1. MEDICAL AUDITS AND TIPS FOR PHYSICIANS FACING PRIVATE PAYER AND GOVERNMENTAL AUDITS Presented by: PHYSICIANS ADVOCACY INSTITUTE AMERICAN COLLEGE OF EMERGENCY PHYSICIANS 1

2. PAI  Founded in 2006 as Result of MDL Managed Care Litigation  Board Comprised of CEOs from 9 State Medical Associations: CA, CO, GA, NE, NY, NC, SC, TN and TX and a Physician 2

3. PAI MISSION To Advance Fair and Transparent Payment Policies and Contractual Practices by Payers and Others in Order to Sustain the Profession of Medicine for the Benefit of Patients 3

4. PAI ACEP TOOLKIT FOR PHYSICIANS FACING MEDICAL AUDITS www.physiciansadvocacyinstitute.org Fair Medical Audits 4

5. TOOLS IN PAI ACEP MEDICAL AUDITS TOOLKIT  Top Ten Tips for Physicians (Article and PowerPoint)  Checklists for Responding to Medical Records Requests and for Physicians Appealing Audit Findings 5

6. PAI ACEP TOOLKIT CONTENTS, CONT.  PAI’s White Paper - Medical Audits: What Physicians Need to Know  ACEP’s Preparing for Physician Audits  Ed Gaines’ Article on Significance and Implications of the Delay in Submitting Appeals to ALJs 6

7. WHAT IS GOING ON WITH PAYORS?  The big picture: OIG and DOJ’s budgets are augmented significantly by “fraud and abuse” recoveries=Billions.  OIG Recovery Ratio: $7 collected to $1 spent  ACA’s numerous new integrity laws as “Pay Fors”  Medicare (MCA) growing @ >10,000 Baby- Boomers/day.  Extrapolation is > used by Gov’t and Health plans to demand very large overpayments on small samples.  Software Programs Allowing Automated Review of Claims and Billing Patterns for Potential Issues of Inappropriate Billing and Fraud, e.g. Predictive Modeling  Contingent Payments to RAC and Other Auditors Incenting Overpayment Findings 7 7

8. DISCUSSION OBJECTIVES:  Describe gov’t and private payor audits and appeals including Medicaid and Medicare Advantage  Analyze pre-audit risk areas, tools and audit defense strategies to enhance provider rights and remedies  Describe methods for mitigating audit risk  Provide tips for helping physicians facing medical audits 8 8

9. Types of Gov’t Payor Payment Review Entities 9 Types of Claims How Selected Volume of Claims Type of ReviewPurpose of Review Other Functions CERT* All Medical Claims RandomlySmall Postpay only Complex only To measure improper payments None PERM* All Medical Claims Randoml y RandomlySmall Postpay only Automated & Complex To measure improper payments None Medical Review Units* at MACs All Medicare FFS Claims Targeted Depends on number of claims with possible improper payments for this provider Prepay & Postpay Automated & Complex To prevent future improper payments Education Appeals Medicare Recovery Auditors* All Medicare FFS Claims Targeted Depends on number of potentially fraudulent claims submitted by provider Prepay & Postpay Automated & Complex To detect and correct past improper payments None PSC/ZPICS (now UPIC) All Medicare FFS Claims Targeted Depends on number of claims with fraudulent claims submitted by provider Prepay & Postpay Automated & Complex To identify potential fraud ---- OIG All Claims Targeted Depends on number of potentially fraudulent claims submitted by provider Postpay Complex To identify fraud---- *Overseen by OFM/PCG

10. “A/B” MAC means hospitals (Part A) and Physicians (Part B) are processed by one contractor.  Source: AAOS.  http://www.aaos. org/govern/feder al/Medicare/MAC JurisdictionsMap.jpg http://www.aaos. org/govern/feder al/Medicare/MAC JurisdictionsMap.jpg  MACs are in process of consolidating from 15 to 10, e.g. Jurisdiction H is the combined J4 and J7.  CMS is expecting MAC medical directors to engage in appeal hearings. 10

11. 11 The Cost/Benefit of Governmental Payor Physician Group Appeals.

12. WHAT’S THE COST/BENEFIT OF APPEALING?  AMA cited survey found that the average overpayment was $86/claim per RAC audit.  Average cost of a RAC audit to medical practice is approx. $110/claim.  So there’s a net loss of each RAC audit appeal per claim of -$24.00 ($110 cost less $86 overpayment average).  Source: http://www.ama-assn.org/ama/pub/ama-wire/ama- wire/post/payment-recovery-audit-program-needs-overhaul- doctors-cmshttp://www.ama-assn.org/ama/pub/ama-wire/ama- wire/post/payment-recovery-audit-program-needs-overhaul- doctors-cms 12

13. WHAT’S THE COST/BENEFIT OF APPEALING?  Why not just write the check for overpayments and be done w/ it?  Answers:  When Part B providers appealed, > 60% succeeded at 1-4 level appeals. (Source: Part B News, 10/6/14)  Mitigating risks of—  Progressive Corrective Action (PCA) & Stat. Sampling.  Extrapolation. 13

14. http://www.palmettogba. com/palmetto/providers. nsf/DocsCat/Providers~ Jurisdiction%2011%20P art%20B~Medical%20Re view~General~84WREC0 587?open&navmenu=Me dical%5EReview%7C%7 C%7C%7C 14

15. REASONS TO CHALLENGE MAC/RAC AUDIT FINDINGS  For “major level” error rates, statistical sampling for overpayment projection is expressly authorized, Medicare Program Integrity Manual (MPIM) Section 3.10.1.4.  Make sure you receive credit (MPIM 3.11.1.5) for the “undercoding” for the “provider error rate” 15

16. EXTRAPOLATION  Extrapolation defined: method of forecasting the results of an audit sample to the universe of claims from which the sample was drawn, and project an error rate, e.g. 5%, across all MCA claims  The Medicare statute does NOT permit extrapolation unless: 1. “a sustained or high level payment error”, OR 2.“documented educational intervention” has failed to correct the payment errors. 42 USC Section 1395ddd(f)(3) 16

17. WHAT IS A “SUSTAINED OR HIGH LEVEL OF PAYMENT ERROR”?  One or more of the following: 1.Medical review by any contractor 2.Probe or data analysis 3.Hx of provider audits/probes 4.Information from law enforcement. 5.Allegations of wrongdoing 6.OIG audits or wrongdoing Source: MPIM 8.4.1.4 17

18. REASONS FOR APPEALING MAC/RAC FINDINGS:  The decision to use extrapolation cannot be challenged on Medicare appeal or in the federal courts, 42 USC 1395fff (d)(3), 42 CFR 405.926 (p) and MPIM 8.4.1.2.  The extrapolation methodology to determine the overpayment is subject to challenge on appeal and in the courts.  The MAC/RAC methodology is presumed valid, and burden of proof is on the provider.  CMS Ruling 86-1. 18

19. INITIATION OF THE AUDIT PROCESS  Typically a Letter Requesting Medical Records  Governmental Audits Initiated by an Additional Request for Records (ADR)  Audits Can Be Triggered by Review of Claims Data or Based on CERT Findings  Sometimes Triggered by Calls from Staff or Patients 19

20. TYPES OF RECOVERY (RAC) AUDITS  Automated -- No Review of Medical Records -- First Notice of Audit a Demand for Repayment  Complex -- Medical Records Reviewed -- Limits on Number of Medical Records Requested  Semi-Automated Reviews -- Begin as Automated Reviews 20

21. IMPORTANT FACTS REGARDING RECOVERY (RAC) AUDITS  RAC Auditors Cannot Review Any Program Other than FFS  RAC Auditors Cannot Conduct Pre-Payment Review (Except Pursuant to a Demonstration Project in 11 States)  Medical Record Requests Limited  RAC Auditors Are Paid on a Contingency Based on Identified Improper Payments (Both Overpayments and Underpayments) 21

22. 22 RAC Permanent Program: Region Region A: Performant Recovery Inc., (formerly DCS) of Livermore, California— 12.45%; Region B: CGI Technologies and Solutions, Inc. (CGI) of Fairfax, Virginia—12.5%; Region C: Connolly Consulting Associates (CCA), Inc. of Wilton, Connecticut—9%; Region D: HealthData Insights, Inc. (HDI) of Las Vegas, Nevada—9.49%. http://www.cms.gov/Research-Statistics-Data-and- Systems/Monitoring-Programs/Provider-Compliance- Interactive-Map/index.html

23. FY 2013 RAC Results by Region: 97+% overpayments 23

24.  Critical to know that recoupment by the MAC occurs on Day 41 (unless the 1 st appeal is filed in 30 days) even though there are another 70+ days to appeal. **AIC=Amount in Controversy ALJs are > 2 yr. behind in scheduling hearings according to the AHA lawsuit. 24

25. MORITORIUM ON SUBMISSION OF APPEALS TO ALJ APPEAL LEVEL  U.S. Office of Medicare Hearings and Appeals (OCMA) Started Notifying Providers in December 2013 and January 2014 That It Had Placed a Moratorium on Submitting Appeals Filed After April 2013 to Administrative Law Judges (ALJs)  Appeals Covered by the Moratorium: Pre- and Post-Payment Part B Claims’ Reviews, Including Reviews and Audits by RACs, MACs, ZPICs, and Medicare Advantage Plans  Moratorium Could Last Up to 28 Months 25

26. Justice delayed is justice denied  Nearly 3 year wait for ALJ hearing.  AHA lawsuit v. HHS filed in May 2014. Part B News, 6/23/14 26

27. 27 Program your system w/ ANSI remark codes to flag RAC audits in the 835 R/A.  http://www.ngsmedicare.com/ngs/portal/ngsmedicare/!ut/p/a0/04_Sj9CPykss y0xPLMnMz0vMAfGjzOINvIKdHd1MTQwMfC0NDDwdzYLd3N0NjE2cTfULsh0 http://www.ngsmedicare.com/ngs/portal/ngsmedicare/!ut/p/a0/04_Sj9CPykss y0xPLMnMz0vMAfGjzOINvIKdHd1MTQwMfC0NDDwdzYLd3N0NjE2cTfULsh0  TIP: Program “N432” & “N469” into your billing application/PM system to spot RAC review in the Medicare R/A long before the letters are received.  VAcgaoyo!?LOB=Part%20B&REGION=All VAcgaoyo!?LOB=Part%20B&REGION=All

28. UPIC/ZPIC AUDITS  Purpose: To Perform Data Analysis for Medicare Parts A – D to Determine Improper Billing Patterns and to Follow- up on Allegations of Fraud  May Reopen Claim Determinations within 5 Years of Claim Adjudication for Material New Evidence or Obvious Error  Records Due within 30 Days of Request or Risk Non- payment  Refers Cases of Suspected Fraud to Department of Justice (DOJ) or HHS Office of the Inspector General (OIG)  Can Suspend or Revoke the Provider Transaction Access Number  Retaining Counsel Should be Serious Consideration 28

29. “Supplemental Medical Review Contractor” (SMRC) AUDITS  Audits Focus on Issues Identified by CMS and Through CERT and Other Data Analysis  May Not Review Claims Currently Under Review by Other Medicare Contractor (But Have Been Known to Request Records from Such Claims)  No Payment for Medical Record Duplication  No Appeal Directly From Audit Finding, but Only After Overpayment Demand from MAC  Audit of E/M CPT® Codes 99214 and 99215 Resulted in Finding a 61% Error Rate, 40% Due to Failure to Timely Respond to Request for Records, and 39% Due to Insufficient Medical Documentation 29

30. AUDIT LOOK BACK PERIODS  RAC – 3 Years  UPIC – 5 Years for Material New Evidence or Obvious Error  Commercial Payer Audits Vary by State Law for Insured Claims 1 Year, 18 Months and 2 Years are Most Commonly Used Limits on Overpayment Recoveries, but Texas’ Limit is Six Months and Arkansas, Louisiana, and Massachusetts Have No Limitations  See the Appendix for a list of state laws re: look back periods. 30

31. Case Study: MCA Secondary Payor’ s Piggyback on Medicare Audits.  Medicare MAC performs follow up audit after MAC probe review and extrapolates the findings to $350K in overpayment against a Kansas City Phys. Group  Medicare Secondary Payor (MSP)—pay expenses not covered by Medicare—then piggybacked and demanded overpayment on the extrapolated MAC audit findings.  MSP overpayment demand is done BEFORE providers have opportunity to appeal the MAC audit.  MAC appeals by the group prevented Medicare recoupment but recoupment by MSP occurred anyway.  Report on Medicare Compliance, July 3, 2013 at 1. 31

32. Medicare Advantage Audits & Contracting.  What is Medicare Advantage (MA)?  Medicare Parts A, B and usually prescription drugs (D) covered by one health plan/PPO per an agreement w/ CMS.  MA plans contract with providers— e.g., an addendum to the BCBS contract.  Tip: be careful w/ the MA contract as plans are trying to limit providers to 2 levels of appeal and no ALJ.  If non-par, appeal process per Part B Manual. 32

33. TIP #1: ASSESS THE RISK OF AN AUDIT BEFORE IT OCCURS  RAC, Other Governmental and Private Payer Auditors Use Software Programs to Identify Possible Issues with Medical Claims and So Should You  Analyze and Understand Reasons for Outliers in Advance of an Audit  Review Electronic Medical Records Product and Your Practice’s Use of It to Ensure Output of EMR Complies with Coding Rules  Conduct Peer Review Audits Among Physicians in Medical Practice  Ensure Software Programs Allow Your Practice to Verify Accuracy of Claim Payments  Regularly Review Changes in CPT and Payers’ Medical Policies 33

34. TOOLS FOR BENCHMARKING  Part B Nationalization Summary Data File (BESS) Allows Benchmarking of Code Utilization with Others in Your Specialty  Medicare’s Comprehensive Error Rate Testing (CERT) Report Can Be Used to Determine Billing Codes Commonly Found to Have Errors 34

35. The Importance of Benchmarking  Allows Physicians to Determine if Their Billing is Consistent (or Out of Line) with Others in their Specialty  Allows Physicians to Determine if There are Reasons Why Billing Differs from Others in Their Specialty (e.g. Subspecialized Practice, Patient Mix, etc.)  Prompts Physicians to Verify Billing in Accordance with CPT and Medical Policies  Has Implications on Other Payer Policies Impacting Physicians’ Bottom Lines – Profiling, Tiered Networks, etc.  Always Verify that Practice is Correctly Classified by Payers so that Proper Benchmarks Apply 35

36. TIP #2: BE PROACTIVE IN ENSURING PROPER CODING AND BILLING  Coding Rules, Documentation and Relevant Medical Policies All Important  CERT Report  CS STARS Software  Level 4 and 5 E/M Codes  Should Be Part of Every Practice’s Compliance Program  Coding Applied by EHR Systems Not Always Accurate  Provides Strong Defense if Audit Occurs 36

37. ELECTRONIC HEALTH RECORDS  Do Not Set at Default Settings  Do Not Blindly Copy and Paste Between Records  Past History Should be Reviewed, Not Merely Copied  Update Information as Necessary  History of Present Illness Based on Symptoms on D/O/S  Diagnosis Codes Only for Conditions Addressed on D/OS  Review Coding to Ensure Accuracy 37

38. TIP #3: DETERMINE PAYER AND TYPE OF AUDIT BEFORE RESPONDING  Payers Often Contract with Outside Vendors Who Don’t Necessarily Disclose Payer on Whose Behalf the Audit is Being Conducted “Proxy” Audits  Determine Payer, Scope of Audit and Type of Audit Before Responding  Necessary Not Only to Learn More About the Audit and Process, but Also to Verify that Access to the Records is Permitted Under HIPAA and State Law  Respond to Any Requests for Medical Records as if an Audit Because Medical Record Requests are Often Precursors to Audits  Consider Retaining an Attorney or Other Consultant (Highly Recommended for UPIC/ZPIC Audits) 38

39. TIP #4: PAY ATTENTION TO DEADLINES AND PROCEDURES  Designate Individual Responsible for Responding Before Audit Occurs  Calendar All Deadlines  Respond Promptly or Seek Extensions  If No Deadline Specified, Ask and Document  Failure to Meet Deadlines and Comply with Procedures Can Have Consequences --Failure to Respond to Request for Records within 45 Days in a MAC Prepayment Review Can Result in Denial --Failure to Comply with Authentication Requirements Can Result in Documents Not Being Considered --Failure to Appeal RAC Audit Findings within the First 30 Days Can Result in Recoupment Pending Appeal (Even if Timely Appeal) 39

40. TIP #5: ENSURE THAT MEDICAL RECORDS COMPLETE  Important Because Payers Do Not Always Permit Records to be Supplemented  Verify that Medical Records are Legible (and Provide Transcript of Illegible Portions)  Verify that No Information Has Been Cut Off in Copying  Provide Complete Medical Record  Complete the Medical Records with Any Documents that Had Not Yet Been Added to the Chart (but Do Not Alter the Medical Record)  Include Explanation/Support for Any Unusual Services/Tests  Send Records in a Manner that Allows Tracking and Maintain Record of What Has Been Sent 40

41. TIP #6: WHEN USED, ENSURE FAIR EXTRAPOLATION  Extrapolation – Statistical Sampling Used to Determine and Project an Error Rate  RACs May Not Use Extrapolation Unless: --Determination of Sustained or High Error Rate --Educational Corrective Action by the MAC has Failed to Correct Errors  But, a RAC’s Determination to Use Extrapolation Cannot be Challenged on Appeal  Commonly Used by Commercial Payers 41

42. STATISTICALLY SOUND/FAIR EXTRAPOLATION  Ensure that Outliers are Removed from the Calculation  Ensure that Zero Paid Claims are Removed from the Calculation  Ensure that Underpaid Claims, as Well as Overpaid Claims, are Included  Consider Seeking Review of 100% of Claims to Ensure Accuracy and Inclusion of Underpaid Claims 42

43. TIP #7: VERIFY AUDIT FINDINGS  Often Erroneous  Approximately 44% of RAC Audit Findings Overturned on Appeal at the ALJ Level (3 rd Level of Appeal), but Only 6% of Providers Appeal)  Check the Math  Determine Whether Auditor’s Conclusions Regarding Incorrect Codes or Insufficient Documentation Justified  Review Audit Findings Objectively 43

44. TIP #8: UNDERSTAND APPELLATE RIGHTS AND APPEAL ERRONEOUS ADVERSE FINDINGS  Determine Payers’ Appeals Process  Calendar All Dates  Timely Appeal Erroneous Adverse Findings  Take Advantage of Opportunities to Informally Discuss Audit Findings with Auditor, but Understand that Such Discussions Do Not Stay Deadlines --RAC Appeals Informal Discussion Process --Conversations with Medical Director When Under Pre-payment Review 44

45. TIP #9: INCLUDE ALL NECESSARY INFORMATION TO REFUTE ERRONEOUS AUDIT FINDINGS ON APPEAL  Restate and Refute Every Element of Audit Finding Being Appealed, Assuming Individual Reviewing the Appeal Does Not Have Any Background About Your Audit  Cite any CPT Coding Policy or Reference Material, Medical Policy or NCD and LCD Relied On  Cite any Pertinent Medical Literature for Medical Necessity Denials  Include Summary of Why Audit Findings Erroneous  Consult with Counsel and Outside Experts as Appropriate in Preparing Appeal (but Should be Strongly Considered in Cases of Suspected Fraud) 45

46. TIP #10: CHANGE ANY IDENTIFIED ISSUES WITH CODING AND BILLING  Auditors May Identify Genuine Issues in a Physician Practice’s Coding and/or Documentation  Objectively Assess Audit Findings  Correct any Identified Problems  Notify Payer of Corrective Action  Negotiate Payment Plan if Necessary 46

47. Contact information: Ed Gaines, JD, CCP Chief Compliance Officer Zotec Partners Greensboro, NC egaines@zotecmmp.com 877-271-2506 Follow me on Twitter: @EdGainesIII http://twitter.com/EdGainesIII Deborah Winegard, Esq., Whatley Kallas, LLP Atlanta, GA dwinegard@whatleykallas.com 404-607-8222 47

48. Appendix: Physicians Advocacy Institute (PAI)--ACEP Tool Kit  Link to the Audit tool kit developed jointly by the PAI and ACEP Reimbursement Committee 48 http://www.physiciansadvocacyinstitute.org/Advocacy /Fair-Medical-Audits/Toolkits-Resources

49. Appendix Good/Better/Best Defenses: Medical Record Review Comprehensive Audit Response Template from the ACEP Document: “Preparing for Payer Audits: ACEP Reimbursement Committee 2012. http://www.acep.org/reimbursement/ http://www.acep.org/reimbursement/ 49

50. Appendix: State Law Time Limits on Overpayment Recoveries. States That Have Established Time Limits on the Detection and Recovery of Overpayments Alabama (18 mos) (Ala.Code 1975 § 21-54-020) Arkansas (18 mos) (A.C.A. § 23-63-1802, AR ADC 054.00.85-3) Arizona (1 year) (A.R.S. § 20-3102) California (1 year) (West's Ann.Cal.Ins.Code § 10133.66) Colorado (1 year) (C.R.S.A. § 10-16-704, C.R.S.A. § 10-16-106.5) DC (18 mos) (DC ST § 31-3133) Florida (30 mos) (Fla. Stat. §627.6131) Georgia (1 year) (O.C.G.A. § 33-20A-62) Iowa (2 years) (IA ADC 191-15.33(507B)) Indiana (2 years) (IC 27-8-5.7-10) Kentucky (2 years) (KY Rev. Stat. Ann §304.17A-708) Maryland (COB - 18 mos, 6 mos) (MD Code, Insurance, § 15- 1008) Maine (1 year) (Me. Rev. Stat. Ann. 24-A §4303) Missouri (1 year) (Me. Rev. Stat. Ann. 24-A §4303) Montana (1 year) (MCA 33-22-150) Nebraska (6 mos) (210 NE ADC Ch. 61, § 009) New Hampshire (18 mos) (N.H. Rev. Stat. § 420-J:8-b (HMOs)) New Jersey (18 mos) (N.J.S.A. 17:48-8.4, N.J.S.A. 17:48-7.12, N.J.S.A. 17:48E-10.1, N.J.S.A. 17:48F-13.1, N.J.S.A. 17B:26-9.1, N.J.S.A. 17B:27-44.2, N.J.S.A. 26:2J-8.1) New York (2 years) (NY Insurance Law § 3224-b) North Carolina (2 years) (N.C.G.S.A. § 58-3-225) Ohio (2 years) (R.C. § 3901.388) Oklahoma (2 years) (36 Okl.St.Ann. § 1250.5) Oregon (2 years) (O.R.S. § 743.912) Rhode Island (2 years) (Gen.Laws 1956, § 27-18-65, Gen.Laws 1956, § 27-19-56, Gen.Laws 1956, § 27-20-51, Gen.Laws 1956, § 27-20.1-19, Gen.Laws 1956, § 27-41-69) South Carolina (18 mos) (Code 1976 § 38-59-250) Tennessee (18 mos) (T. C. A. § 56-7-110) Texas (180 days) (V.T.C.A., Insurance Code § 843.350 (HMOs), V.T.C.A., Insurance Code § 1301.132 (PPOs)) Utah (COB - 2 years, Medicaid/Medicare/CHIP - 3 years, 1 year) (U.C.A. 1953 § 31A-26-301.6) Virginia (1 year) (Va. Code Ann. § 38.2-3407.15) Vermont (1 year) (M.G.L.A. 118E § 38) Washington (2 years) (18 V.S.A. § 9418) West Virginia (1 year) (W. Va. Code, § 33-45-2) **States that stipulate the recoupment process but do not institute a time limit (3 states - as of June 2010): Alaska (AS § 21.54.020), Louisiana (LSA-R.S. 22:250.38) & Massachusetts (M.G.L.A. 118E § 38) 50 http://www.aaoms.org/members/resources/practice-management-and-allied-staff/practice-management-and- allied-staff-news-and-materials/post-payment-audits-refund-requests-2 50