Category: Medicare

MACRA: Alignment Beyond The New Advanced Alternative Payment Models

The Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”) provides for two reporting tracks for eligible practitioners:  the Merit-based Incentive Payment System (“MIPS”) and Advanced Alternative Payments Models (“AAPMs”). There are only a few models that have been approved by the Centers for Medicare and Medicaid Services as AAPMs for 2017, and the list of expected 2018 AAPM models is quite short.  Further, the AAPM requirements include, among other criteria, a strict risk-bearing standard.

Missing from the list of AAPMs: clinically integrated networks (“CINs”), physician-hospital organizations (“PHOs”) and many of their brethren.  However, that does not mean that CINs and PHOs and other non-advanced alternative payment models (“APMs”) are about to fade into the night.  On the contrary, it is likely that these types of models will continue to proliferate.  The reporting requirements for eligible practitioners on the MIPS track are quite daunting.  Additionally, independent practitioners will need to expend significant sums and time reporting for MIPS.

This is where the non-advanced APMs come in. By this time, most of the remaining independent practitioners fall into one of three categories: (1) those who do not want to be employed by a health system; (2) those who a health system does not want to employ and (3) those that were employed by a health system, but are not any longer.  Yet, most of those practitioners will be subject to MACRA and will have a difficult time going it alone.  Moreover, in an era of continued consolidation and competition, health systems continue to evaluate alignment models with community practitioners.

It is possible that independent practitioners will now see more than ever the value of joining a non-advanced APM. The non-advanced APM likely has the personnel and the resources to help practitioners choose the appropriate measures for MIPS reporting, compile the necessary data, analyze the data and complete the actual reporting.  Further, the cost of joining and maintaining participation in a non-advanced APM for an independent practitioner is likely much less than what it would cost that same practitioner to comply with MACRA on his or her own.  Additionally, these benefits would be in addition to those already offered by non-advanced APMs such as data sharing, best practice protocols and joint contracting.  Non-advanced APMs allow the practitioners to remain independent, but also bring alignment, on a non-exclusive basis, with a health system.

MACRA represents a significant change for health care providers, but it also represents a great opportunity.

Medicare Part B Inappropriately Paid $6.7 Billion for E/M Services in 2010

In a recent report, the Department of Health and Human Services (DHSS) Office of Inspector General (OIG) examined whether or not Medicare Part B management (“E/M”) services in 2010 were incorrectly coded and/or lacking overall documentation.

This is the third in a series of reviews by the OIG concerning E/M services.  The first study found that from 2001 to 2010, physicians increased their billing of higher level E/M services in all visit types, and that in 2010, over 1,600 physicians consistently billed for the two highest level codes for E/M services.  The second study looked at the adoption of electronic health record (EHR) technology, finding that 57 percent of all physicians providing E/M services in 2010 used EHR technology at their primary practice location in 2011.

This most recent analysis determined that in 2010, approximately $6.7 billion in Medicare Part B claims, representing some 55 percent of claims submitted by physicians and non-physician practitioners, were incorrectly coded and/or so lacking documentation that payment should have been denied.  This sum represents over a fifth of all Medicare payments for evaluation and management (E/M) services in 2010.

Over a quarter of all claims surveyed were “upcoded,” i.e., the correct code for the services provided was lower than the code originally billed for, while nearly another 20 percent were either insufficiently documented or undocumented altogether.   In the aggregate, over 45 percent of E/M claims reviewed were either upcoded or unsupported by the medical records.  Most miscoded claims (79 percent) were upcoded or downcoded by one level; in addition, 17 percent and 4 percent of claims were upcoded and downcoded, respectively, by two levels.

In its study, the OIG identified “high-coding physicians” as those whose average code level was in the top 1 percent of their specialty and billed for the two highest E/M level codes at least 95 percent of the time.  Claims by these physicians were more likely than not to be incorrectly coded or insufficiently documented compared to physicians outside of this classification.  The overwhelming amount of coding errors (99 percent) were in the form of upcoding, resulting in an average of $15,594 inappropriately paid to each physician.

OIG made three recommendations as result of this study:  first, increased physician education concerning proper E/M coding; second, contractor encouragement to review E/M services billed by high-coding physicians; and third, follow up on claims that were paid in error that have resulted in overpayments or underpayments.

CMS agreed with the first recommendation to increase physician education on this topic.  However, it did not concur with OIG’s second recommendation based on negative return on investment after previously directing a medical review contractor to review claims by high-coding physicians.  CMS also partially agreed with OIG’s third recommendation to pursue overpayment recoveries beyond a certain threshold and to implement remedial educational requirements for physicians below this threshold.

CMS and its contractors clearly have the resources and incentive to seek recovery of overpayments.  Even though Medicare payment rates for individual E/M services are small (approximately $100 on average), the volume of claims is enormous:  physicians billed for some 370 million E/M services in 2010 that accounted for nearly 30 percent ($32.3 billion) of all Part B payments that year.

Given the substantial spending on E/M services and prevalence of error (56 percent of E/M claims by high-coding physicians, and 42 percent of E/M claims for all other physicians) it can be readily expected that physicians who regularly provide E/M services under Part B will face increased audit risk from CMS and its contractors.

Down With the Two-Midnight Rule

On April 14, 2014, the American Hospital Association, New Jersey Hospital Association, and other hospital associations and systems (“Plaintiffs”) filed a federal lawsuit in the United States District Court for the District of Columbia, case 1:14-cv-00609, against Kathleen Sebelius as Secretary of Health and Human Services (“HHS”) challenging three “unlawful” Medicare policies.[1] One of these policies is known as the two-midnight rule and involves Medicare Part A reimbursement.[2]  This involves reimbursement for “inpatient” hospital services.

Neither HHS nor its administrative agency, the Centers for Medicare and Medicaid Services (“CMS”), has ever formally defined “inpatient.” CMS has recognized that the decision to admit a patient is a “complex judgment” call involving various factors including medical history, current medical needs, severity of signs and symptoms, types of facilities available, hospital by-laws and admissions policies, the medical predictability of something adverse happening to the patient, and the relative appropriateness of the treatment.  Medicare Benefit Policy Manual  Ch. 1 §10.  Indeed, hospitals and physicians have been instructed by CMS that “generally, a patient is considered an inpatient if formally admitted as [such] with the expectation that he or she will remain at least overnight, and occupy a bed even though it later develops that the patient can be discharged or transferred to another hospital and not actually use a bed overnight.”  Id. According to CMS, a physician should “use a 24-hour period as a benchmark; i.e., [physicians] should order admission for patients who are expected to need hospital care for 24 hours or more.” Id.

Despite its own guidance, CMS published a final rule in August 2013 that a Medicare beneficiary is not an “inpatient” unless the admitting physician expects the patient to require care in the hospital spanning two midnights (admitted on Day 1 and discharged on Day 3).  Thus, CMS will not pay for an inpatient stay that spans less than two midnights (regardless of level of care, i.e., intensive care unit).  Instead, that patient stay will be converted to an outpatient stay and one reimbursed under Medicare Part B.

The Plaintiffs allege this CMS rule is “arbitrary and capricious” and undoes decades of Medicare Policy.  The Plaintiffs find it “unwise” to supplant physician judgment with a government rule.  It “defies common sense” for “inpatient” to mean “a person who stays in the hospital until Day 3.”

This, allege the Plaintiffs, is contrary to the Administrative Procedures Act (“APA”).  The policy deprives hospitals of reimbursement to which they are entitled and forces them to spend an exorbitant amount of money and time and change their medical records systems, admissions policies and procedures and documentation protocols to comply with the rule.  It further redirects resources that would otherwise be invested in patient care.  Thus, request the Plaintiffs, the policy must be set aside.

As of May 14, 2014 an Answer by the Government has not been filed.


 

[1] A second federal lawsuit was also filed contending that the 0.2 percent Medicare payment based on CMS’ expectation of more patients being admitted for a two-midnight stay is unlawful.

[2] The other two policies being challenged are (1) requiring rebilling of denied claims within one year of service when many claims are at least a year old when audited and (2) expecting that physicians certify at admission that a Medicare patient is expected to need treatment for a period spanning two midnights.