This Month In Healthcare Legal News--Part 2: October Review

As the month of October draws to a close, the news cycle has been dominated by Hurricane Sandy and the upcoming election. Healthcare law in the United States and its future have also seen some developments but the public has not been made aware of them to a great extent. One example is the OIG Work Plan discussed in the previous blog. Another is proposed legislation that could affect a serious component of healthcare law for many practitioners. 

Any director or officer of a hospital system or primary care doctor with his/her own practice will tell you--without Medicare reimbursements, your overall reimbursement will be low regardless of the diversity of your payer mix. It is a chance many won't take. One bad audit can set a company back for months despite the outcome of the appeals process.

PROPOSED MEDICARE AUDIT IMPROVEMENT ACT AUDITS THE AUDITORS.

The healthcare law section of our practice group area delves into Recovery Audit Contractors (RAC) and their impact on Medicare reimbursements to providers as well as the success they have had in bringing money back into the federal program. Recently, a bill was introduced to Congress which regulates RACs and forces them to operate with more regulation than when they were initially implemented. With the need before to recover overpayments of Medicare being so desperate, companies were allowed broad authority to collect while making the provider jump through many hoops and appeals to get it back. Furthermore, RACs were incentivized to do so by getting a percentage of what they retrieve.

Representatives Sam Graves (R-MO), Todd Akin (R-MO), Billy Long (R-MO), and Adam Schiff (D-CA) introduced a bill to Congress on October 16, 2012 which proposes to reduce the Medicare contractor audit burden on hospitals. The bill, called the Medicare Audit Improvement Act of 2012 (Act), proposes changes to the ways contractors may conduct audits and imposes additional requirements on contractors.

Among the requirements introduced in the Act are limits to the amount of additional documentation a Medicare contractor may request for complex pre-payment audits and complex post-payment audits. The Act also proposes penalties for contractors that fail to maintain compliance with Medicare program requirements. Specifically, the Act calls for financial penalties when a contractor fails to complete an audit determination within the applicable timeframes, and when a contractor fails to provide communication in a timely manner regarding claim denials and appeals. This is very important for providers who are constantly given the run around or left in limbo wondering about why they haven’t been reimbursed yet for services and when CMS plans to release their Medicare payments. Perhaps the biggest measure of reform in the Act includes provisions that propose to impose financial penalties for appeals that are overturned. When a party successfully appeals a claim denial, the Act would require the contractor to pay a monetary penalty to the party that prevailed in the appeal. This aspect of the Act is notable given the number of claim denials, particularly in the area of short-stay inpatient admissions, that are overturned at the ALJ level of appeal.

Contractors would also be required to publish performance data under the Act. Contractors would be required to publish data each year on:

• the aggregate number of audits conducted,

• the aggregate number of denials for each audit type,

• denial rates,

• the aggregate number of appeals filed by providers,

• the aggregate rate of appeals, and

• the appeal outcomes at each stage of appeal.

The proposed legislation could be read by clicking the following:

http://www.gpo.gov/fdsys/pkg/BILLS-112hr6575ih/pdf/BILLS-112hr6575ih.pdf

We do not want to speculate as to the likelihood that it will pass, especially with a pending election. However, we do have to note that this would greatly reform the current RAC system and would require broad bipartisan support before passing through both houses and being signed by the President. Opponents of the proposed legislation may argue that the bill, especially with provisions providing penalties for overturned appeals, may severely hinder or effectively do away with companies and their abilities to audit. Even if the bill passes, certain provisions such as those will likely be removed or modified before the bill becomes law. Midwest Legal Partners will continue to track this proposed legislation. 

Overall, the entire month of October has been an exciting time for Midwest Legal Partners, PLLC. Saif Kasmikha was a speaker with a comprehensive panel at a health law event in Michigan on the impact of the Affordable Care Act on all stakeholders. Scott Scarbrough was also a speaker at a CLE event in Milwaukee, Wisconsin on business and IP matters. We will continue to keep our clients and the public posted on the latest legal news affecting their practices.