.weiss@thecmcgroup.net

New Blog Aimed at Medical Office Personnel

PMI announces the launch of a new blog aimed at medical office personnel, moderated by Sean Weiss, Senior Partner of PMI Professional Services, LLC.

"I promise to keep it dedicated to the Business of Medicine but with my own twist to it. It is my goal to explore all of the various issues facing health care professionals on a daily basis as well as providing you with insight into the latest and greatest tools available to you through various vendors in the industry." said Weiss.

Sean Weiss Sean possesses a diverse background in the industry, holding positions of significance with some of the industry's most recognized and respected organizations. As the former Director of Consulting and Research for The Medical Management Institute, he oversaw the day-to-day operations of the consulting department and all consulting projects throughout the U.S. Sean is also a former Senior Analyst and Compliance Officer for Tenet Health Systems (Southeastern Region), where his responsibilities ranged from implementing formal training and educational programs to handling compliance issues and leading communication meetings among providers and senior management. In addition, Sean worked as a Senior National Physician Services Consultant for the Government Affairs Department and Health Information Management Systems Department for HCA/The Health Care Company (formerly Columbia HCA).

He is an author or contributing author to multiple model compliance programs (HIPAA, OIG, OSHA, personnel policies and procedures) as well as numerous textbooks on Medicare, Evaluation and Management services, coding, and specialty-specific training manuals. Sean is also a contributing author for several medical practice coding, compliance and management magazines and online news forums reaching to tens of thousands of readers every month.

"I promise to report on all of the latest happenings from around our industry and to provide you with blow-by-blow action from all of the biggest conferences of the year our company attends. I encourage each and everyone of you to join the message board and to post your questions each and every day. I hope you will alert others to this Blog, thus making this one of the biggest and best sites for health care professionals on the web." stated Weiss.

Blog URL: http://blogen.net/srpartner1.blog

Profile URL: http://blogen.net/profile.aspx?user=srpartner1

Practice Management Institute and Decision Health are extremely excited to debut a grassroots network of medical practice professionals focused on career development and networking.

Today’s rapid rate of change in the healthcare industry means that your experience, level of knowledge and networking ability has a huge effect on the stability of your career. That is why PMI and Decision Health, the national leaders of practice management news and education, are teaming up to build an all-new network of practice management professionals. Members of the PMI/Decision Health Network will receive unprecedented access to training tools, advice from well-known business leaders, coding and billing news, and much more. The Network will be highly focused on providing career development resources for its membership through industry news and updates, access to experts, and the support of a strong network of professionals from across the country.

Interested in becoming a Network Leader?

PMI and Decision Health are currently seeking ambitious leaders with a strong desire to create access to key practice management training and career support for their communities. Attributes of PMI Network leaders include access to an existing network of practice management professionals in the local area, knowledge of current issues in practice-based coding, billing and/or office management, and influence with physicians, billing and coding professionals, office administrators, etc.

PMI and Decision Health make it easy to kick-off your own local Network with support tools and advice from those who have established Networks in other areas of the country. A toolkit for establishing a charter PMI/Decision Health Network in your community will be provided, along with support from the national Network Coordinator and chapter leaders. Network leaders will gain unprecedented access to some of today’s best and brightest practice management leaders.

If you are interested in starting a PMI/Decision Health Network in your area, please contact Michael Moore, Director of Outreach and Business Development at 1-800-259-5562, ext. 270.

Click here to make plans now to join Practice Management Institute® in San Antonio!

Join us June 21 & 22, 2007 for the 2007 National Conference for Certified Professionals.

Arrangements have been made at the Crowne Plaza hotel located on the banks of the beautiful San Antonio River Walk. Network with your peers, and earn all 12 of the required CEUs for certification renewal in one two-day event. The Crowne Plaza hotel offers luxurious rooms, spacious meeting facilities and convenient access to dining and entertainment. PMI will have our faculty lineup on hand, as well as guest speakers and topics you won't want to miss. Stay tuned to learn more about topics slated for this conference!

We will be updating the conference information often so check back soon.

TELECONFERENCE ALERT: Link:http://www.billing-coding.com/synergy360/
WHEN: Friday, March 16th
TIME: 11am EST, 2pm EST (repeat)
PRESENTER: Kathy Young
TITLE: Will Your Doctor Make the Grade

SUMMARY: The government is not only allowing insurances to grade doctors, they are encouraging it through the Advantage Plans. United Healthcare has sent out letters stating that they have been and will continue to grade doctors. The grading will be based on coding and documentation. If the doctor does not meet insurance bench mark they can lose their contract. How can we help our doctors? Plug into this session and learn how!