This is a reprint of the article that was published in last week’s Medtrade Monday. Medtrade Monday and the two authors decided to run this article a second time because of the importance of the topic. Note that Jeff and Wayne will present a webinar for AAHomecare on this topic on Thursday, October 25, 2018. There will be no charge for this webinar.

Section 6402 of the Affordable Care Act states that any provider or supplier that receives an overpayment must (i) report to CMS and (ii) provide written notice of the reason for the overpayment. The overpayment must be reported and returned no later than 60 days after it is identified. Failure to do so may result in civil monetary penalties under the Federal False Claims Act.

In its previously published Final Rule, CMS provided guidance regarding the obligations of providers and suppliers to report and repay overpayments.

• The Final Rule addressed the “lookback period.” This is the time period for which a DME supplier must examine its patient files for overpayment obligations. CMS originally proposed a 10 year lookback period. However, the Final Rule shortened the lookback period to six years
• The Final Rule stated that, as a general rule, a supplier will have six months to investigate possible overpayments before the 60 day clock starts running. Compare this to the initial Proposed Rule which said that the investigation should be conducted with “all deliberate speed.”
• The Final Rule addressed what it means to “identify an overpayment.” According to the Final Rule, identification occurs when a supplier “has or should have, through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment.” The word “quantified” is significant. In including “quantified,” CMS responded to commentators who argued that an overpayment must be quantified before it can be reported and repaid. In the Final Rule, CMS stated: “We agree and have revised the language…..to clarify that part of identification is quantifying the amount, which requires a reasonably diligent investigation.” The “reasonable diligence” requirement differs from the initial Proposed Rule which stated that identification occurs when a supplier “has actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the existence of the overpayment.”

Let’s focus on the third bullet. Under the Final Rule, a DME supplier will have identified an overpayment (i) if the supplier conclusively knows about it or (ii) if the supplier would have known about it by acting with “reasonable diligence.” Although the term “reasonable diligence” gives flexibility to CMS, CMS is unlikely to punish a good faith compliance effort. As stated in a recent court ruling involving the 60 day rule: “[E]nforcement actions aimed at well-intentioned health care providers working with reasonable haste to address erroneous overpayments……would be unlikely to succeed.” It is important to note that the 60 day rule requires “proactive compliance activities…..to monitor for the receipt of overpayments.” Said another way, the DME supplier must be proactive, not reactive. Lastly, the Final Rule stated that it is “certainly advisable” for suppliers to create a paper trail that serves as evidence of reasonable diligence.

The risk of violating the “60 Day Rule”…and, hence, the risk of violating the False Claims Act…has just been ratcheted up. In June 2018 the OIG released a report entitled “Most Medicare Claims for Replacement Positive Airway Pressure Device Supplies Did Not Comply With Medicare Requirements“ (“Report”). The Report findings were a result of previous OIG work that found that Medicare allowed replacement of positive airway pressure (“PAP”) device supplies more frequently than what is reasonable and necessary and that DME suppliers often do not have the documentation required to support the need for replacement supplies.

In preparing the Report, the OIG selected a statistical sample of 110 claims for replacement PAP device supplies that Medicare paid in 2014 and 2015 and reviewed the supporting documentation from the supplier to determine whether that documentation complied with Medicare requirements. Of the 110 claims in the sample, 24 complied with Medicare requirements while 86 claims with payments totaling $13,414 did not. On the basis of the sample results, the OIG estimated that Medicare made payments of $631,272,181 for replacement PAP device supply claims that did not meet Medicare requirements.

According to the OIG, errors in these claims included:

• Physicians’ orders were not in accordance with LCDs
• Replacement supplies were not reasonable or necessary
  • Supplier did not have a proper request for replacement supplies
  • Supplier did not document continued need for PAP device therapy and supplies
  • Supplier dispensed more supplies than allowed
• Supplier had no proof of delivery
• Supplier did not respond to requests for documentation

In the Report the OIG recommended that, among other steps, the Medicare contractors should notify 82 suppliers, associated with the 86 claims containing potential overpayments, and instruct the suppliers to exercise reasonable diligence to investigate and return any identified overpayments. The OIG further recommended that the contractors inform the suppliers that in accordance with the “60 Day Rule,” the suppliers should identify and return identified overpayments.

As a result of the Report, suppliers are now receiving notices from Noridian and CGS advising them to “review claims submitted related to replacement PAP device supplies to determine if overpayments exist within the 6 year lookback period.”

Noridian and CGS are encouraging suppliers to use statistical analysis to determine a valid sample that can be extrapolated into the universe to determine the claims to be reviewed versus a review of all claims billed in the last 6 years. Suppliers will have 180 days (6 months) to conduct the review and identify any overpayments, and by statute, will have 60 days (2 months) to report and return overpayments. In total, suppliers have 240 days from the date of the notification letter to complete the investigation, identify overpayments, and make the necessary arrangements with the MACs to refund.

What makes the Noridian and CGS letter ominous is that under the “60 Day Rule,” the letter sets up the supplier for potential liability under the False Claims Act. Assume that (i) the supplier ignores the letter, the supplier does not respond, and the contractor audits the claims described in the letter; or (ii) the supplier does not audit its files but simply reports to the contractor that the claims are proper, and the contractor audits the claims described in the letter; or (iii) the supplier audits its files, the supplier reports to the contractor that the claims are proper, and the contractor audits the claims described in the letter. Assume that in any of these scenarios, the contractor concludes that all or some of the claims are improper. There is a risk that the contractor will turn its findings over to the OIG. If this occurs, then there is a risk that the OIG and the Department of Justice will instigate an investigation of the supplier under the False Claims Act.

The bottom line is that the supplier should take the CGS/Noridian letter seriously. The wisest course of action is for the supplier’s health care attorney to hire a consultant to conduct the audit. An experienced consultant will have the statisticians available to conduct a statistical analysis and determine a valid claims sample. The consultant will report to the attorney, and in turn, the attorney will report the findings back to the supplier. This way, the audit results will be protected by the attorney-client privilege. By following these steps, the supplier can control how and when to disclose the audit results.

The supplier should report its findings to the contractor. If the audit reveals that some claims should not have been paid, then the supplier should voluntarily repay those claims. Although the letter states that the supplier has six months to conduct its investigation and then has 60 days thereafter to voluntarily repay any overpayments, the wisest course of action is for the supplier to complete its investigation much sooner.

Jeff Baird will present the following webinars:

AAHOMECARE’S EDUCATIONAL WEBINAR

Noridian, CGS and the “60 Day Rule”

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C. & Wayne van Halem, President, The van Halem Group

Thursday, October 25, 2018

2:00-3:00 p.m. EASTERN TIME

Noridian and CGS have recently sent letters to PAP resuppliers advising them to review PAP resupply claims submitted during the previous six years to determine if overpayments exist. The letter further advises resuppliers to either (i) review every file or (ii) use statistical analysis to determine a valid sample that can be extrapolated into the universe. The letter then tells the resuppliers that that they will have 180 days to review and identify overpayments and then to refund the overpayments within 60 days thereafter. What makes these letters so alarming is the fact that they are setting up the resuppliers for False Claims Act liability. Pursuant to the Affordable Care Act and implementing regulations, if a provider/supplier identifies an overpayment and does not repay it, then the overpayment becomes a “false claim,” thereby triggering civil monetary penalties. As such, it is critical that the recipients of the letters take proactive steps to respond. There is a likelihood that similar letters, pertaining to other types of products, will be sent to DME suppliers in the future. This webinar will discuss (i) the reasons that the Noridian and CGS letters were sent, (ii) how the letters trigger potential liability under the False Claims Act, (iii) the responsive steps that recipients of the letters should take, and (iv) why the letters will likely be “a sign of things to come.”

Register for Noridian, CGS and the “60 Day Rule” on Thursday, October 25, 2018, 2:00-3:00 pm ET, with Jeffrey S. Baird, Esq., of Brown & Fortunato, P.C. and Wayne van Halem, CFE, AHFI, of The van Halem Group.

Registration is free but limited to 100 participants.

AAHOMECARE’S EDUCATIONAL WEBINAR

How to Fight the Awarding of a Sole Source Contract by a State Medicaid Program

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C. & Pam F. Colbert, Esq., Brown & Fortunato, P.C.

Tuesday, October 23, 2018

2:30-3:30 p.m. EASTERN TIME

It is the proverbial “Irresistible Force Meeting the Immovable Object:” State Medicaid rolls are continuing to expand…but Medicaid programs are constrained by limited money. In an attempt to contain costs, State Medicaid programs are contracting with Medicaid Managed Care Plans (“Plans”) to provide health care services and products to beneficiaries under a capitation payment (fee per member per month).  The Plan then contracts with providers and suppliers to provide the products and services to Medicaid beneficiaries. Plans focus on profits. In order to generate profits, Plans are (i) cutting reimbursement and (ii) contracting with a small number of providers and suppliers…and in some cases, Plans contract with only one provider/supplier. If a DME supplier is facing drastically reduced reimbursement and/or being bumped off of Plan’s panel, the supplier needs to know what responsive steps to take.  This program will (i) discuss what a Plan is and how a state Medicaid program will contract with it; (ii) examples of Plans drastically reducing reimbursement and limiting the number of DME suppliers on their panels; and (iii) steps that the supplier can take to respond to the Plan’s actions. These steps include (i) utilizing the Plan’s appeal/grievance process; (ii) determining if the state has an applicable “any willing provider” statute; (iii) filing a complaint with the State Insurance Commission; (iv) lobbying the State Medicaid program; (v) lobbying the state legislature; (vi) lobbying CMS; (vii) conducting public awareness campaigns; and (viii) contacting Medicaid beneficiaries directly.

Register for How to Fight the Awarding of a Sole Source Contract by a State Medicaid Program on Tuesday, October 23, 2018, 2:30-3:30 p.m. ET, with Jeffrey S. Baird, Esq. and Pam F. Colbert, Esq., of  Brown & Fortunato, PC.

FEES: Member: $99.00; Non-Member: $129.00

Webinar Sponsored by PAMS

How to Handle the Non-Compliant Patient

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C.

Wednesday, October 24, 2018

2:00 pm – 3:30 pm EASTERN TIME

A “noncompliant patient” can take many forms. For example, an oxygen patient may negligently, recklessly or intentionally damage his concentrator. As yet another example, the oxygen patient may fail to have a face-to-face visit with his physician in order for the DME supplier to obtain a recertification CMN. And what about the oxygen patient who refuses to return his concentrator when the RUL has expired? Or what about the oxygen patient who insists on smoking when using the concentrator? This program will discuss the legal rights the supplier has in response to a noncompliant patient. Recognizing, however, that it may be unrealistic…and perhaps even risky…for the supplier to exercise its legal rights, the program will discuss practical steps that the supplier can take to deal with a noncompliant patient. Examples of practical steps include sending out reminder letters, sending out lapse notifications, offering gift card incentives to persuade a patient to return an item, and contacting the patient’s physician and/or caregiver.

Learning Objectives:

• Understand the DME supplier’s continuing obligations to the patient once the supplier provides an oxygen concentrator to the patient.
• Learn the multiple ways that an oxygen patient can accurately be classified as noncompliant.
• Learn the steps the DME supplier can take when it determines that an oxygen patient is noncompliant.
• Understand the steps the DME supplier can take to assist an oxygen patient to become compliant.

Register now for “How to Handle the Non-Compliant Patient” on Wednesday, October 24, 2018, 2:00-3:30 pm ET, with Jeffrey S. Baird, Esq., of  Brown & Fortunato, PC.

FEES: Member: $59.00; Non-Member:$89.00

Jeffrey S. Baird, JD, is Chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Amarillo, Tex. He represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or [email protected].

Wayne H. van Halem, CFE, AHFI, is President of The van Halem Group, an audit and billing consulting company based in Atlanta, GA. He represents DME suppliers and other health care providers throughout the United States. Mr. van Halem can be reached at (404)343-1815 or [email protected].