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STATE BAR OF MICHIGAN HEALTH CARE LAW SECTION Medicare Payment Principles: Quick Hits On What Every Health Attorney Should Know WEBINAR December 10, 2014.

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Presentation on theme: "STATE BAR OF MICHIGAN HEALTH CARE LAW SECTION Medicare Payment Principles: Quick Hits On What Every Health Attorney Should Know WEBINAR December 10, 2014."— Presentation transcript:

1 STATE BAR OF MICHIGAN HEALTH CARE LAW SECTION Medicare Payment Principles: Quick Hits On What Every Health Attorney Should Know WEBINAR December 10, 2014 Kenneth R. Marcus, Esq. Honigman Miller Schwartz and Cohn LLP

2 Ken Marcus Honigman Miller Schwartz and Cohn LLP Disclaimer: This session does not furnish legal advice. Feel free to contact me to discuss issues. 313 465 7470 2 SPEAKER / DISCLAIMER

3 3 Presentation Topics  General Research Resources and Medicare Authority  Medicare Coverage: Parts A-D (E)  Audit and Appeals Process  Change of Ownership  Advanced Practice Providers  Special Rules  Q & A

4 4 GENERAL RESEARCH RESOURES American Health Lawyers Association Medicare/Medicaid Institute Materials Annual program each March CCH Medicare and Medicaid Guide BNA Medicare Report

5 MEDICARE AUTHORITY  Statute  42 USC §§1301-1320d-8, 1395-1395hhh  Title XVIII of the Social Security Act  Legislative History  Regulations 42 CFR  CMS Manuals: Paper / Internet 5

6 MEDICARE AUTHORITY  CMS Forms  E.g., 855  Forms are more important for:  – Certifications  –Information requirements  – Instructions List.asp List.asp 6

7 MEDICARE AUTHORITY  Administrative Decisions  Provider Reimbursement Review Board  Administrator of CMS  Administrative Law Judges  Medicare Geographic Classification Review Board  Departmental Appeals Board  Medicare Appeals Council  Federal Case Law 7

8 MEDICARE COVERAGE: PART A Part A:  Inpatient hospital stay, skilled nursing facility stay, home health visits (some also covered under Part B), and hospice care.  Accounted for 34% of benefit spending in 2013. Part A benefits are subject to a deductible ($1,216 per benefit period in 2014) and coinsurance.  No premium payment for Part A. 8

9 MEDICARE COVERAGE: PART B Part B:  Covers physician visits, outpatient hospital services, durable medical equipment (DME), some drugs, diagnostic services.  Accounted for 25% of benefit spending in 2013.  Benefits are subject to a deductible ($147 in 2014), and cost sharing for most services.  There is a premium, approx. $115/month. 9

10 MEDICARE COVERAGE: PART C Part C:  This is the Medicare Advantage program  Beneficiaries have the option to enroll in a private health plan, such as a health maintenance organization (HMO), and receive all Medicare-covered benefits.  Part C includes enriched benefits (e.g., expanded drug coverage).  Payments to Medicare Advantage plans accounted for 25% of benefit spending in 2012. 10

11 MEDICARE COVERAGE: PART D Part D:  Voluntary outpatient prescription drug benefit, with additional subsidies for beneficiaries with low incomes and modest assets.  Offered through private plans that contract with Medicare, both stand-alone prescription drug plans (PDPs) and Medicare Advantage prescription drug plans (MA-PDs).  In 2013 accounted for 11% of benefit spending. 11

12 MEDICARE COVERAGE: PART E Part E:  Supplemental plans are available to cover copay and deductible amounts. 12

13 MEDICARE COVERAGE  Resource:  13

14 PROVIDER APPEALS PROCESS: PART A  PROVIDER PART A APPEALS  Providers: e.g., hospital, home health agency, skilled nursing facility  Appeal payment interpretation issues, not individual patient claims for payment  These are appeals seeking reversal of payment amounts during the cost report audit process 14

15 PROVIDER APPEALS PROCESS: PART A  Appeal Tribunals  Less than $10,000: Intermediary (Blue Cross Blue Shield Assoc. in Chicago)  $10,000 or greater: Provider Reimbursement Review Board (Baltimore)  Five person panel appointed by Secretary of HHS  One must be a CPA  Two provider representatives 15

16 16 PROVIDER APPEALS PROCESS: PART A  Receipt of Final Determination  Typically notice of program reimbursement (“NPR”). Other determinations as well.  Appeal To PRRB: 180 Days  PRRB Decision Subject To Review By CMS Administrator  Following Exhaustion Of Administrative Appeals Process: Federal Court  Note: Exhaustion of administrative appeals process is mandatory.

17 17 PROVIDER APPEALS PROCESS: PART A Resources:  42 U.S.C. § 1395oo  42 C.F.R. §§ 405.1801 et seq.  For PRRB Instructions / Alerts / Decisions go to web site:  and-Guidance/Review- Boards/PRRBReview/  CCH Medicare and Medicaid Guide

18 18 PROVIDER APPEALS PROCESS: RAC AUDIT APPEALS  Recovery Audit Contractors (RAC’s)  These are defensive appeals of amounts recovered as a result of an audit that determines an overpayment.  Most providers have established RAC response teams, pursue the appeals process and engage consultants for technical assistance.  RAC generated an industry for consulting and certain law firms.

19 19 PROVIDER APPEALS PROCESS: RAC AUDIT APPEALS  Rebuttal (Optional): 15 Days  Fiscal Intermediary: 120 Days; prevent recoupment if filed within 40 days  Qualified Independent Contractor: 180 Days After FI Decision  Office of Medicare Hearings & Appeals (Administrative Law Judge): 60 Days After QIC Decision  Medicare Appeals Council: 60 Days After ALJ Decision  US District Court: 60 Days After MAC

20 20 PROVIDER APPEALS PROCESS: RAC AUDIT APPEALS  Jan 2014: OHMA imposed moratorium on appeals to ALJ’s  A two year workload increase of 184%;  A backlog of appeals that has grown 500% in the past two years; and  In January 2012, OMHA received approximately 1250 appeals per week, but by December 2013 it was receiving over 15,000 appeals per week.  AHA filed suit in May 2014 in DC District Ct.  CMS has offered a national settlement

21 21 PROVIDER APPEALS PROCESS: RAC AUDIT APPEALS  Resources:  CMS RAC Webpage  Systems/Monitoring-Programs/Medicare-FFS- Compliance-Programs/Recovery-Audit-Program / Systems/Monitoring-Programs/Medicare-FFS- Compliance-Programs/Recovery-Audit-Program /  CGI (The Region B RAC)  solutions solutions

22 22 CHANGE OF OWNERSHIP (CHOW) CHOW: Does the person/entity with ultimate responsibility for or ownership of the provider change? If yes, the transaction likely is a CHOW. Sale of All/Substantially All Assets Merger Of Provider With and Into Another Corporation Consolidation Of Two Providers With and Into a New Corporation But not a CHOW if sale of corporate stock (or sale of corporate membership) or a donation

23 23 CHANGE OF OWNERSHIP (CHOW) Why Do You Care If A Transaction Is A CHOW? Certification  Provider Agreement/Enrollment  Including Medicaid, BCBSM, MCO Reimbursement Substantive Payment Licensure/CON PLANNING BEFORE THE DEAL CLOSES IS THE KEY TAKEAWAY

24 24 CHANGE OF OWNERSHIP (CHOW) What happens to the Provider Agreement? 42 C.F.R. § 489.13(c) (c) Assignment of agreement.— When there is a change of ownership as specified in paragraph (a) of this section, the existing provider agreement will automatically be assigned to the new owner

25 25 CHANGE OF OWNERSHIP (CHOW) If the Provider agreement is assigned: The Acquiring Entity Steps Into The Shoes Of The Prior Owner Medicare Rights, Obligations, Sanctions, Penalties All Become The Responsibility Of The New Owner, e.g, Overpayments Receivables, Proceeds of Pending Appeals

26 26 CAN I AVOID ASSIGNMENT OF THE PROVIDER AGREEMENT? To avoid the automatic assignment: Purchaser and Seller must agree that the Seller retains the provider agreement. But there’s a catch …. There may be a delay in issuance of a new provider agreement, resulting in a gap between the transaction effective date and the effective date of the new agreement.

27 27 CHANGE OF OWNERSHIP (CHOW) If Providers Combine:  Hospital-specific payment variables will change Best Practice:  If as a result of the CHOW two providers are combined, run a pro forma cost report to identify how the hospital-specific payment variables will interact

28 28 CHANGE OF OWNERSHIP (CHOW) Liability Follows The Agreement E.g., US v Vernon Home Health, CCH ¶42,424 (Purchaser liable for overpayment.) The Seller Can Agree To Indemnify The Purchaser Against Liability If the Seller has the financial resources If the Seller remains in existence

29 CHANGE OF OWNERSHIP (CHOW) Resources: 42 C.F.R. § 413.89  CMS Manuals: Medicare State Operations Manual  § § 3210.1-3210.5 Provider Reimbursement Manual, Part I:  § § 1500.1-1500.8 Discuss With CMS OR MAC 29

30 30 ADVANCE PRACTICE PROVIDERS E.g.,:  Nurse Practitioner  Physician Assistant  Clinical Nurse Specialist (Previous now politically incorrect term was “midlevel practitioners”)

31 31 ADVANCE PRACTICE PROVIDERS Medicare Payment For Professional Services  Direct OR  “Incident To”  Direct:  Claim for payment submitted in the name and NPI of the APP  Medicare payment = 85% of physician payment  Physician supervision is not required. Collaboration with physician is required.  But note state licensure law may require supervision, for example PA’s in Michigan.

32 32 ADVANCE PRACTICE PROVIDERS Medicare Payment  “Incident To”  Medicare speak for services furnished by a physician’s employee (or independent contractor) that are an integral, but incidental, part of the physician’s service performed in office or at patient’s home.  Payment is made in the name and NPI of the physician  Direct Physician Supervision Is Required  Physician must be present in the suite, although not in the treatment room  Note failure to satisfy the supervision requirement has generated False Claims Act exposure

33 33 ADVANCE PRACTICE PROVIDERS Resources Incident To:  42 C.F.R § 410.26  Medicare Benefit Policy Manual, Ch. 15 § 60 Physician supervision 42 CFR §§ 410.28(e) and 410.32(b)(3)  Medicare Benefit Policy Manual Chapter 15, Sections 80, 80.6, 80.6.1 and 80.6.2  Find on CMS website or CCH Medicare Medicaid Guide

34 34 ADVANCE PRACTICE PROVIDERS Resources (continued) Medicare Payment For APP’S  Patient Protection and Affordable Care Act (P.L. 111-148), §3114  42 C.F.R. §§410.74, 410.75, 410.76, 410.77, 414.52, 414.54, 414.56  Medicare Claims Processing Manual, Pub. 100- 04, Ch. 12, §§110, 130.2

35 35 SPECIAL PAYMENT RULES Incident To Under Arrangement Provider Based Reassignment Physician Supervision

36 36 SPECIAL PAYMENT RULES: GENERAL COMMENT  It is important to understand that the Medicare universe is divided among three separate yet equally important groups:  Providers  Physicians  Suppliers  Certain payment rules are applicable only to providers and are not applicable to physicians and suppliers, and certain rules are uniquely applicable to physicians or suppliers.

37 SPECIAL PAYMENT RULES: INCIDENT TO  Discussed above regarding APP’s  Important to note that, in addition to a billing issue, failure to provide the required supervision poses liability under the False Claims Act 37

38 SPECIAL PAYMENT RULES: UNDER ARRANGEMENT Hospitals may provide services directly or “under arrangement.” “Under arrangement” is Medicare parlance for billing Medicare for a service provided by a vendor through subcontract. 38

39 SPECIAL PAYMENT RULES: UNDER ARRANGEMENT  Hospital contracts with a third party vendor to provide services to hospital patients  Service is billed by the hospital as a hospital service but performed by the vendor  Vendor is paid a fee by the hospital and agrees to look solely to the hospital for payment  Payment of the hospital must discharge liability of beneficiary or any other party to pay for the items and services  Hospital cannot “merely serve as a billing mechanism” 39

40 SPECIAL PAYMENT RULES: UNDER ARRANGEMENT The Hospital cannot “merely serve as a billing mechanism” The Hospital must:  Admit patient for treatment in accordance with admission policies  Maintain complete and timely clinical record on patient  Maintain liaison with attending physician regarding patient’s progress  Assure that its utilization review and quality assurance programs apply to the service 40

41 SPECIAL PAYMENT RULES: UNDER ARRANGEMENT  Routine services furnished under arrangement outside of a hospital during cost reporting periods on or after January 1, 2015 will not be recognized for Medicare payment purposes  Routine services: room and board, dietary and nursing services  Only diagnostic tests performed under arrangement outside of a hospital for hospital patients will be recognized 41

42 SPECIAL PAYMENT RULES: UNDER ARRANGEMENT  Note: “Purchased Services” should not be confused with the under arrangement principle  Previously referred to purchased diagnostic services and purchased interpretations; but IT NO LONGER EXISTS  So if a client or other party suggests a “purchased services” arrangement, beware.  Replaced by the Ant-Markup rule 42 C.F.R. § 414.50, which imposes a payment limitation that is the lesser of:  The performing entity’s net charge. The net charge must be determined without any charges that reflect the cost of the equipment or cost of leased space.  The billing entity’s charge for the service.  The physician fee schedule allowed amount.  Specific requirements to come within the rule. 42

43 SPECIAL PAYMENT RULES: UNDER ARRANGEMENT  Resources  Definition: 42 U.S.C. 1395x(w)  Coverage: 42 U.S.C. 1395x(b)(3)  Eligibility: 42 C.F.R. 409.3 43

44 SPECIAL PAYMENT RULES: PROVIDER BASED  “Provider based” is Medicare parlance for services furnished at an off site facility that may be billed as if provided directly by the hospital  The advantage of provider based status is that payment may be greater, i.e., the facility fee in addition to the professional fee.  Other advantages: 340B drug discount eligibility, disproportional share adjustment, med ed payments, inclusion in third party payor agreements 44

45 SPECIAL PAYMENT RULES: PROVIDER BASED Disadvantages:  Medicare Conditions of Participation for hospitals apply  Medicare billing requirements apply  Life Safety Code applies  EMTALA  Medicare payments for physician services reduced  Written notices to beneficiaries required for off-campus outpatient departments  Commercial payers may refuse to pay facility fees 45

46 SPECIAL PAYMENT RULES: PROVIDER BASED Requirements: 42 C.F.R. 413.65(d) and (e):  For on and off campus:  Located more than 250 yards from main provider  Licensure  Clinical Integration  Financial Integration  Public Awareness  Compliance with provider based requirements 46

47 SPECIAL PAYMENT RULES: PROVIDER BASED For off campus:  Operate under ownership and control of provider  Administration and supervision equivalent to a hospital department  Located Either  Within 35 miles of hospital or during each year  Or, 75% of patients live in same zip code as 75% of main provider’s patients and 75% of patients require same type of care as would be furnished by the main provider  Children’s hospital NICU exception  Must be in same state or consistent with laws of adjacent states For Joint Venture:  Must be (1) on one provider’s campus and (2) partially owned by one provider 47

48 SPECIAL PAYMENT RULES: PROVIDER BASED The Attestation “Requirement”  Not required.  Benefit: If file attestation and found to be out of compliance, recovery is limited to date when attestation filed. Otherwise exposed to recovery for all years subject to reopening (i.e., 3 years following audit determination) Resources:  42 C.F.R. § 413.65  Excellent Tool Kit For Members Of AHLA Regulation, Accreditation and Payment Practice Group 48

49 SPECIAL PAYMENT RULES: REASSIGMENT  The Medicare beneficiary assigns Part B payment to a physician or supplier  There is a general prohibition on further assignment, i.e., reassignment, unless the reassignment comes within one or more specified exceptions, which for physician services include  Payment to a government agency  Pursuant to court order  To an agent  To an employer  Payment under a contractual arrangement  Anti Markup payment  Reciprocal Billing arrangement  Locum Tenes payment 49

50 SPECIAL PAYMENT RULES: REASSIGMENT  Resource:  Internet Only Manuals, CMS Pub 100-04 §30.2.1,Exceptions to Assignment of Provider's Right to Payment 50

51 51 PHYSICIAN SUPERVISION  Licensure/Certification/Scope of Practice  State licensure law governs physician supervision requirements for advanced practice providers  Medicare Payment  Medicare payment requires compliance with specific supervision requirements  For services of APP’s  For diagnostic tests Note: The licensure / certification and Medicare payment requirements are not necessarily identical.

52 52 PHYSICIAN SUPERVISION Three Levels  General  Procedure is furnished under the physician's overall direction and control, but the physician's presence is not required during the performance of the procedure.  Direct  Personally present in suite, available to assist, not required to be in treatment room  Personal  Must be in attendance

53 53 PHYSICIAN SUPERVISION  The CMS Medicare Physician Fee Schedule Database  schedule/license-agreement.aspx schedule/license-agreement.aspx  Type of Information: Payment Policy Indicator  Enter the HCPCS code and, in addition to other payment requirements, the level of physician supervision is provided  1: General; 2: Direct; 3: Personal

54 54 PHYSICIAN SUPERVISION Resources  42 CFR §§ 410.28(e) and 410.32(b)(3)  Medicare Benefit Policy Manual Chapter 15, Sections 80, 80.6, 80.6.1 and 80.6.2  Find on CMS website or CCH Medicare Medicaid Guide

55 Q and A  Questions and Answers 55

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