3/17/2015 1 Paula Koenig – CCO Numotion Jeff Baird –JD, Brown & Fortunato, Inc Cindy Matson ‐VP Corp Compliance, Sanford Health Ruth Krueger – Compliance Manager, Sanford Health Learning Objectives Examine the increasingly aggressive actions by the alphabet soup of CMS contractors, and how to respond. Review key challenges inherent in: the Medicare competitive bid program, joint ventures and subcontracting possibilities. Compare the definition of “marketing” under HIPAA Privacy Rule and the Anti‐kickback Statue (AKS). Discuss marketing strategies with consideration for the HIPAA Privacy Rule, AKS, the beneficiary inducement statute, and other potential federal and state anti‐fraud laws. What type of company do you represent? A. Hospital/Health System B. Private/Family owned DME C. Publically held DME D. Insurer E. Other
Transcript
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Paula Koenig – CCO Numotion
Jeff Baird –JD, Brown & Fortunato, Inc
Cindy Matson ‐VP Corp Compliance, Sanford Health
Ruth Krueger – Compliance Manager, Sanford Health
Learning Objectives Examine the increasingly aggressive actions by the alphabet soup of CMS contractors, and how to respond.
Review key challenges inherent in: the Medicare competitive bid program, joint ventures and subcontracting possibilities.
Compare the definition of “marketing” under HIPAA Privacy Rule and the Anti‐kickback Statue (AKS). Discuss marketing strategies with consideration for the HIPAA Privacy Rule, AKS, the beneficiary inducement statute, and other potential federal and state anti‐fraud laws.
What type of company do you represent?
A. Hospital/Health System
B. Private/Family owned DME
C. Publically held DME
D. Insurer
E. Other
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How many employees work in your DME operation?
A. <20
B. 20‐50
C. 51‐100
D. >100
DME Overview Industry around for 35 years
Grew up unregulated
Little knowledge of what DME was
Didn’t hit the radar ‐little interest by federal government
Tides turned “Gaming the system”/Fraud examples surfacedDME industry caught the interest of CMS, Congress, DOJ, OIG
Pendulum swung way too far to right creating the “Perfect Storm” i.e. competitive bidding post‐payment audits prepayment reviews stringent documentation requirements; and lower reimbursement.
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How long have you worked in DME?
A. <1
B. 1‐5
C. 6‐10
D. >10
E. DME? I’m in the wrong room!
Leave it to Beaver type of DME days of simple, relaxed, fee for service are gone…
…now enmeshed in the complexity of Modern Family
Not all bad newsThink outside the box
23 million of the Greatest Generation
20 million of the Korean War generation
78 million Baby Boomers (those born between 1946 and 1964).
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Boomers Boomers are now retiring at the rate of 10,000 per day.
Boomers will live to be 85 years old and until they die, they expect to be running triathlons and going to Rolling Stones concerts.
Boomers do not expect to be living in long term care facilities.
Boomers will need what the DME industry has to offer.
Demand for DME will only increase exponentially.
Other hot buttons do you want to discuss?
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Audits * Audits * AuditsThe DME industry is drowning in audits!
DME MACs
CERT
RAC
ZPIC
SMIRC
Medicaid
Other Payers
Yes, it’s alphabet soup…
But where is the love?
DME MAC audits The 4 Regional Contractors do their own pre‐pay and post‐pay audits.
Increased audits as a response to CERT denial rates Focus on technical components of the file
Date issues: document received dates, sequence dates
Signatures
Scrutiny re medical necessity, esp conflicts in the medical records
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CERT auditsCMS created CERT auditors to review MAC error rates
CERT = Comprehensive Error Rate Test
Denials always end up back at the provider
Error rates DME claims: FY 2003 13.6%
FY 2006 7.8%
FY 2009 51.9% ‐ spike in error rates due to strict enforcement of documentation requirements, and elimination of clinical review judgment
FY 2012 66.0%
FY 2013 58.2%
RAC auditsRAC = Recovery Audit Contractor CMS demo project 2005 – 2008, expanded to national coverage in 2010
RACs are paid by getting a % of overpayments they identify
Post‐pay audits, a lot of data mining. RACs keep approx. 15% of identified overpayments. Can go back 3 years.
RACs expanding into Medicaid programs, required by CMS
2010 DME focus – DOS overlaps inpatient stay
2011 DME focus – inpatient stay (overpayments on 60,000 claims, $6,775,000 overpayment); all denials $34,000,000 on 295,000 claims
2012 $41,000,000 overpayment on 257,000 DME claims
2013 $74,000,000 overpayment on 322,000 claims
ZPIC audits ZPICs = Zone Program Integrity Contractors (formerly PSCs, Program Safeguard Contractors)
Investigates suspected fraud, waste, and abuse
Can initiate full pre‐pay reviews; can extrapolate error rates
ZPICs started in 2009
DME MACs can refer a provider to ZPICs if they suspect inappropriate behavior
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SMRCSMRCs = Supplemental Medical Review Contractor
Limited DME audits to date, but…
Strategic is currently performing medical record review on the following projects:
Remuneration to beneficiaries to influence their purchase of item or service covered under federal healthcare programs
Nominal value ($10/item or $50/year)
Telephone Solicitation42 U.S.C. § 1395m(a)(17)
Only allowable when
Written permission, or
Previously provided item and call is in regards to that item, or
Previously provided other item during the proceeding 15 months
CMS FAQs
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Stark (physician self‐referral)42 U.S.C. § 1395nn
May not refer to Designated Health Service (DHS) that a physician has ownership in
DHS = DME, parenteral and enteral nutrients, prosthetics, orthotics and prosthetic devices and supplies, outpatient prescription drugs + others
HIPAA Privacy & MarketingFAQ 291Nothing in the Privacy Rule can be construed as amending, modifying, or changing other rules… specifically, fraud and abuse, self‐referral
Violations where nurse and physical therapists act as marketers for DME companies
May meet “marketing” exception but nevertheless violate other statutes and regulations
Do you purchase business leads from a third party?
A. Yes
B. No
C. Don’t know
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Allowable or Not?http://oig.hhs.gov/compliance/
Safe harbor regulations under AKS
“bright line” tests that do not violate AKS
Advisory Opinion process
Describes specific circumstances and proposed arrangement
Contracts with referral sources reviewed by counsel and comply with laws
Do not submit claims for items or services as a result of violation of these laws
Pay FMV only for rental space or supplies
Do not offer gifts or other things of value to induce referrals or services
Written policies and procedures that address this
OIG Compliance Guidance Marketing
Non‐deceptive Marketing materials translated into other languages No cash incentives No waiver coinsurance or offering of “free” services Do not promote items not reasonable or necessary Percentage arrangements for sales and marketing personnel
No unsolicited phone calls Do not imply endorsement by Medicare of Social Security
Educate sales force regarding these concerns
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Marketing SchemesUnsolicited orders for medical equipment or supplies with deceptive language (implies beneficiaries request for items)
Ads that indicate Medicare will pay physicians for referrals
Pre‐completed medical necessity forms to sign and date
CMS believes may lead to services or items not medically necessary
AMA guidance
Pertinent OIG DocumentsDiabetes, DME Supplier, Telemarketing Company & Owner Executives Agree to Exclusions in Settlement
Advisory Opinion 08‐19 – Pay per call/lead
Special Fraud Alerts: Telemarketing by DME Suppliers
Rental of Space in Physician Offices by Persons or Entities to Which Physicians Refer
Physician Liability for Certifications in the Provision of Medical Equipment and Supplies
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Joint Venture
Definition In its simplest terms, a joint venture is when two or more people or entities own something together
Avoidance of KickbackA joint venture that is a “sweetheart deal” with a referral source violates the Medicare anti‐kickback statute
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Safe Harbors If an arrangement falls within a safe harbor, then the anti‐kickback statute is not violated
Small Investment InterestSafe HarborDifficult for a joint venture to fit within the safe harbor
OIG Guidance If a joint venture does not fit into the Small Investment Interest safe harbor, then other OIG guidance must be considered
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Special Fraud Alert:Joint Venture ArrangementsSets out a list of factors that suggest that the joint venture is an attempt to disguise a kickback arrangement
OIG’s April 2013 Special Advisory Bulletin: Contractual Joint Ventures
Points out that the joint venture entity must have operational responsibilities and financial risk
Joint Venture With HospitalAmong other requirements:
The parties must invest risk capital in an amount equal to their percentage of ownership interests
Profits will be distributed on the basis of ownership percentages…not on the basis of business generated by the owner
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Have you discussed the possibility of a joint venture with a hospital?
A. Yes
B. No
Hot Button Issues:Competitive Bidding
“Buying Into” a Competitive Bid Contract ‐ 100% Asset PurchaseAssume that XYZ Medical Equipment, Inc. is awarded a CB contract
It can sell 100% of its assets to ABC Medical Equipment, Inc. and ask the CBIC to transfer the CB contract to ABC
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“Buying Into” a Competitive Bid Contract ‐ 100% Asset PurchaseXYZ must notify the CBIC of the anticipated sale
The parties must sign a NovationAgreement
The CBIC can accept or reject ABC
“Buying Into” a Competitive Bid Contract ‐ Partial Asset Purchase Instead of purchasing 100% of XYZ’s assets, ABC can purchase those assets of XYZ that are associated with XYZ’s CB contract
All other requirements, pertaining to a 100% asset purchase, remain the same for a partial asset purchase
“Buying Into” a Competitive Bid Contract ‐ 100% Stock Purchase
Let’s assume that John Smith is the sole stockholder of XYZ
Smith can sell all of his stock to ABC. As a result, XYZ becomes a wholly‐owned subsidiary corporation of ABC
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“Buying Into” a Competitive Bid Contract ‐ 100% Stock PurchaseSubject to patient choice, ABC can refer its Medicare CB patients to XYZ
Because ABC and XYZ will be “commonly owned,” XYZ can ask the CBIC to add ABC’s PTAN to XYZ’s CB contract
“Buying Into” a Competitive Bid Contract ‐ 100% Stock PurchaseThe “60 day notice” does not have to be given to the CBIC
A Novation Agreement is not required
XYZ will need to update its 855S with the NSC to show that ABC is XYZ’s new owner
“Buying Into” a Competitive Bid Contract ‐ 100% Stock PurchaseAfter the 855S is processed, XYZ will need to submit the Contract Supplier Location Update Form to the CBIC to have ABC’s PTAN added to the CB contract
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“Buying Into” a Competitive Bid Contract ‐ Partial Stock Purchase If ABC purchases 5% or more of XYZ’s stock, or vice versa, then under CB rules, ABC and XYZ will be “commonly owned”
“Buying Into” a Competitive Bid Contract ‐ Partial Stock PurchaseAssume that ABC purchases exactly 10% of XYZ’s stock
Once the NSC records reflect that ABC is a 10% stockholder of XYZ, then XYZ will ask the CBIC to add ABC’s PTAN to XYZ’s CB contract
“Buying Into” a Competitive Bid Contract ‐ Partial Stock PurchaseThis is accomplished by XYZ filing a Contract Supplier Location Update Form with the CBIC
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“Buying Into” a Competitive Bid Contract ‐ Partial Stock Purchase In the future, if ABC and XYZ desire to bid for the same product category in the same CBA, then they will have to submit one bid for both companies
Have you previously submitted for a competitive bid contract?
A. Yes
B. No
“Carve Out” of a Competitive Bid Contract
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“Carve Out” of a Competitive Bid ContractOn July 11, 2014, CMS published a proposed rule entitled “Revision to Change of Ownership Rules to Allow Contract Suppliers to Sell Specific Lines of Business”
The rule was finalized on November 6, 2014. It states:
“Carve Out” of a Competitive Bid Contract“For contracts issued in the Round 2 Recompeteand subsequent rounds…where a contract supplier sells a distinct company…that furnishes a specific product category or services a specific CBA, CMS may transfer the portion of the contract performed by that company to a new qualified entity…
When a CB Contract Supplier “Meets Capacity”
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When a CB Contract Supplier “Meets Capacity” In its bid submission, ABC Medical may have listed its capacity for walkers as 2000
However, ABC has quickly sold more than 2000 walkers
ABC's bank will not provide any additional working capital to ABC
When a CB Contract Supplier “Meets Capacity”How can ABC continue to sell walkers when it does not have the financial capacity to purchase additional inventory?
Can ABC cease providing walkers?
When a CB Contract Supplier “Meets Capacity” The competitive bid rules state: “[a] contract supplier must agree to furnish items under its contract to any beneficiary who maintains a permanent residence in, or who visits, the CBA and who requests those items from that contract supplier”
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Termination of Competitive Bid Contract for Failure to
Provide Products
Termination of Competitive Bid Contract for Failure to Provide ProductsA common complaint is that a DME supplier is awarded a CB contract in multiple CBAs, but refuses to provide products to beneficiaries who reside out of the supplier’s traditional service area
Termination of Competitive Bid Contract for Failure to Provide Products On July 25, 2014, Congressman Tom Price, M.D. (GA‐06) and 137 other Representatives sent a letter to the OIG requesting that it conduct a study of regarding access
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Termination of Competitive Bid Contract for Failure to Provide Products In a December 22, 2014 letter to Representative Price, the OIG agreed to conduct a study
Termination of Competitive Bid Contract for Failure to Provide ProductsThe CBIC also recognizes the problem
In a January 2, 2015 letter to a contract supplier, the CBIC told the supplier that the CBIC would terminate the CB contract because the supplier was not furnishing all items as requested by Medicare patients
Subcontracting
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IntroductionThe contract supplier must disclose the subcontract and related information within 10 business days after the parties execute the contract
Responsibilities That Can Be SubcontractedContract suppliers may subcontract for (1) the purchase of inventory, (2) the delivery and set‐up of items, (3) patient and caregiver instruction, and (4) the repair of rented equipment
Avoiding Kickback ProblemsAn example of a subcontractor arrangement is where a supplier (that was not awarded a competitive bid contract) and wants to preserve its relationship with referral sources, seeks to become a subcontractor for a CB winner
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Avoiding Kickback ProblemsUnder the subcontract agreement, the contract supplier will pay compensation to the subcontractor for services other than referring patients
In structuring the compensation, it will be important for the parties not to violate the Medicare anti‐kickback statute
Are you currently a party to a subcontract agreement?
A. Yes
B. No
Expansion of Completive Bid Pricing
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Medicare expansion of bid ratesOn 01/01/2016, CMS will apply bid pricing to non‐bid areas. 8 regions
using bid data from CBAs in those regions, CMS will identify the new Regional Single Payment Amounts (RSPAs) that will then apply to the non‐bid zip codes in that region. The RSPAs will be no lower than 90% of the average SPA for the region, and no higher than 110%.
This will be phased‐in: Dates Of Service 01/01/2016 – 06/0/2016 rates will be 50% of the current fee schedule/50% of the adjusted RSPA.
DOS 07/01/2016 and after will be the RSPA
Medicare expansion of bid rates Rural areas ‐ any zip code where at least 50% of the area in that
zip code is outside a rural area – in any state will be priced at the RSPA ceiling.
Some items (lower utilization) that were in the Round 1 Re‐bid but not included in the Round 2 bid or Round 1 re‐compete, will use the R1Rebid amounts to set the fees
WC options used on different bases: CMS will use a weighted average of the SPAs for that code across categories. Weighting will be an average of the SPAs based on allowed claims for all the categories, then applied to that code. One new price per code: “it is administratively burdensome and unnecessary to have more than one fee for the same item”. (No exception for options used on complex wheelchair bases)
New ‘bundling’ bid programs CMS will initiate 3 new demonstration bid programs in 12 new CBAs out of 80 possibilities (population over 250,000 with at least 20,000 Medicare beneficiaries)
The 12 CBAs for these projects will be areas that are NOT Round 1 or Round 2 CBAs.
Time frame not established yet. Education and bid process could start in 2015; start date could be in 2016
There won’t be overlap between “A” and “B”.
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Medicare bundling program”A” Standard Power Wheelchairs and CPAP Under bundling, contracted Wheelchair providers will be paid a flat monthly rental rate, continuously (no cap) that will include the power base chair, options, and all service/maintenance.
Under bundling, contracted CPAP providers will be paid a flat monthly rental rate, continuously (no cap) that will include the CPAP and all related accessories
Actual codes that will be bundled have not been spelled out yet
Medicare bundling program “B” Bundling “B”:
Std Power WCs remain on 13 month capped rental, but providers will be required to service the chairs they provide, during the contract period.
Editorial comment: I have no idea what this means in real life…
Additional considerations…..
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Hot Button: HIPAA Privacy Concerns
HIPAA ‐ acquisitionsHow do you manage contacting customers and transferring files in an acquisition? Stock vs asset transaction
Who can call who
Obtaining consents
Managing rental conversions
HIPAA – social media Fine line to walk when using social media
How do you publicly respond to negative posts while still maintaining HIPAA compliance
How do you monitor all the social media sites
Is it possible to be active with social media without compromising privacy concerns
What if a customer posts a negative photo or video?
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HIPAA – complaints Customers sometimes enlist external help with a complaint
Local TV and newspapers Better Business Bureau State agenciesAdvocacy Groups Social Media
