Physician Billing/Coding/Payment Review

Transcription

1 Physician Billing/Coding/Payment Review James B. Wieland, Esq. PART ONE: THE MEDICARE CARRIER CLAIMS REVIEW PROCESS Medical Review Section 1862(a)(1)(A) of the Medicare Act states that no payment shall be made for items or services which are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member. Section 1842(a)(2)(B) of the Act requires Medicare Carriers to apply safeguards against unnecessary utilization of services furnished by providers. Carriers apply what is referred to as Medical Review policy and conduct prepayment and postpayment reviews to identify inappropriate, medically unnecessary, or excessive items/services and take action where a questionable practice is found. The prepayment Medical Review process identifies certain claims before they are paid and subjects them to computerized or auto-adjudicated or manual Medical Review using national coverage policy and Local Medical Review Policy. Postpayment Medical Review identifies, through an analysis of paid claims data, providers who will undergo the Comprehensive Medical Review process or individual paid claims that may represent medically unnecessary care. Based on findings, corrective actions may be taken. Underlying both prepayment and postpayment Medical Review is analysis of claims data to focus Medical Review efforts in the most significant areas of overutilization. This approach is known as Focused Medical Review. Medical review policy is the basis for the Medical Review decisions made by the Carrier's medical review staff. Statutory Exclusions From Coverage. The statutory authority for the majority of Carrier Medical Review activity is 1862(a)(1)(A) of the Medicare Act, which excludes coverage for items or services that are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member. There are statutory exceptions to this exclusion which are specified in the full text of 1862(a) for the following items and services: Pneumococcal, influenza, and hepatitis B vaccines are not covered if they are not reasonable and necessary for the prevention of illness Screening mammography is not covered if it exceeds frequency limits or does not meet quality standards and Screening pap smears are not covered if they exceed frequency limits. Least Costly Alternative. This national policy provision must be applied when determining payment for all durable medical equipment (DME). Carriers have the discretion to apply this principle to Medicare Review Policy payment for non-dme items and services as well. National Coverage Policy. The primary authority for all coverage provisions is the Medicare statute. The non-statutory source is Medicare coverage policy. A

2 national coverage policy is a statement of national policy regarding Medicare coverage which is: Published in HCFA regulations Contained in a HCFA ruling or Issued as a Medicare program instruction, such as manual issuances in the Coverage Issues Manual or Medicare Carrier's Manual. National coverage policy indicates whether and under what circumstances items/services are covered. Carriers are required to apply all pertinent statutory provisions, regulations, and national coverage policy when adjudicating claims. When a national coverage policy indicates that a given item/service is covered under specific circumstances, the Carrier must cover the item/service under those circumstances. However, the authority and responsibility to interpret national coverage policy and apply that policy to individual cases is retained by the local carriers. When making individual case determinations, Medicare Policy is that the Carriers have no discretion to deviate from national policy if absolute words such as never or only if are used in the policy. Local Medical Review Policy. When needed and in the absence of a national coverage policy for a particular item/service, Carriers may develop a Local Medical Review Policy to indicate whether the item/service is covered and under what clinical circumstances it is considered to be reasonable, necessary, and appropriate. The process for developing Local Medical Review Policy includes the development of draft policy based on review of medical literature and the Carriers understanding of local medical practice, soliciting comments from the medical community, including the Carrier Advisory Committee of local physicians and others from the medical community, responding to and incorporating into final policy comments received, and notifying providers of the policy effective date. Local Medical Review Policy is not to be used to restrict or conflict with national policy. Carriers are instructed that if a national policy states that a given item is covered for diagnoses/conditions A, B and C, Carriers may not use that as a basis to develop Local Medical Review Policy to cover only diagnoses/conditions A, B and C. When national policy does not exclude coverage for other diagnoses/conditions, Carriers must allow for individual consideration unless the Carriers Local Medical Review Policy supports automatic denial for some or all of those other diagnoses/conditions. Focused Medical Review. Carriers are instructed to maximize program protection by focusing Medical Review efforts on those areas identified where services billed have significant potential to be for aberrancies. This kind of systematic data analysis requires Carriers to have in place the hardware/software capability to profile Carriers providers in aggregate, by specialty, or individually. Data analysis done to support Focused Medical Review is a tool used by Carriers to choose areas which represent the best investment of Medical Review resources. Target areas can be chosen because of high volume, high cost, dramatic change or because of adverse impact on beneficiaries. Prepayment Review Procedures. Prepayment review provides the Carrier with the opportunity, before a claim is paid, to review selected claims which have a higher potential for being noncovered or medically unnecessary. It also identifies ways to prevent further abuse in the utilization of services by educating providers about Local Medical Review Policy

3 and HCPCS coding. Prepayment Medical Review screens are computer edits or logic used to identify and/or suspend from payment items/services that require application of national coverage policy or a Local Medical Review Policy. In the event that both Local Medical Review Policy or national coverage policy fail to address issues of Medical Necessity for a particular claim, Carriers may determine Medical Necessity on an individual claim basis based on available information. Auto- Adjudicated Medical Review occurs when Medical Review decisions are made at the system level, using available electronic information, without the intervention of Carrier personnel. Carriers are encouraged to implement auto-adjudicated Medical Review decision steps, including Medical Review internal guidelines, that do not require clinical expertise/judgment or review of documentation to substantiate the claim. In those instances where Medical Review is autoadjudicated, the Carriers must clearly list the circumstances under which an item/service will be denied as not medically necessary. Also, items/services that are specifically excluded by statute or that HCFA Central Office determines are never reasonable and necessary can be auto-adjudicated and need not be manually reviewed before denial. Although auto-adjudicated Medical Review denials are possible for certain items/services, Carriers are instructed not to deny items/services that simply exceed frequency parameters, without reviewing all relevant information submitted with the claim (e.g., justifications prepared by providers, primary and secondary diagnoses and/or copies of medical records). Manual Medical Review is defined as Medical Review that requires the intervention of health care professionals or specially trained Carrier Medical Review staff intervention. Manual Review can be at any point in the claim review. For example, a claim may be referred for manual review by the auto-adjudication system because the final decision cannot be made based on the available electronic information and is, therefore, suspended for evaluation by Carrier Medical Review staff. Aberrant Claims Identification. Understanding the characteristics of the individual Carrier service area is a key element of data analysis. Carrier instructions are that the aberrancies selected must be significant and Carriers are instructed to document the source of the aberrancy and rationale for its selection. The provider(s) identified as causing the aberrancy will be investigated further. Sources of Leads. Sources of information to be used identifying aberrancies and profiling of peer groups include: National claims data Carrier internal claims data Office of the Inspector General Alerts Beneficiary and provider complaints Referrals from the PRO, intermediary, or other federal programs Referrals from medical licensing boards and Referrals from the Carrier Advisory Committee. Numerical Aberrancies. Numerical aberrancies represent mathematical variations. Although no corrective action may be required for these aberrancies, Carriers document and retain their findings and the explanation for these aberrancies. Examples of numerical aberrancies include:

4 Pricing variation due to transition to the Medicare Fee Schedule Variation due to differences in your areas' underlying population demographics and Location of a medical school, research center, or highly specialized facility in the service area. Aberrancies That Represent Overutilization or Provision of Medically Unnecessary Items/Services or Abusive/Fraudulent Practices. Corrective action is required for those areas identified that indicate provision of noncovered or medically unnecessary items/services or abusive coding practices including the failure to use correct modifiers. Aberrancies That Represent Coding Problems. When identified, Carriers must address and take corrective action on significant problems where incorrect coding results in overpayment. Carrier Priorities. Carriers have a priority setting process to assure Medical Review is focused on areas with the greatest overutilization demonstrated by high dollar payments, high volume of services, dramatic change, or significant risk for negative impact on beneficiaries (e.g., low volume but unnecessary surgery). When prioritizing aberrancies identified through analysis of local data, Carriers may also consider the magnitude of the effect on local claims processing (e.g., the degree to which claims will be suspended for Medical Review). Corrective Actions on Identified Aberrancies. For those aberrancies identified, Carriers take those actions which have a reasonable chance of correcting the problem. In general, educational activities are emphasized over punitive actions. Corrective actions include: For identified coding problems, issue coding instructions to individual providers or groups of providers Developing new or revised Local Medical Review Policies. At a minimum, a working draft must be disseminated to the Carrier Advisory Committee. If the Local Medical Review Policy is not implemented, other corrective actions must occur Educating providers (individually or groups). When individual physicians are contacted because of overutilization, Carriers normally provide comparative data on how they vary significantly from other physicians in the same payment area or locality. The comparative data should include graphic presentations Designing new or revised prepayment screens to flag for the identified aberrancy. Carrier develop prepayment screens that target claims for items or services or providers that present the greatest risk of inappropriate program payment. Carriers are instructed that screens should be focused, to the extent possible, to avoid suspending claims of providers who have not contributed to the problem Selecting providers for Carrier Medical Review and, if appropriate, assessing/collecting overpayments following the Carrier Medical Review guidelines described below. When Carrier Medical Review is chosen as a corrective action, it must be completed within 12 months of being selected Referring cases of potential fraud to the Carriers your Medicare Fraud Unit. If the Carrier determines that there is a pattern of abuse, or if the Carrier has issued warnings in the past to the provider for this or comparable practices, the Carrier is

5 instructed to discuss the case with the Medicare Fraud Unit before taking any action. In order for a referral to be considered corrective action, the Fraud Unit must agree that there is the strong potential for fraud or a pattern of abuse and accept responsibility for the case or Initiating overpayment recoupment as appropriate. Prepayment Screens. Prepayment screens based on national coverage policy or Local Medical Review Policy are in place to suspend targeted claims for application of medical policy. Carriers are instructed to focus screens, to the extent possible, on those claims with the greatest likelihood of being denied and to avoid suspending claims of providers who have not contributed to the problem. Methodology used to focus screens and target claims is supposed to minimize inefficient review and provider hassle. The Carriers system must be able to perform several comparisons to screen cases for Medical Review. Procedure to Procedure. This relationship permits the Carrier to screen multiple services, at the claim level and in history. Procedure to Provider. For a given provider, this permits selective screening of items/services that need review. Frequency to Time. Allows the Carrier to screen for a certain number of items/services provided within a given time period. Diagnosis to Procedure. Allows the Carrier to screen for items/services submitted with a specific diagnosis. For example, the need for a vitamin B12 injection is related to pernicious anemia, absence of the stomach, or distal ileum. Carriers must be able to establish screens where specific diagnosis/procedures relationships are considered in order to qualify the claim for payment. Procedure to Specialty Code. Permits Carriers to screen items/services provided by a certain specialty. Procedure to Place of Service. Allows selective screening of claims where the service was provided in a certain setting such as a Comprehensive Inpatient Rehabilitation Facility. The following screens are not considered Medical Review screens: Limiting charge screens Global surgery edits Once in a lifetime screens Procedure to sex, where the sex of the beneficiary is not consistent with the item/service Mandated payments edits for evaluation and management codes and National or local rebundling edits. Categories of Medical Review Screens. There are three kinds of Medical Review screens: Category I. Medical Review edits based on the evaluation of the data available on the claim. For example, one or more data elements on a claim may be

6 compared with data from the beneficiary's history file (e.g., procedure code compared to history file to determine frequency in past 12 months). Category II. Medical Review edits which also require information not present on the claim. For example, one or more data elements on a claim may be compared with data from the beneficiary's history file (e.g., procedure code compared to history file to determine frequency in past 12 months). Category III. Screen for items/services from specific providers flagged for medical Review. These providers are singled out due to unusual practice patterns, the Carriers knowledge of service area abuses, and/or utilization complaints received from beneficiaries or others. Category III suspensions can be for all claims from a particular provider or focused on selected item/services, place of service, etc., (e.g., all claims for holter monitoring from a given provider). Beginning September 30, 1995, Carriers may not operate a Category I or II Medical Review screen without associated internal Medical Review guidelines and a corresponding published Local Medical Review Policy or national coverage policy that would be used to review selected claims. For Category III screens, the corresponding policy may be specific to the provider under review. Mandated Category II screens are: Routine Foot Care (Excluding Mycotic Nails). Identify claims submitted for an unusually large number of routine foot care treatments (HCPCS M0101). Mycotic Nails. Identify claims involving an unusually large number of treatments for mycotic nails (HCPCS 11700, 11701, 11710, 11711). Chiropractic. Identify claims involving an unusually large number of manipulations of a beneficiary's spine (HCPCS A2000). Concurrent Care. Identify claims in which more than one provider of the same or similar specialty or subspecialty bills Medicare for in-hospital service to a beneficiary on the same date. Inpatient Rehabilitation Medicine Visits. Identify claims for an unusually large number of visits by psychiatrist to a patient in a rehabilitation facility (HCPCS ). Epoetin Alfa (EPO). Identify claims for unusual dosages and/or nonindicated use of EPO (HCPCS Q9920 Q9940). Optional Category II Screens which can be eliminated or modified by the local Carrier without Regional Office approval are Holter and Real-Time Monitoring. Identify claims involving an unusually large number of holter or real time monitoring services (HCPCS ). A-Mode Scans. Claims where an A-mode scan was performed in conjunction with cataract surgery or an unusually large number of A-mode scans were performed. (HCPCS 76516, ) Levels of Manual Review. The levels of manual review represent a continuum of technical and clinical expertise that should be possessed by Carrier personnel. First Level Manual Review. Carriers must have internal Medical Review guidelines for first level reviewers, establishing conditions under which

7 items/services are approved, denied (in full or in part), developed for additional information, or referred to a higher level of review. First level reviewers may not deny claims without specific, detailed, written internal Medical Review guidelines. Claims which the reviewer is not trained to process are to be handled by a second or higher level reviewer. Second Level Manual Review. Carriers must have internal Medical Review guidelines for second level reviewers, establishing conditions under which items/services are approved, denied (in full or in part), developed for additional information, or referred to a higher level of review. Carriers personnel should refer questions of Medical Necessity which cannot be resolved by internal Medical Review guidelines and are beyond the expertise of a second level reviewer to an RN reviewer or provider reviewer. Clinician Review. Carriers are encouraged to have at least one half Full Time Equivalent Registered Nurse to review claims beyond the expertise of second level reviewers (Regional Carriers for Durable Medical Equipment must have at least 5 FTE RNs). Experienced RN reviewers receive less detailed instructions in Carrier internal Medical Review guidelines than first and second level claims reviewers. The Carrier Medical Director may also be called upon to make a Medical Review decision. Both RNs and the Carrier Medical Director may call upon outside clinical consultants for advice. Any determination by a clinician must be documented and include the rationale for the decision. While clinicians must also follow national coverage guidelines and Local Medical Review Policies, they are expected to interpret gray areas not covered by local or national policy, and when necessary, evaluate the appropriateness of the item/service. Postpayment Medical Review. For postpayment Medical Review Carriers must: Identify providers with the greatest likelihood of overutilization and then conduct Comprehensive Medical Review in order to determine if corrective action is needed Determine any Medicare program abuse or overutilization and implement appropriate corrective actions, including the calculation and recovery of overpayments Identify situations where prepayment screens and/or Local Medical Review Policies should be added or improved and When needed, refer providers to the Medicare Fraud Unit with recommendations for administrative sanctions (including civil and criminal prosecution) for providers who fail to correct their inappropriate practices. Postpayment Review Personnel. At a minimum, Carriers must employ or retain the following types of personnel on a full-time, part-time or consultant basis: Clinical personnel Medical Review personnel trained to review claims using Medical Review guidelines during manual review Individuals capable of analyzing provider profiles and/or Statisticians or persons trained to develop analytical and sampling methods. Provider Audit List

8 The Provider Audit List is an all-inclusive listing of providers who: Have been identified for Comprehensive Medical Review and/or Are subject to Category III prepayment screens. The Provider Audit List must include the basis for selection of all Provider Audit List cases, the status, and those actions taken to develop the cases and correct problems. If, subsequent to development of the Provider Audit List, it becomes evident that a provider not listed on the Provider Audit List warrants immediate postpayment review, Carriers substitute the new case for a potentially less productive one. Providers remain on the Provider Audit List until they are either referred to the Medicare Fraud Unit or have corrected their utilization problem. Regional Officers current Provider Audit List for 2 years. The Provider Audit List must be available to HCFA on request. Corrective Actions. Corrective actions occur when the Carrier does one or more of the following: Educates the provider (individually or groups). Anytime individual physicians are contacted because of overutilization, Carriers should provide comparative data on how they vary significantly from other physicians in the same payment area or locality. The comparative data should include graphic presentations Send a warning letter Develop a Category III screen to focus Medical Review on the problem provider Calculate and recover overpayments from the provider and Refer cases of potential fraud to the Medicare Fraud Unit. If the Carrier determines that there is a pattern of abuse, or if the Carrier has issued warnings in the past to the provider for this or comparable practices, Carriers discuss the case with the Medicare Fraud Unit before taking any action. To be considered corrective action, the Fraud Unit must agree that there is the strong potential for fraud or a pattern of abuse and accept responsibility for the case. Comprehensive Medical Review Requirements. The Comprehensive Medical Review process allows the Carrier to determine whether a provider it suspects of providing noncovered or medically unnecessary items/services is, in fact, doing so. It also serves as the basis for overpayment assessment. Carriers must select providers for Medical Review and initiate corrective action within 12 months of selection. When Medical Review is chosen as a corrective action for an identified aberrancy Carriers must complete the Comprehensive Medical Review within 12 months of selection. Carriers should conduct the review under professional medical supervision using internal Medical Review guidelines which are based on Local Medical Review Policies. Selection of an individual provider is generally based on profiling providers who have generated one or more assigned or unassigned claims during the period under review. Carriers use UPINs for physicians and individual PINs for nonphysicians. Carriers may conduct sub-studies of locality practices for physicians with multiple PINs. Their patterns of practice may vary across different locations (e.g., hospital based, office based, SNF based), especially when physicians designate different specialties for their different PINs. Potential resources for referrals or review possibilities include: Aberrancies identified through the data analyses of paid claims.

9 Standard postpayment claims data reports Alerts received from other carries, the intermediary, PRO, State Medicaid agency and Providers identified by: - The Medicare Fraud Unit alerts - Medical Review staff - Beneficiary services or medical correspondence staff - Review staff or hearing officers - Quality assurance end of line staff - EMC staff - Claims processing staff - Provider/professional relations staff - Private business staff - Newspaper accounts of provider's billing practices - Questionable newspaper or television advertising and - Other sources. The first step in Comprehensive Medical Review is the identification of all beneficiaries who received the service under review from the provider for the specified time period (this is termed the universe ) followed by selection of a sample of these beneficiaries. Carriers have three sampling options. They may either: Randomly select a minimum of 15 beneficiaries from the universe. This option is known as a limited sample Select a Statistically Valid Random Sample (SVRS) of beneficiaries from the universe. (There are specific Sampling Guidelines set forth in the Medicare Carriers Manual.) or Select a SVRS of beneficiaries from the universe, and then randomly select a minimum of 15 beneficiaries from the SVRS. This option is known as a limited subsample. Carriers are required to use acceptable sampling techniques and maintain documentation describing the technique as part of the record. Carriers may include the description of sampling techniques with notices that inform the provider that a Comprehensive Medical Review is being conducted. Overpayment Assessment Once the Carrier has concluded that an overpayment exists, the Carrier must assess an overpayment. The assessment options available to the Carrier vary depending upon the type of sample used when identifying beneficiary claims for inclusion in the Comprehensive Medical Review. Overpayment Assessment Terms. Actual Overpayment. The sum of payments (based on Medicare approved amounts) made to a provider for items/services which were determined to be medically unnecessary or incorrectly billed during re-adjudication of an SVRS or limited sample/subsample and review of supporting documentation.

10 Projected Overpayment. The numeric overpayment obtained by projecting an overpayment for all similar claims in the universe under review from a SVRS. Limited Projected Overpayment. The numeric overpayment obtained by projecting an overpayment for all similar claims in the universe under review from a limited sample/subsample. Comprehensive Medical Review Based on a SVRS. If the Carrier chooses to use a SVRS of claims for review, it calculates the projected overpayment and notifies the provider of the overpayment and make payment arrangements with the provider to collect the overpayment. Comprehensive Medical Review Based on a Limited Sample/Subsample. If the Carrier chooses to use a limited sample/subsample of claims for review, it has three overpayment assessment options: Recoup the actual overpayment for the claims reviewed Conduct an expanded Comprehensive Medical Review based on a SVRS and recoup the projected overpayment or Offer the provider a consent settlement based on the potential projected overpayment amount. Consent Settlement Based on the Projected Overpayment. The consent settlement process is available to Carriers as a tool to modify a provider's billing practice while limiting the Carriers costs. Carriers are instructed to provide consent settlement documents which carefully explain, in a neutral tone, what rights a provider waives by accepting a consent settlement. Also, the documents must explain in a neutral tone the consequences of not accepting a consent settlement. A key feature of a consent settlement is a binding statement that the provider agrees to waive any rights to appeal the Carriers decision regarding the potential overpayment. Carriers want to ensure that the provider is knowingly and intentionally agreeing to a waiver of rights. When offering a provider a consent settlement, the Carrier may choose to present the consent settlement letter to the provider in a face-to-face meeting. The consent settlement correspondence describes the three options available to the provider: Option 1 - Acceptance of Potential Projected Overpayment. Providers selecting Option 1 agree to refund the entire limited projected overpayment amount without submitting additional documentation. These providers forfeit their right to appeal the adjudication determinations made on the sampled cases and the potential projected overpayment that resulted from extrapolating to the universe. For providers who elect Option 1, the Carriers do not audit any additional claims for the item/service under review within the time period audited. Option 2 - Acceptance of Capped Potential Projected Overpayment. This option is essentially the same as Option 1, the only difference being that the provider agrees to submit additional pre-existing documentation. Carriers then review this additional documentation and may adjust the potential projected overpayment amount accordingly. As in Option 1, the Carriers do not audit any additional claims for the item/service under review within the time period audited for providers who elect Option 2. Option 3 - Election to Proceed to a Statistically Valid Random Sample (SVRS). If a provider fails to agree to Option 1 or 2, this option is selected by

11 default. For providers who select this option knowingly or by default, thereby rejecting the consent settlement offer and retaining their full appeal rights, Carriers must: - Notify the provider of the actual overpayment and - Initiate an expanded review of a SVRS of the provider's claims for the item/service under review. PART TWO: THE MEDICARE CARRIER ROLE IN FRAUD AND ABUSE The Medicare program pays for health care items and services for millions of beneficiaries and provides payment to terms of thousands of providers and suppliers of services. Within a program of such complexity and magnitude, the opportunities for fraud, abuse, and waste are considerable. The quality control effort involves the beneficiaries, contractors, PROs, State Medicaid agencies, and Federal agencies such as HSFA and the Office of Inspector General (OIG), DHHS. Medicare Carriers are responsible for accomplishing the major portion of integrity review development, whether for fraud or abuse. Carriers are also responsible for investigating and developing suspected fraud and abuse cases before referring them to the OIG Office of Investigations Field Office. This responsibility requires that Carrier personnel conducting each segment of claims adjudication, payment utilization review, and professional relations functions be aware of their responsibility for identifying fraud and abuse and be familiar with internal procedures for forwarding potential fraud cases to the Medicare Fraud Unit. Primary program integrity responsibilities reside in the Medical Review (Medical Review) Unit and the Medicare Fraud and Abuse Unit (hereafter referred to as the Fraud Unit). Medical Review Unit. The Medical Review unit's responsibilities include looking for questionable billing patterns and practices, i.e., program abuse. The term abuse describes incidents or practices of providers that are inconsistent with accepted sound medical practice. Abuse may, directly or indirectly, result in unnecessary costs to the program, improper payment, or payment for services that fail to meet professionally recognized standards of care, or that are medically unnecessary. Abuse involves payment for items or services when there is no legal entitlement to that payment and the provider has not knowingly and intentionally misrepresented the facts to obtain payment. If the Medical Review unit finds, or suspects, such practices, it should consult with the Fraud Unit to determine whether the case should be referred to the Fraud Unit for further action. Medicare is vulnerable to overutilization of medical and health care services. Abuse takes such forms as, but is not limited to, claims for services not medically necessary, or not medically necessary to the extent furnished (e.g., a battery of diagnostic tests is given where, based on diagnosis, only a few are needed). Although these types of practices may be considered abusive, under certain circumstances, Carriers also assume that they may constitute or evolve into fraud. If a provider appears to have knowingly and intentionally furnished medically unnecessary services or filed claims for services not furnished as stated on the claim form, or made any false statement on the claim form to receive payment, the case is discussed with the Fraud Unit and referred if the Fraud Unit agrees there is potential fraud. When reviewing such situations, Carriers are specifically instructed

12 not to assume that the abuse is the result of an error or misunderstanding of program requirements. If the situation does not appear to involve fraud, (and the Fraud Unit concurs) the Medical Review Unit notifies providers that particular practices or behaviors are abusive and must cease. It refers cases involving providers who fail to correct their practices or behavior following the educational contact and warning to the fraud unit. Medicare Fraud Unit. This unit is responsible for detecting and deterring Medicare fraud. It develops cases for referral to relevant Inspector General, Office of Investigations Field Office. Fraud is intentional deception or misrepresentation that the individual makes, knowing it to be false and that could result in some unauthorized benefit to them. The most frequent example of fraud arises from a false statement or misrepresentation that is material to entitlement or payment under the Medicare program. The violator may be a participating provider, a supplier of durable medical equipment, a beneficiary, or some other person or business entity, including a Carrier employee. Fraud in the Medicare program takes such forms. Examples given in the Medicare Carriers Manual include: Billing for services or supplies that were not provided. This includes billings for no shows, i.e., billing Medicare for services that were not actually furnished because the patients failed to keep their appointments Misrepresenting the diagnosis for the patient to justify the services or equipment furnished Altering claim forms to obtain a higher payment amount Deliberately applying for duplicate payment, e.g., billing both Medicare and the beneficiary for the same service or billing both Medicare and another insurer in an attempt to get paid twice Soliciting, offering, or receiving a kickback, bribe, or rebate, e.g., paying for a referral of patients in exchange for the ordering of diagnostic tests and other services or medical equipment Unbundled or exploded charges, for example, the billing of a multichannel set of lab tests to appear as if the individual tests had been performed A provider completing Certificates of Medical Necessity (CMNs) for patients not personally and professionally known by the provider Misrepresenting the services rendered (upcoding or the use of procedure codes not appropriate for the item or service actually furnished), amounts charged for services rendered, identity of the person receiving the services, dates of services, etc. Billing for noncovered services as covered services, e.g., routine foot care billed as a more involved form of foot care to obtain payment Claims involving collusion between a provider and a beneficiary, or between a supplier and a provider resulting in higher costs or charges to the Medicare program Use of another person's Medicare card in obtaining medical care Alteration of claims history records to generate fraudulent payments False provider disclosures of ownership in a clinical laboratory

13 Split billing schemes (e.g., billing procedures over a period of days when all treatment occurred during one visit) Use of the adjustment process to generate fraudulent payments Collusion between a provider and a carrier employee where the claim is assigned. (If the provider deliberately overbilled for services, Carriers are instructed that adjustments could be generated with little awareness on the pan of the beneficiary) A carrier employee acting on his/her own behalf where the claim is unassigned. (Through manipulation of beneficiary address or the claims history record, a carrier employee could generate adjustment payments against many beneficiary records and cause payments to be mailed to an address known only to him/her) and Billings based on gang visits, e.g., a physician visits a nursing home and bills for 20 nursing home visits without furnishing any specific service to, or on behalf of, individual patients. The Fraud Unit has procedures to identify potential fraud and abuse situations including procedures to ensure that: Complaints received by telephone that allege fraud are documented, forwarded to the Fraud Unit, and acknowledged within 30 calendar days. Written complaints must be acknowledged by the Fraud Unit within 30 calendar days following receipt in the mailroom Potential fraud cases that meet the criteria for immediate referral are promptly referred by the fraud unit to relevant OIG Office of Investigations Field Office Appropriate documentation is sent to OIG Field Office with proposed administrative sanction cases All available information is furnished to OIG Field Office with respect to providers requesting reinstatement No payments are make for services furnished by an individual or entity following the effective date of exclusion All instances where an excluded individual or entity submits claims for which payment may not be make after the effective date of the exclusion are reported All cases where a provider consistently fails to comply with the provisions of the assignment agreement are reported to the HCFA Regional Office with jurisdiction No payments are made for an excluded individual or entity who is employed by a Medicare provider or supplier Confidentiality of files and records is maintained so that the civil rights of those involved are protected Educational/warning correspondence (including comparative performance reports) with providers prepared by both the Medical Review and Fraud Units is kept in individual provider files so that documentation of these contacts is easily retrievable Documentation is maintained in provider files of the details of telephone or personal contacts involving fraud and abuse issues discussed with providers or provider staff. This information is to be retained for 7 years and Written instructions exist and are followed for conducting reviews (including procedures for reviewing questionable billing codes), making beneficiary contacts,

14 and referral of cases to and from the Medical Review unit. Carrier Reviews. Carriers conduct a variety of reviews to determine the appropriateness of payments even when there is no evidence of fraud. Some or all of the following reviews are done, depending on the Carriers funding level: Sampling of claims for a variety of items and services to determine propriety of payments Telephone contacts with beneficiaries to verify the delivery of items and services Random validation checks of physician licensure Reviews of certificates of medical necessity Analysis of high frequency/high cost, high frequency/low cost, low frequency/low cost, low frequency/high cost procedures and items Analysis of local patters/trends of practice/billing against national and regional trends beginning with the top 30 national procedures for focused medical review and other kings of analysis that help to identify cases of fraudulent billings Initiating other analysis enhancements to authenticate proper payments and On site inspection visits, as necessary. Before making an on site visit, first notify OIG Field Office and then, following approval, the provider. Indicate the purpose of the visit. If the provider objects to the visit or to disclosing the information the Carrier want to review, contact OIG Field Office for advice. Carriers are instructed that they should not under any circumstances go on site without the provider's permission unless accompanied by staff from the OIFO and an OIG Field Office -obtained subpoena. The sources of cases to be developed for fraud and abuse include: Complaints or tips from providers and beneficiaries received by mail, telephone or in person Referrals from related governmental agencies Aberrancies detected through internal controls, postpayment and other reviews, audits, or inspections Referrals from other agencies or sources of information, such as PROs, Medicaid Fraud Control units, or Office of the U.S. Attorney. Reports from the General Accounting Office (GAO), Congressional committees, OIG Office of Audit Services (OAS), OIG Office of Investigations (OI), or other oversight organizations at the Federal, State, or local level Suggestions from HCFA components, State agencies, contractors, and PROs, concerning areas where they have experienced problems or identified program matters that do not seem to be properly addressed in current policy Statistical leads indicating aberrant costs, upcoding, or charging practices produced by State contractor postpayment systems or other sources Newspaper and magazine articles, as well as local and national television and radio programs highlighting areas of possible mismanagement or abuse Carrier quality assurance (QA) staff Complaints or questions from providers, beneficiaries, recipients, or private citizens OIFO and HCFA fraud alerts

15 Investigative leads from ongoing fraud and abuse case review activity and Ideas stemming from ongoing or completed inspections. Immediate Case Referrals to Office of Inspector General Carriers are instructed to immediately advise OIG Field Office where allegations with one or more of the characteristics shown below are received and to forward all available information involving allegations, unless directed otherwise: Indications of contractor employee fraud: Informant is an Employee or competitor of a physician or supplier Involvement of providers with prior convictions for defrauding Medicare or who are currently the subject of a fraud investigation Indications of beneficiary fraud Situations involving subjects of current program inspections or investigations Multiple carriers involved with any one provider (OIFO will coordinate activities with all involved carriers) Cases with, or likely to get, widespread publicity, or involving sensitive issues Allegations of kickbacks or bribes Allegations of a crime by a Federal employee Indications that organized crime may be involved or Indications of fraud by a third-party insurer that is primary to Medicare. Medicare Fraud and Abuse Information Coordinator. The Coordinator is a carder employee who works full-time in the Fraud Unit to ensure the networking of Medicare-related fraud and abuse information. It is the responsibility of the Coordinators to create an environment hostile to fraud one in which the detection of those individuals and entities that would seek to defraud the Medicare program or its beneficiaries is facilitated. The Coordinator is directed to establish and maintain contacts with individuals in organizations who have an interest in learning of Medicare fraud. Contacts are developed to ensure effective two-way communication between these organizations and the carrier. Contacts may be in writing, by telephone, or in person. Contacts are to include fraud alerts, lists of excluded/sanctioned providers, meetings, and newsletters. Subjects of contacts are to include: Current scams and fraudulent schemes operating in the area Topics of mutual concern and nature of current investigations Initiatives to educate providers and beneficiaries and Fraud-related training programs scheduled by organizations in the area that accepts individuals outside their organization. Close ongoing coordination with the Medical Review Unit is viewed as essential. Prepayment Review. As discussed in Part One, the Medical Review staff identifies providers whose practices are abusive and, perhaps, fraudulent. The Medical Review staff denies claims submitted by these providers and makes educational contacts to explain that the particular practices are wrong. If there is a pattern of abuse, the Medical Review Unit warns the provider of the consequences of continuing the practice. If the provider continues, despite the Medical Review Unit's warning, there will be a referral of the case to the Fraud Unit for

16 development and referral to OIG Field Office, if appropriate. The Fraud Unit identifies abusive behavior in the course of its normal activities. Investigations of complaints and independent data analysis identify providers who are engaging in abusive practices. If these providers are not the subject of review, notice, and warnings, there may be a referral for prepayment review or placement on the Provider Audit List, as the Medical Review Unit deems appropriate. Otherwise, the Fraud Unit develops these cases and refers them to OIG Field Office. The Fraud Unit may also detect abusive practices that are brought to the attention of the Medical Review unit to enable development of prepayment screens, or a revision of an existing carrier medical policy or as a subject for a special study. Complaints Filed by Beneficiaries and Others. Complaints may be presented by telephone, in writing, in-person, or referred via the OIG Hot Line. Beneficiaries, as recipients of Medicare covered items and services, are in a unique position to assist in detecting fraud and abuse. It is essential that beneficiaries perceive Medicare Carriers as being genuinely interested in learning of abusive and fraudulent practices and in acting promptly on such referrals. Definition of a Complaint of Fraud and Abuse. A complaint is a statement, oral or written, alleging that a provider, supplier, or beneficiary received a Medicare benefit of monetary value, directly or indirectly, overtly or covertly, in cash or in kind, to which they are not entitled under current Medicare law, regulations, and/or program policy. Included are allegations of misrepresentation and violations of Medicare requirements applicable to persons or entities that bill for Medicare covered items and services. Examples of complaints given in the Medicare Carriers Manual include: Allegations that items or services were not received Allegations that services received are inconsistent with the services billed (as indicated on the EOMB) Allegations that a provider or supplier has billed both the beneficiary and Medicare for the same item of service Allegations regarding waiver of copayments or deductibles Allegations that a supplier or provider has misrepresented itself as having an affiliation with an agency or department of State, local, or Federal government, whether expressed or implied and Beneficiary inquiries concerning payment for an item or service, that in his/her opinion, far exceeds reasonable payment for the item or service that the beneficiary received (e.g., the supplier or physician has up-coded to receive higher payment). The following are not included on the list of fraud and abuse complaints: Complaints (or inquiries) regarding Medicare coverage policy Complaints (or inquiries) regarding the status of claims Requests for claims appeal Complaints regarding the appeals process or Complaints concerning providers or suppliers (other than those complaints meeting the criteria established above) that are general in nature and are policy or program oriented. Fraud and abuse complaints are sent to the fraud unit, which is solely responsible

17 for determining whether it: Retains the complaint for further development Refers it to the Medical Review unit for its review and development or Refers it to the correspondence unit for response. The Fraud Unit acknowledges complaints, in writing, within 30 calendar days following receipt of the complaint in the Carrier's mailroom. In its acknowledgment, the Carrier thanks the complainant for their interest and for bringing the matter to its attention. Developing Potential Fraud Cases. When the Carrier receives an allegation of fraud, or identifies a potentially fraudulent case, it initiates an investigation immediately to determine the facts. Carriers consider complaints by current or former employees for early contact with OIG Field Office, who may wish the Carrier to do no more than immediately refer the case with only limited internal development. The Carrier contacts the complainant/beneficiary whenever necessary for clarification of any aspects of the complaint/situation. The Carrier checks each incoming complaint against Fraud Unit files for other complaints involving the same provider. Also, it checks its provider correspondence fries for educational/warning letters or for contact reports that relate to similar complaints. Carriers maintain complaint files, organized by provider or supplier, which contain all complaints, investigation findings, warning letters, or documented discussions. Carries are instructed to close out misunderstandings (e.g., beneficiary alleged no services furnished by radiologist, when in fact radiologist read x-rays with no beneficiary contact, i.e., beneficiary misunderstood billing codes). Carriers contact the provider if the issue is a billing error (e.g., wrong date of service, wrong patient or wrong service). In all instances where a complaint was caused by bill processing or clerical error, Carriers are instructed to close out the complaint and notify the complainant and also to prepare a brief rationale for each closure and insert it in the case file, since cases of this type are sampled and checked for accuracy of handling during the annual Carrier Performance Review. When the Carrier determines that the complaint/identified situation was not caused by error or misunderstanding, it will conduct an expanded investigation. Since there is potential for fraud in these instances, Carriers do not contact the provider or their office personnel. If the Carrier believes that provider contact is necessary, it first contacts OIG Field Office for advice. If the suspect provider hears that the Carrier is reviewing its billings or learns of the complaint and contacts the Carrier, the Carrier is instructed to report such contact immediately to the OIG Field Office. After review of the provider's background, specialty and profile, Carriers decide whether the situation, although potentially fraudulent, is more accurately categorized as abuse. For example, records indicate that a physician has billed, in some instances, both Medicare and the beneficiary for the same service. Upon review, the Carrier determines that, rather than attempting to be paid twice for the same service, an error was made on the part of the physician in his/her billing methodology. Carriers are instructed not to categorize this as a fraudulent situation (duplicate billing), but to consider this an abusive situation (improper billing). The review, depending on the type of allegations, may consist of contacting a

18 sample of beneficiaries that received the same type of services from the provider as are involved in the initial complaint. From a review of the practice profile, Carriers choose a minimum sample of 10 beneficiaries. Carriers are instructed to consider that a strong potential for fraud exists when the review results in 40 percent of those contacted during the review (including initial complainant), who are capable of reliably confirming or denying services, definitely denying having received the service billed by the provider. Development of Abuse Cases. Correcting and preventing program abuse are functions of the Medical Review unit. The difference between abuse reviews and fraud reviews is essentially that the abuse situation involves a review of the propriety or medical necessity of services that are billed. Fraud reviews, as discussed above, are geared towards determining, for example, whether or not billed services were, in fact, furnished. Abuse reviews generally occur after Carrier claims processing activity, although they may arise as a result of information obtained during the claims processing cycle. The Medical Review unit reviews cases that clearly appear to be program abuse relegating potential fraud cases to the fraud unit. This assures timeliness without affecting the reasonableness of the decision process. If an adverse determination is made, fair hearing proceedings are available to the provider. If the PRO later submits a decision in disagreement with that of the medical consultant, reconsider the determination in light of any additional, convincing medical facts.