Category Archives: General News

CMS Presolicitation Notice: Unified Program Integrity Contract (UPIC)

On June 5, 2015 CMS issued a presoliciation notice indicating that they will be issuing a Request for Proposal (RFP) to solicit services for the Unified Program Integrity Contract (UPIC).  As per the notice, “the UPIC will combine and integrate existing CMS program integrity functions carried out by multiple contractors and contracts into a single contractor to improve its capacity to swiftly anticipate and adapt to the ever changing and dynamic nature of those involved in health care fraud, waste, and abuse across the Medicare and Medicaid program integrity continuum.” The solicitation will be available on or about June 22, 2015, and will be distributed solely through the Federal Business Opportunities (FBO) website. Proposals are expected to be due 30 days from the RFP issue date.

The notice that CMS plans to issue an RFP for Unified Program Contracts comes almost two years after CMS put forth their strategy for contractor consolidation under the Unified Program Integrity Contract.  On July 2, 2013, CMS posted a Special Notice inviting interested industry representatives to participate in the Center for Program Integrity (CPI) Industry Day.  The objective of the Industry Day was stated to be “to introduce the CPI’s vision and goals for strengthening the integrity of the Medicare and Medicaid Programs through improved contracting approaches and strategies.” The Notice indicated that “CPI seeks to integrate the program integrity functions for audits and investigations across Medicare and Medicaid.”

During the Industry Day, Craig Gillespie, currently Director of the Contract Management Group at CPI, presented a conceptual overview of UPICs and CMS’s strategy as they related to contractor consolidation under the program .  The strategy was aimed toward a “holistic and coordinated Medicare/Medicaid program integrity strategy” that included cooperation and communication between regional program integrity contractors, leverage of CPI’s centralized tools nationally and a strengthening of CMS’ national level oversight of contractors.  At that time, the “Fundamental Contractor Activities” were stated to be the following:

1. Identify and Prioritize Leads
2. Data Analysis and Managing Leads
3. Conduct Investigations
4. Protect Program Dollars
5. Identify Medicare and Medicaid Overpayments
6. Support to the Administrative Appeals Process
7. Support to CMS
8. Support to Law Enforcement

In conjunction with the Special Notice, CMS issued a draft Request for Information (RFI) Requirements Document for the Unified Program Integrity Contractor. The RFI notice sought feedback from industry representatives regarding the draft Requirements Document.  Each of the “fundamental activities” listed above is presented in more detail in the draft document.

Further to the above, on May 1, 2014, CMS issued a Sources Sought Notice (SSN) related to the UPIC program.  The SSN states that CMS currently relies on a network of contractors to carry out program integrity work and that they are seeking to combine the functions of various contractors under the UPIC.  Specifically, the SSN identifies the functions of the Zone Program Integrity Contractors (ZPICs) and Program Safeguard Contractors (PSCs), the Medicaid Integriy Contractors (MICs) and the Medicare-Medicaid Data Match (Medi-Medi) incorporated under the ZPIC scope of work as functions which would be combined under the UPIC.  As part of the SSN, CMS included a Draft Statement of Work for the UPIC.  The draft SOW totals 86 pages and includes the scope, applicable statutes, regulations and documents, program goals, implementation and transition requirements, functional requirements, expected outcomes and administrative requirements related to the UPIC.

The draft requirements document issued in conjunction with the Industry Day Notice, as well as the RFI Questions posted alongside the draft, combined with the Draft SOW issued as part of the SSN provide a comprehensive overview of the development of CMS’ UPIC strategy and may provide detailed insight into the forthcoming RFP from CMS.

Is Chairman Brady’s Call for CMS to Retract the Settlement Process Likely to Derail the Settlement?

On the Friday before Labor Day, CMS offered a proposal to settle all hospital claims denied for lack of necessity for inpatient admissions (and still in the appeal process). For eligible claims the proposal offers to pay hospitals 68 % of the net allowable amount. In a recently issued letter to Human Services (HHS) Secretary Sylvia Burwell, Kevin Brady (R-TX), Chairman of the Ways and Means Subcommittee on Health, has questioned whether HHS has the statutory authority for the proposed settlement offer and calls on CMS to retract the offer.

In addition to the question of authority, Chairman Brady also raises a number of concerns with regard to the process that CMS has developed for the settlement of hospital claims. We will look at each of the concerns expressed in the letter, but we will offer our opinion first: Chairman Brady’s letter is unlikely to do anything but possibly slightly delay the settlement process. While the Chairman’s letter does call on CMS to retract the settlement proposal, we believe that this is an action CMS will only take if forced to do so.

In the letter Chairman Brady indicates that the Committee was “shocked to learn about the disclosure of the settlement policy in the press.” Apparently, the offer was not only news to the hospital community, but also to one of the most powerful committees in Congress. Given this fact, it is not difficult to read Chairman Brady’s letter as an expression of frustration that CMS did not consult the Committee before issuing the settlement offer. Chairs of oversight committees (rightly) expect that agencies in their jurisdiction will inform them about major policy shifts before they hit the papers. While certainly questionable form on CMS’ part, it seems insufficient to cause CMS to withdraw the offer. We anticipate that Secretary Burwell will draft a thoughtful response to the Chairman and for the settlement process to move forward as planned.

Addressing each of the concerns expressed by Chairman Brady in his letter, here is how we see the issues:

  1. In the letter Chairman Brady questions whether HHS has the statutory authority for this settlement process.
    • Our interpretation is that CMS has the authority. Buried in the Code of Federal Regulations (Title 42, Part 405, Section 376) is language, based on provisions of the Social Security Act, that allows CMS to “compromise” on any overpayment determination regarding a claim. Nothing says CMS can do this en masse, but nothing says they can’t, so there’s every reason to believe a court would see this regulation as permitting the present offer.
  2. Chairman Brady question the wisdom of the “‘all or nothing’ settlement approach,” rightfully noting that each discharge is unique and the circumstances that apply pertaining to medical necessity in one case do not necessarily transfer to all cases.
    • The very nature of an aggregated settlement is that each party concedes claims it could probably prevail on for the sake of efficiency. Regarding the Chairman’s concern that the process threatens the “due process rights of Medicare providers,” as there is nothing compulsory about the settlement, providers are not obligated to accept the offer.   A provider can choose to stay in the appeals process, likely with its wait time shortened by the providers who do settle being removed from the queue.
  3. Chairman Brady asks CMS to show its math regarding the 68% offer. He points to the payment ratio of outpatient versus inpatient treatment in five categories, and asks why the settlement does not reflect that number (an average of 36%).
    • Based on statistics from the American Hospital Association’s RacTrac study, if all the eligible claims went through the entire appeal process, 66% of them would yield decisions favorable to the hospitals. The proposed settlement achieves what is likely to be close to the ultimate result, but speeds up the process.
  4. Chairman Brady asks about the beneficiaries’ frustration regarding the skyrocketing Part B liability that has followed the increase in inpatient denials.
    • If anything, the settlement profits beneficiaries, who could be liable for Part B coinsurance if hospitals lost their appeals and rebilled the claims. Under the express terms of the agreement, hospitals forego any right to collect anything from beneficiaries that hasn’t already been either paid or promised under a payment plan.

The ultimate takeaway from all of this might be that if you’re running a federal agency and plan to launch a program that could cost billions – and the Congressional committee overseeing your agency has held hearings on the topic – you would be wise to pick up the phone and give the committee a heads up. In this case it appears that CMS forgot that. In light of CMS’ recent policy fits and starts – the about-face on rebilling, the repeated delays of implementation of the two-midnight rule, the vacillation on automatically denying related claims – CMS’ apparent failure to consult with Congress prior to issuing the proposed settlement is not much of a surprise. But, while the result could be a hurdle for the proposed 68% settlement offer for inpatient status appeals, it’s not likely to be a derailment.

Dust Settling on Medicare Settlement

Tuesday afternoon, CMS held what it described as its “first” provider conference call regarding its offer to settle inpatient status claims for 68% of the allowable payment. As frequently happens with these calls, there were only a few new concrete details or clarifications that came out, but they are worth noting:

  1. Per CMS, a claim will be eligible if it was denied “at any point in the appeal process” based on the allegation that an outpatient setting would have been appropriate. The specifically cited example was a case in which the initial denial was for the inpatient admission, but a subsequent contractor conceded the service was inpatient-only but alleged the procedure was not necessary at all. Not only did CMS confirm that this claim would be considered eligible based on the initial denial, but CMS also made clear that the inverse is true, as well. So, according to CMS, a claim initially underpaid based on a DRG downcode, for example, that was then denied in full after an inpatient status review, is also eligible.
  2. CMS repeated its “all-or-nothing” statement – a hospital must choose to settle all or no eligible claims, not settle some and continue appealing others. CMS added the proviso that it will be adding eligible claims the provider doesn’t report. While this failsafe is reassuring in theory, the practical reality is that CMS and its contractors will likely see an overwhelming number of claims on spreadsheets, so it will be in the provider’s interest to make sure every claim that might be eligible is on the list.
  3. Perhaps most importantly since one of the virtues of settlement is a quicker resolution, CMS indicated that it expects that MACs will be able to review a provider’s eligible claim spreadsheet and provide a response within 30 days of the spreadsheet’s submission, and the provider then has 14 days to accept or respond to CMS’ eligibility determination. At that point, payment for the confirmed eligible claims is due within 60 days.

Theoretically, then, a provider could have money in the bank within 90 days of sending its list. It is worth remembering, however, that this entire settlement issue arose because CMS and its related entities were so woefully underprepared for the deluge of appeals in the RAC era. An ALJ decision required by law to be issued within 90 days now takes years. All appeals for claims submitted for settlement are stayed throughout the determination process. So, if CMS again has underestimated the response, providers could again be left waiting while the paperwork shuffles through. The silver lining to that cloud is that a stay is exactly what it sounds like: If the hospital later withdraws outstanding claims from the settlement process, they resume their appeals where they left off on the day the spreadsheet hit CMS’ inbox.

Again, as always, a lot of unanswered questions remain, thanks to more than a few “We’ll get back to you” pledges from CMS. We’ll certainly keep you posted.

We Must All Hang Together: CMS Automated Denial Policy Puts Doctors, Hospitals in the Same Documentation Boat

When a government agency decides not to adopt a policy “at this time,” it is a safe bet that policy is coming soon. Case in point: The Centers for Medicare & Medicaid Services has, for the second time this year, announced that it will allow its claim review contractors to deny any claim “related” to a claim that has been denied after documentation review. Some of those “related” denials can even come without any additional documentation development and without a second review. In other words, denial of one claim can trigger automatic denials of any and all claims related to it.

CMS attempted to institute this policy in February, but reversed course weeks later citing a need for “clarification.” The only clarification in the new version is that CMS will play a role in preapproving automated denial targets. Beyond that, virtually every facet of the program remains as clear as mud, even what “related” means.

The obvious example, and the scenario CMS cites (without limiting itself to that situation), is a denied hospital claim for a service leading to automated denials of the claims of the physicians who performed the service. This prospect is understandably concerning for physicians, but that concern can be to hospitals’ benefit. Physicians who may have been unconvinced of the need for Documentation Improvement Programs are at risk for finding thousands of new reasons to change their minds.

For this new impetus to improve medical records to be effective, however, hospitals need to make sure they can meet the new-found demand. That could mean simply redoubling current efforts, but it may mean relying on the expertise of consultants who can help give doctors the “how” of documentation improvement, now that CMS has helped provide the “why.”

Check out our white paper for a fuller exploration of this topic.

CMS Still Off the RAC: Litigation Forces More Delays in Awarding New Recovery Auditor Contracts

by Mike Gentine, Fotheringill & Wade, LLC

Medicare’s contracts with its most infamous post-payment review arm – the Recovery Audit Contractors – expired earlier this year, and CMS intended to award new contracts promptly to keep the work flowing. However, two current RACs – HealthDataInsights and CGI Federal – asked the Government Accountability Office to force CMS to re-structure the proposed contracts because of what the RACs contended were commercially unfeasible terms (namely, the new contracts could delay payments to RACs substantially).

The GAO denied the protests, giving its blessing to CMS’ proposals, but CGI kept up the fight, filing suit in the Court of Federal Claims in April. After months of motions and arguments – during which time CMS pledged not to award the contracts – the court ruled against CGI (the case is under seal, so we do not have access to the court’s opinion, only its order). That loss did not stop CGI.

CGI will appeal the court’s decision to the Court of Appeals for the Federal Circuit (one step short of the Supreme Court), and the Federal Circuit’s docket suggests there will not be a final decision there until Summer of 2015, at the earliest. Moreover, CGI successfully persuaded the claims court to issue an injunction forbidding CMS from awarding the contracts until the appeals court makes its ruling.

What does the delay in getting new RACs mean for healthcare providers?

Because of the previous delays, CMS had already extended, in limited fashion, the contracts and the work of the current RACs. CMS is almost certain to do so again, and perhaps with a broader scope given how far away the new contracts likely are. The bad news for providers is that the extended contracts will not feature any of the RAC program improvements CMS has proposed. The other bad news is that, even with the moratorium on inpatient status reviews keeping those claims out of RACs’ hands for another six months, “there will be plenty of claims for contractors to audit,” as the government pointed out in its attempt to block CGI’s request for an injunction.

Particularly with no definite end date on the calendar, CMS’ future extension(s) of the current RAC contracts will likely still be limited to designated issue areas, rather than the more sweeping approach hospitals are all too familiar with. But the show will go on, and, once the new contracts are finally awarded, the eventual contractors – whose bids will have been sitting for two years or more – may try to make up for lost time. So, even if the contract delays and the moratorium mean RAC is a shadow of its former self right now, hospitals should not be lulled into a false sense of security. Providers should keep in place the resources necessary to ensure compliance and timely appeals for inappropriately denied claims.