Over my career, I have done a fair amount of M&A work….CCRCs, SNFs, HHAs, Physician practices, hospice, etc. While each “deal” has lots of nuances, issues, etc. none can be as confusing or as tricky to navigate as the federal payer issues; specifically, the provider number. For SNFs, HHAs, and hospices, an acquisition not properly vetted and structured can bite extremely hard post-closing, if provider liabilities existed pre-close and were unknown and/or unknowable. Even the best due diligence cannot ferret out certain provider number related liabilities.
The Medicare provider number is the unique reference number assigned to each participating provider. When initially originating as a provider, the organization must apply for provider status, await some form of accreditation (for SNFs it is via a state survey and for HHAs and hospice, via private accreditation) and then ultimate approval by Medicare/DHHS. As long as the provider that has obtained the number, remains in good standing with CMS (hasn’t had its provider status/agreement revoked), the provider may participate in and bill, Medicare and Medicaid (as applicable).
Provider numbers are assignable under change of control, providing the assuming party is eligible to participate in the Medicare program (not banned, etc.). Change of control requires change of ownership or control at the PROVIDER level, not the facility or building level. The building in the case of an SNF, is not the PROVIDER – the operator of the SNF is. For example, if Acme SNF is owned and operated by Acme, Inc., then Acme, Inc. is the Provider so long as the SNF license in Acme’s state is to Acme, Inc. Say Acme decides to sell the SNF property to Beta REIT and in turn, Beta leases the facility back to Acme. Acme no longer owns the building but remains the Provider as it continues to hold the license, etc. consistent with the operations of the SNF. Carrying this one step further. Acme decides it no longer wants to run the SNF but wishes to keep the building. It finds Zeta, LLC, an SNF management/operating company, to operate the SNF and leases the operations to Zeta. Zeta receives a license from the state for the SNF and now Zeta is the PROVIDER, even though Acme, Inc. continues to own the building.
In the example above regarding Zeta, the typical process in such a change of control involving the operations of a SNF is for Zeta to assume the provider number of Acme. The paperwork filed with CMS is minimal and occurs concurrent to the closing creating change of control (sale, lease, etc.). What Zeta has done is avoid a lengthier, more arduous process of obtaining a new provider number, leaving Acme’s number with Acme and applying as a new provider at the Acme SNF location. While taking this route seems appealing and quick, doing so comes with potential peril and today, the peril is expansive and perhaps, business altering.
When a provider assumes the provider number of another entity at change of control, the new provider assumes all of the former provider’s related liabilities, etc. attached to the number. CMS does not remove history or “cleanse” the former provider’s history. The etc. today is the most often overlooked;
- Star ratings
- Quality measures including readmission history
- Claim error rate
- MDS data (submitted)
- Federal survey history
- Open ADRs
- Open or pending, probes and RAC audits
The above is in addition to, any payments owed to the Federal government and any fines, forfeitures, penalties, etc. The largest liability is or relates to, the False Claims Act and/or allegations of fraud. These events likely preceded the change of control by quite a distance and are either impossible to know at change of control or discoverable with only great, thorough due diligence. The former in my experience such as whistleblower claims may not arise or be known until many months after the whistleblower’s allegation. During the interim, silence is all that is heard. Under Medicare and federal law, no statute of limitation exists for fraud or False Claims. While it is possible via indemnification language in the deal, to arrest a False Claims Act charge and ultimately unravel the “tape” to source the locus of origin and control at the time of the provider number, the same is not quick and not without legal cost. Assuming the former provider is even around or can be found (I have seen cases where no such trail exists), winning an argument with CMS that the new provider is blameless/not at fault is akin to winning the Battle of Gettysburg – the losses incalculable. Remember, the entity that a provider is dealing with is the Federal government and as such, responsive and quick aren’t going to happen. Check the current status of the administrative appeal backlog as a reference for responsive and quick.
Assuming no payment irregularities occur, the list preceding is daunting enough for pause. Assuming an existing provider number means assuming all that goes with it. On the Federal side, that is a bunch. The assuming party gets the compliance history of the former provider, including the Star rating (no, the rating is not on the SNF facility but on the provider operating the SNF). As I have written before, Star ratings matter today. Inheriting a two Star rating means inheriting a “dog that doesn’t hunt” in today’s competitive landscape. It also means that any work that is planned to increase the Star rating will take time especially if the main “drag” is survey history. The survey history comes with the provider number. That history is where RAC auditors visit and surveyors start whenever complaints arise and/or annual certification surveys commence.
The Quality Measures of the former provider beget those of the assuming provider. This starts the baseline for Value Based Purchasing. It also sets the bar for readmission risk expectations, network negotiations and referral pattern preference under programs such as Bundled Payments. Similarly, all of the previous MDS data submissions come with that same provider number, including those that impact case-mix rates under Medicaid (if applicable). And, not exhaustively last but sufficient for now, all claims experience transfers. This includes the precious error rate that if perilously close to the limit, can trip with one more error to a pre-payment probe owned, by the assuming provider. Only extreme due diligence can discover the current error rate – perhaps.
Avoiding the peril of all of the above and rendering the pursuit or enforcement of indemnification (at the new provider’s expense) a moot issue is simple: Obtain a new provider number. It is a bit time-consuming and does come with a modicum of “brain damage” (it is a government process) but in comparison to what can (and does) happen, a very, very fractional price to pay. In every transaction I have been directly involved with, I have obtained a new provider number. In more than one, it has saved a fair amount of go-forward headache and hassle, particularly on the compliance end. Today, I’d shudder to proceed without a new provider number as the risks of doing so are enormous, particularly in light of the impact of Star ratings, quality measures and survey history. Additionally, the government has never been more vigilant in scrutinizing claims and generating ADRs. Inheriting someone else’s documentation and billing risks genuinely isn’t smart today.
While inappropriate for this post, I could list a plethora of examples and events where failure to obtain a new provider number and status has left the assuming provider with an absolute mess. These stories are now, all too common. Even the best due diligence (I know because my firm does it), cannot glean enough information to justify such a sweeping assumption of risk. Too much cannot be known and even that which can, should be rendered inconsequential by changing provider status. Reliance on a definitive agreement and litigation to sort responsibilities and liabilities is not a prudent tactic. Time and resources are (always) better spent, applying for and receiving, a new provider number and provider status.
Nearing the end of the Supreme Court session, the Court issued an important clarification ruling concerning the False Claims Act in cases of alleged fraud. In the Universal Health Services case, the Court addressed the issue of whether a claim could be determined as fraudulent if the underlying cause for fraud was a lack of professional certification or licensing of a provider that rendered care related to the subsequent bill for services. In the Universal case, the provider submitted claims to Medicaid and received payment for services. The services as coded and billed implied that the care was provided by a licensed and/or qualified professional when in fact, the care was provided by persons not properly qualified. In this case, the patient ultimately suffered harm and death, due to the negligent care.
The False Claims Act statute imposes liability on anyone who “(a) knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval; or (b) knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim.” It defines “material” as “having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.” And it defines “knowingly” as “actual knowledge; … deliberate ignorance; … or reckless disregard of the truth or falsity of the information; and … no proof of specific intent to defraud is required.” The last element is key – no proof of intent to defraud is required.
Though providers sought a different outcome, the initial review suggests the decision is not all that bold or inconsistent with other analogous applications. The provider community hope was that the Court would draw a line in terms of the expanse or breadth of False Claims Act “potential” liabilities. The line sought was on the technical issue of “implied certification”; the notion that a claim for services ‘customarily’ provided by a professional of certain qualifications under a certain level of supervision doesn’t constitute fraud when the services are provided by someone of lesser professional stature or without customary supervision, assuming the care was in all other ways, properly provided. The decision reinforces a narrow but common interpretation of the False Claims Act: An action that would constitute a violation of a federal condition of participation within a program creating a condition where the service provided is not compliant creates a violation if the service was billed to Medicare or Medicaid. Providers are expected to know at all times, the level of professional qualifications and supervision required under the applicable Conditions of Participation.
The implications for providers as a result of this decision are many. The Court concretized the breadth of application of the False Claims Act maintaining an expansive view that any service billed to Medicare and/or Medicaid must be professionally relevant, consistent with common and known professional standards, within the purview of the licensed provider, and properly structured and supervised as required by the applicable Conditions of Participation. Below are a few select operational reminders and strategies for providers in light of the Court’s decision and as proven best-practices to mitigate False Claims Act pitfalls.
- One of the largest risk areas involves sub-contractors providing services under the umbrella and auspices of a provider whereby, the provider is submitting Medicaid or Medicare claims. In these instances the provider that is using contractors must vet each contractor via proper credentialing and then, provide appropriate and adequate supervision of the services. For example, in SNFs that use therapy contractors the SNF must assure that each staff member is properly licensed (as applicable), trained to provide the care required, and the services SUPERVISED by the SNF. Supervision means actually reviewed for professional standards, provided as required by law (conditions of participation), properly documented, and properly billed. The SNF cannot leave the supervision aspect solely to the therapy contractor.
- Providers must routinely audit the services provided, independently and in a structured program. Audits include an actual review of the documentation for care provided against the claim submitted, observations of care provided, and interviews/surveys of patients and/or significant others with respect to care and treatment and satisfaction.
- Establish a communication vehicle or vehicles that elicits reactions to suspicious activity or inadequate care. I recommend a series of feedback tools such as surveys, focus groups, hotlines and random calls to patients and staff. The intent is to provide multiple opportunities for individuals, patients, families and staff to provide information regarding potential break-downs in care or regarding outright instances of fraud.
- Conduct staff training on orientation and periodically, particularly at the professional level and supervisory level. The training should cover organizational policy, the legal and regulatory framework that the organization operates within, and case examples to illustrate violations plus remedy steps.
This last week the Department of Justice and CMS announced a $125 million settlement with RehabCare, a subsidiary of Kindred Healthcare, regarding improper Medicare billing. As in virtually all cases of a similar nature involving false or improper billing to the Medicare program, this matter began with a whistleblower suit (insiders establishing False Claims Act violations perpetrated by the organization). What is different in this case or unique by comparison, is that RehabCare is not a “provider”. It did not actually conduct the billing but as alleged, caused the false or improper claims to occur through a certain set of business practices.
RehabCare has been party to a number of improper Medicare billing settlements and enforcement actions. For example, the Arch Care case in New York (I wrote a post on this case in 2015 at http://wp.me/ptUlY-im). In prior cases, RehabCare was tangentially involved as the contract therapy provider. The enforcement action was taken against the SNF as the “provider” as opposed to the therapy contractor. Recall that the Government/Provider relationship is between CMS and the SNF as it is the SNF that holds the provider agreement and ultimately submits the claim for the “improper” services to Medicare. In this most recent settlement, the Government used the insider information provided RehabCare therapists to direct a “conspiracy” action against the company. Simultaneous to the larger settlement, the Department of Justice announced four other settlements with nursing homes (SNFs) for improper therapy billing, each involving RehabCare as the therapy contractor. The settlements ranged from $3.9 million to Wingate Healthcare (Massachusetts and New York) to $750,000 for a SNF operated/owned by Frederick County Maryland.
To my knowledge, this is the first time that the Department of Justice has brought a conspiracy type suit against an organization, alleging an intent to defraud the government via the billings of the actual “provider”. This is a unique twist in the False Claims Act application (as applied to health care fraud) as it does not involve a party that actually “billed” Medicare – the SNF that contracted with RehabCare filed the claim. The whistleblowers alleged and the government pursued, a case where the allegations ranged from RehabCare setting unrealistic financial goals for its therapists to not allowing discontinuation of therapy services after the therapist recommended discharge to over-treating and upcoding. And while all these allegations may be true, the fascinating element is that the government took the “brunt” action against RehabCare even though the SNFs involved were technically and legally responsible for making sure that the claims submitted to Medicare were proper, legitimate, etc. Ultimately, it is the SNF (the actual provider) that is responsible for assuring that the Government is not billed for inappropriate, improper, fraudulent, etc. services. The False Claims Act nuts and bolts language is below:
(1)In general.—Subject to paragraph (2), any person who—
- With RehabCare fallen, do not be surprised that organizations like Genesis are next or already in process. Any provider (SNF) that uses a national therapy provider for contracting purposes should immediately do all of the following.
- Review the contract between the SNF and the therapy contractor, especially the liquidated damages clauses. Meet with the contractor’s representatives and openly discuss concerns. Undoubtedly, assurances that all is “well” will be offered. Ask for the same in writing and a revisit to the liquidated damages section to re-craft a shared risk provision.
- Engage a qualified firm to conduct a full audit of the therapy contractor’s practices, a reasonable sample of Medicare claims, and supporting documentation. Again, for readers, I have resources here for referrals to the best firms.
- Use a triple-check. Anyone who needs resources, contact me.
- Integrate your billing and Medicare RUGs data into your QAPI. You want to review monthly, your RUGs distribution, EOTs, COTs, lengths of stay, average daily rate, etc. Benchmark your date and trends.
- If you haven’t bid your therapy contract within the last two or so years, plan on it. Again, best practice is to use an outside consultant who knows the therapy side and contracting to assist with the bidding process.
- Consider, strongly, going in-h iouse or developing a hybrid partnership for your therapy services. Again I can provide some resources and direction here. Partnerships can be as beneficial (SNF with hospital, etc.), done right, as in-house programs and again, can go a long way to minimizing the expansive fraud risk and complications that come (historically) via RehabCare, Genesis, etc.
Over the last six months or so, I’ve written a number of articles on the issue of SNFs, therapy contracts/contractors, and recent fraud settlements. I’ve also given a few presentations on the same subject, covering how fraud occurs, the relationships between therapy contractors, SNFs and Medicare, and the keys to avoiding fraud. A reader question based on this subject area is the genesis (the answer is anyway) of this post. The questioned shortened and paraphrased is;
“If we (the SNF) conduct an audit of our therapy contractor and our Medicare claims as you suggest and we find abnormalities that appear to be fraudulent claims, what do we do next? We know we have to correct the practices that allowed the claims to happen but is there something else we need to do?”
Not only is this an excellent question given the subject area, the answer or outcome is likely the reason so many providers don’t or won’t audit their therapy contractors and Medicare claims (afraid of what they might find). The answer to the question is YES, there is something else to do and it is a federal requirement if a provider wishes to potentially avoid Civil Monetary Penalties and other remedies. This key step is known as Self Disclosure.
Starting at the beginning: If the results of the “audit” determine that Medicare was billed inappropriately, the provider is in potential violation of the False Claims Act. The False Claims Act describes violations as ‘any entity or person that causes the federal government to make payments for goods or services that are a) not provided b) provided contrary to federal standards or law or, c) provided at a level or quality different than what the claim was submitted for (summarized)’. For Medicare, providers are in violation of the False Claims Act if bills are/were submitted to Medicare (and paid) for care that was inappropriate, unnecessary, falsely misrepresented (upcoding, documentation etc.) or not provided. Assuming, as the questioner poses, that the audit found abnormalities (improper bills and payments) to Medicare (Parts A, B, or C) for any of these reasons, a False Claims Act violation (liability) has been identified. The provider has obligations as a result, under federal law.
The “obligation” once the activity is discovered is to self report. The OIG maintains a Self Disclosure Protocol policy that can be accessed here ( http://oig.hhs.gov/compliance/self-disclosure-info/files/Provider-Self-Disclosure-Protocol.pdf ). Self Disclosure is a methodology that providers can use to potentially avoid Civil Monetary Damages, other remedies and extensive legal costs. Self Disclosure however, cannot be used to mitigate criminal penalties if the activity that is part of the Medicare False Claims violation was/is criminal. Self Disclosure also is not relevant for overpayments. Overpayment issues are handled via the Fiscal Intermediary directly.
Per the OIG Self Disclosure Protocol:
“In 1998, the Office of Inspector General (OIG) of the United States Department of Health and Human Services (HHS) published the Provider Self-Disclosure Protocol (the SDP) at 63 Fed Reg. 58399 (October 30, 1998) to establish a process for health care providers to voluntarily identify, disclose, and resolve instances of potential fraud involving the Federal health care programs (as defined in section 1128B(f) of the Social Security Act (the Act), 42 U.S.C. 1320a–7b(f)). The SDP provides guidance on how to investigate this conduct, quantify damages, and report the conduct to OIG to resolve the provider’s liability under OIG’s civil monetary penalty (CMP) authorities.”
Below are some key points providers need to know prior to and in connection with, a self disclosure process. Again, I encourage all providers that are conducting a billing audit or considering a billing audit, to access the PDF from this post and review the OIG Self Disclosure Protocol.
- A current regulatory process or audit from Medicare (or a contractor such as a ZPIC audit) does not mean that the provider cannot self disclose, provided the disclosure is in good faith.
- Further investigations and reviews are part of the process and providers need to be aware that the OIG will direct the provider’s investigative process as part of the self disclosure. In other words, the audit the provider conducted which may have identified the false claims is not the end nor will it suffice to resolve the matter once disclosed.
- Providers that wish to self disclose need legal counsel as the initial disclosure requires a succinct identification of the legal violations applicable and the scope of the activity and dollar amounts (potential) involved.
- Self disclosure should only be made after corrective action has occurred. The disclosure does not suffice as a remedy for conduct going forward nor can it absolve liability in scope that predates the disclosure or the period disclosed (see the point prior).
- Providers need to be aware that this process is not quick nor does it alleviate or mitigate any requirement for repayment of improper claims. Additionally, providers need to recognize that resolution will require mitigation steps including potential agreement to a compliance program/plan and commitment to additional monitoring/auditing, depending on the scope of the violations disclosed.
I encourage providers to read the Protocol and to pay particular attention to 5 – 9. While I know the information may seem daunting and discouraging, don’t use this post or the information in the Protocol as a reason to not conduct a Medicare billing/claims audit and/or to not report, if violations are found. I assure you, having worked extensively with providers caught by the OIG, DOJ and/or in a Qui Tam action, prevention and self disclosure, while onerous is far better and cheaper than what occurs if the violations are discovered federally.
Yes another SNF, another therapy contract and more fraud settlements. The only thing that isn’t different is the contractor – RehabCare once again (a coincidence?…not likely). In news released late last week, a Maine SNF settled with the Department of Justice for $1.2 million, allegations of improper Medicare billings for “unnecessary, inflated, and unreasonable” therapy services. As in the other cases I have covered herein, the therapy services provided at Ross Manor (the SNF) were through a contract with a division of RehabCare. Again, because the overbillings for inappropriate care and/or service are made by the SNF to Medicare under Part A, the liability for the improper payments and thus all remedies, lies with the SNF – not RehabCare.
In their statement, the parent of Ross Manor, First Atlantic Corporation stated that,”Throughout this matter, Ross Manor has worked with the government to understand where it can exercise more oversight of the billing and record-keeping practices of its contractors.” Not to belabor a point but REALLY? The concepts regarding SNF liability for contractor behavior and how to audit and prevent fraud aren’t complicated or difficult For (likely) the final time, I will reiterate the issues and the processes that encapsulate the SNF/Therapy contractor/fraud issues and how to avoid the same.
- Under Medicare, the SNF is the PROVIDER – not the therapy company/contractor. Therefore, any claims submitted to Medicare are submitted by the SNF regardless of who provided the service. If the claims are fraudulent, the SNF is responsible, not the contractor that provided the service, for repayment and any applicable fines, remedies, etc. SNFs are free to contract with anyone or entity to provide skilled nursing services (as defined in the federal Conditions of Participation) but in so doing, as the SNF is the provider, it cannot escape the False Claims liability for claims made to the federal government. The therapy contractor does not bill the government – the SNF does. The expectation is that the claim is lawful, correct, and for medically necessary and proper care.
- The SNF must therefore, provide oversight to assure that all claims are proper and that the care was necessary and legitimate. How? I recommend the following steps.
- Contract with an external consultant knowledgeable in therapy and Medicare billing and periodically, audit your therapy contractor. Review the provision of care, the documentation, and the billing/claims. For SNFs that don’t know or have connections to such a consultant, feel free to contact me – I DO!
- Institute a triple-check process for Medicare billing, each month. This process requires certain parties to each Medicare claim to participate in a review methodology before claims are submitted. Again, readers who need a triple-check format/framework, contact me and I will provide one at no charge.
- Benchmark your MDS utilization and review it against regional and local data. Comparatively, the utilization by RUG, length of stay, and thus Medicare per diem should follow regional and local trends. If not, an explanation and inquiry is warranted.
- Utilize your QAPI program to track care outcomes and Medicare related MDS data. Monitor and follow this data to assure that care is proper and documentation consistent.
- Institute a weekly Clinical Review program to monitor resident care progress (MDS changes, therapy progress, wounds, falls, discharges, hospitalizations, etc.). Readers who need help here, contact me.
- Finally, have MDS certified staff on site and actively involved in the final review and submission of all Medicare claims. This staff must be employed by the facility, properly trained, and non-financially incented to any reimbursement goals or targets.
Last, I have a few current watch targets and tips for SNFs that use therapy contractors and/or are in the process of bidding or renewing a therapy contract.
- Watch staff productivity and time – anything above 80% is a red flag. Demand pay records and time sheets.
- No resident on admission should immediately be placed into all three therapy disciplines. I see this a lot and it is an outright harbinger of fraud. Therapy, like any other service, must be justified by an evaluation, an order, and a treatment plan. If every resident receives all three (speech, PT, OT), something is amiss.
- Be wary of Speech being justified for demented residents as “cognitive retraining”. This is frequently to almost always, a non-justifiable service and one that has no recognized diagnostic correlation or outcome measurement when the underlying disease is dementia. Cognitive retraining makes sense for neurological damage due to head injuries, strokes, etc. but is unwarranted as I see it (often) applied for dementia in an SNF.
- Be wary of the Ultra High over-utilization. Be particularly wary of the tendency to routine code to the RUG. Make sure someone is keenly watching the ADL scoring here and how the minutes are justified.
- Review your contract and look carefully at the Indemnification Clause(s). Know your exposure should a False Claims circumstance arise or simpler, a billing audit/probe. The contract likely (unless you negotiated it differently or had me do it) will only have the therapy company liable for the cost of therapy, not the loss of the Medicare revenue in total. SNFs have huge exposure here.
- If you are presently entertaining a contract or renewal, make sure you memorialize any promises made during the “courtship” or “proposal” phase in the final agreement. I watch SNFs consistently bamboozled with false promises and specious claims of success, support, etc. the same of which never show in “writing” in the final agreement. Make sure everything is in writing. For help and a format for contracting, contact me
I do offer/provide numerous tools, forms, etc. free of charge to any reader who contacts me. I also provide references to vetted, trustworthy sources for services upon request. To contact me, go to the author page on this site (contact info), comment to a post or e-mail me at email@example.com. If you comment to a post and want me to contact you, please leave valid contact information – can’t help without it.
I know I sound redundant but clearly, the message is still not permeating through the industry (except for readers here). The Department of Justice and the OIG for the Department of Health are scrutinizing SNFs, their therapy billings, and the use of therapy contractors. Why? It is all due to a known and now routinely validated, prevalence of over-billing and thus fraud and/or violations (same thing really) of the False Claims Act. I have written on this subject on this site multiple times before and those that have heard me speak at various industry events, received the same message. Bottom-line: If you are an SNF and you use a contract therapy company to provide your therapy services, you must monitor the performance of your therapy contractor and assure that all Medicare billing and Condition of Participation requirements are being met. The acts of the therapy contractor (over-billing, miscoding, improper care, etc.) are the “ACTS” of the SNF as far as the Federal government is concerned. The SNF is responsible for ALL elements of care provided and the accuracy and compliance elements of any and all claims submitted to Medicare.https://rhislop3.wordpress.com/wp-admin/post.php?post=1138&action=edit#
In another case, recently disclosed, a group of three SNFs in New York (Arch Care) operated by Catholic Health Care System settled improper (false) claim allegations with the Department of Justice for $3.5 million. The settlement is based on improper and inflated claims submitted to Medicare for unnecessary, erroneous and improper therapy care provided by RehabCare (a division thereof in this case). The cause of the settlement or the crux of the issue related to the SNFs failure to monitor the therapy provider and to assure that the erroneous/illegitimate claims were not submitted to Medicare. The result of the claims submission is overpayment and thus, the recovery and settlement. Noticeably absent is any action taken against the therapy company by the Department as none such can be taken – the therapy contractor did not bill Medicare – the SNF did!
SNFs need to pay attention to these cases – more are assuredly forthcoming. There are simple remedies to avoid these problems on the part of any SNF or group of SNFs. Below is just a small sample. For additional resources, attend the upcoming HcPro webinar that I am conducting next week (posted on this site) or contact me directly.
- Implement a triple-check system immediately.
- If an SNF hasn’t audited its Medicare billings lately via an outside contractor, do so immediately especially if the SNF uses a therapy contractor. Be prepared if irregularities are found to self-disclose. Self-disclosure is required and it is the only way to potentially avoid treble damages, criminal liability, etc.
- Retain an outside auditor and develop a routine audit system. I have checklists which can be used to guide in this process plus sources for auditors.
- Educate your MDS and billing staff immediately on red-flag issues when it comes to your Medicare billings.
- Integrate certain outcome and patient/resident/family feedback elements into your QA process. Seek direct feedback monitor care outcomes and risk areas.
Join me for this informative webcast to learn how to implement a shared risk arrangement with therapy contractors and discover a strategic way to monitor and limit compliance and monetary risk in terms of billing and liability under Medicare The CMS OIG and the Department of Justice are targeting SNFs with heavy therapy case-mix claims under Medicare. In this webinar, conducted for HC Pro, I will cover the nature of the current levels of compliance risk, False Claims actions, and contractual risks between an SNF and its therapy provider. I will also review current case examples involving Extendicare and RehabCare. Registration and more info. are available via the link below.
In mid-October, the Justice Department announced a $38 million settlement with the SNF chain Extendicare, resolving a series of Medicare False Claims Act violations. The violations involved improper billing for services supposedly provided, provided unnecessarily, or for care that was substandard. This series of violations included allegations of inappropriately billed therapy services; care billed for but not properly substantiated either by assessment or other documentation. The settlement with Extendicare is the government’s largest to date with any SNF organization and evidence of a clear enforcement trend and pattern in the industry.
As a reminder, it is a violation of the False Claims Act for any Medicare provider to (most common);
- Knowingly submit a claim for money to the government for services/care not provided.
- Knowingly submit a claim for money to the government for services/care provided that is sub-standard.
- Knowingly submit a claim for more money that the care or service is ordinarily worth or compensated (up-coding).
- Creating (knowingly) a series or system of events, documentation, etc. to generate claims to Medicare for unnecessary or unwarranted care or services.
Fundamentally, the majority of the Extendicare case involved sub-standard care as a result of inappropriate staffing levels and adequacy of training. As alleged, the care across (at least) 33 facilities in multiple states was so deficient as to lead to infections, unnecessary hospitalizations, falls with head injuries and bed sores/decubiti. The genesis of the investigation is a Whistleblower claim filed in Ohio (the genesis of most False Claims Act cases, known as Qui Tam).
As the title of this post proclaims, there are some lessons for providers in this tale of Extendicare woe. First and foremost is the increasing enforcement activity of the Federal government with regard to Medicare activity in SNFs. I have written about this before. Second, SNF administrators and executives need to be aware of the False Claims Act triggers and steps for prevention. Third, executives and administrators need to understand the intricacies of billing Medicare, their organizational revenue model and where the risks lie. Specifically, and frequent readers have seen these points before, the following steps are fundamentally required to mitigate fraud and billing risks under Medicare.
- Monitor and review your submitted claims by RUGs against regional/local utilization patterns. A facility’s utilization should not be fundamentally different than any other facility’s utilization within a region unless the facility is unique such as a specialty provider, attached or affiliated with a hospital, etc. Additionally, I recommend that all facilities use and outside consultant (not affiliated with the organization) to periodically audit claims against the facility documentation. The biggest risk providers run today is that the MDS and the resultant RUGs billed are not corroborated by the care provided and the documentation thereto, especially nursing. I forgot how many times I have seen therapy RUGs billed at Ultra High C or B levels and found the resident noted as fundamentally ADL independent. I also lost track of how many times I talked with a system executive and/or facility administrator about these issues and got a blank stare back (the classic “no clue” look).
- Monitor and review your sub-contractors incident to care provided, especially therapy contractors. Any contractor that provides care, documents care and participates in any way in determining the service levels billed to Medicare must be separately monitored and audited. Remember, the SNF holds 100% of all fraud/False Claims Act liability under Medicare, even in the activity was perpetrated by a contractor. The government holds the provider with the Medicare provide agreement 100% responsible to accurately bill the program and to monitor the services provided by any contractor. Again, I recommend facilities/organizations utilize an outside entity to review claims and to review the activity of contractors. Having your contractors agree to and enter into, a compliance and facility level integrity agreement is also a “best practice”. For those who need more information here, contact me directly at firstname.lastname@example.org or comment to this post providing a valid e-mail for contact.
- Get your organizational/facility level QAPI working and fast. Providers need to monitor their care outcomes and address quality deficiencies. See my related posts regarding QAPI on this site. I recommend that providers monitor key risk areas such as hospitalizations, falls, infections, pressure sores, ADL decline, weight loss/dehydration, resident/family complaints, etc. I also recommend extremely broad participation by discipline including staff CNAs, RNs, etc. A strong QAPI program will keep leadership abreast of care outcomes and demand reviews and system improvements which help identify risk areas and proactively correct problem areas before systemic poor care occurs. Again, I recommend using some outside resources as part of the process to assure integrity. The resources don’t have to be paid consultants. Again, anyone wanting more insight here and additional information, contact me directly.
- Develop an audit and review system that is impartial and virtually blind to the organization. Keep the schedules and structure at the very top, blind to almost any and all players that are part of the care provided/care billed system. Boards and senior management must require independent risk analysis and assessments on a regular basis to assure billing and program integrity. Remember, you cannot audit yourself!
On a concluding note. Extendicare just announced a sale of it’s North America (U.S.) operations to a private investment group. The reasons provided? Unfavorable environment, Obamacare, too much regulation, poor reimbursement, etc. The organization has been in decline for quite some time, especially in the U.S., predominantly due to a failed business model that emphasized total profitability above all other things – like care. Unfortunately today, profitability and care go hand in hand or in other words, bad care equals no profit.
While this isn’t a de novo trend, it is one that I am seeing again with frequency and thus, it bears/requires CAUTION. This trend is commonly referred to as Skilled until Death or End-of-Life Skilled. The reference in “skilled” is Medicare; delivering qualified skilled nursing or skilled therapy services (or combination thereof) with sufficient frequency and intensity to qualify the resident for Medicare coverage, post a three-day qualifying hospital inpatient stay. The genesis of this trend lies in the differences between the Medicare benefits found in the SNF/traditional Part A program and the Medicare Hospice benefit. The logic for families/residents is as follows (why or why not hospice, etc.).
A patient in a hospital, likely terminal in a short time period and incapable (for a myriad of reasons) of returning home, is approaching discharge. The inpatient stay length in the hospital is sufficient to meet the three-day rule for Medicare A coverage in the nursing home. The patient’s condition likewise is such, that he/she will meet the eligibility test for coverage under the Medicare Hospice benefit. Here’s the nuance. If the patient elects the Medicare Hospice benefit and requires an inpatient stay in an institutional setting, such as an SNF, prior to his/her death, the patient must pay the prevailing cost of the room and board component. The caveat is unless the patient is eligible or qualified for Medicaid and then, the Medicaid program would pay the SNF for the room and board cost. The Hospice benefit does not cover such a cost unless the inpatient stay was respite or qualified as General Inpatient for advanced symptom management, etc. Under the Medicare Part A SNF benefit, the patient may discharge to the SNF, receive the first 20 days of covered care essentially free and then, if still qualified, pay a lower cost per diem co-pay for any covered days past the initial 20. In this simplistic fashion, it seems logical for most parties that unless the patient was Medicaid eligible, the best route is to remain on traditional Medicare and access the Part A SNF benefit. For families and patients, this makes sense but for providers; SLOW DOWN! Showing my age and “borrowing” from a TV favorite in my past, “Danger Will Robinson … Danger”.
The Medicare Part A SNF benefit does not contain any RUG related to End of Life or Palliative Care. In fact, there is no presumption of payment for any end of life care under the Part A SNF benefit as the same was never meant to be used for any reason other than a post-acute transfer style payment up and until, the patient could re-transition to his/her permanent residence, off of the Medicare coverage. Thus, the only aspects of coverage determination/eligibility (sans the 3 day prior rule) is the medical necessity of daily skilled services defined as professional nursing (RN), rehabilitative therapies (PT, OT, ST) or some combination between nursing and other related skilled disciplines such as respiratory therapy, dietitians, etc. Many of the traditional end-of-life hospice/palliative type services would not, meet any of the Medicare Part A SNF “skilled” coverage criteria. Simple management of pain or symptoms without necessitating routine RN assessment and dosage changes isn’t a skilled SNF service. IV’s in and of themselves, don’t engender lots of skilled nursing coverage. If someone is likely to die in a reasonably short time, therapies are unwarranted for any length of time, save perhaps a day or two to develop other care plans for swallowing, positioning, etc.
How this subject rises to the CAUTION level is driven by two separate but inter-operative elements in government today. First, the heightened focus from the OIG on SNF care, its appropriateness, its billing issues, etc. The industry is watched closer today than ever and RAC and Other audits are heating up. Second, the government’s vigilance and determination today in finding fraud, particularly acts/violations of the False Claim Act. Now, lest anyone thinks I am being too alarmist, I have a long list of clients within my consulting practice work that are using us to help with post-payment reviews and claims denials for SNF Part A claims.
The take-away here is very simple….if it walks like a duck, quacks and has feathers, call it a duck. If the patient’s prognosis and plan is death, even if one can gin-up Part A coverage, don’t do it. First, the act of providing non-medically necessary care or care not warranted (inverse coding) is an act of fraud and a violation under the False Claims Act. Similarly, over-treatment and unnecessary care may bring professional sanctions for licensed individuals as well. Essentially, an ethical problem of a large degree is present. Of course, if the patient has consented to a course of curative or interventional care as a last shot at improvement or in an effort to re-build strength/stamina prior to a wedding, family event, etc., the services are warranted and should be properly billed to the Part A SNF benefit. Quite honestly, what I see routinely is the latter is the outlier. The “skilled until death” driven by cost is the norm and this one is perilous for those who play the game. Auditors are out there and this “phenomenon” is known to the OIG and as it grows, scrutinized. Remember, coverage is determined by the legitimate medical needs of the patient, as determined by assessment and framed by the goal/determination and consent of the patient (and/or his legal surrogate). If this does not warrant the use of daily skilled services/interventions to achieve the goal of the patient and meet his/her legitimate care needs as assessed, no coverage is available under Part A. Going beyond this prior point in search of coverage is an act of achieving payment for non-warranted, non-necessary services and as such, a violation of the False Claims Act.
On May 5, the U.S. Department of Justice released its most recent complaint (legal suit filed in Federal court) against Chemed, the corporate parent of Vitas. The complaint is a False Claims Act suit. Briefly for the uninitiated, a False Claims Act suit alleges that the Medicare provider knowingly (or unknowingly but once discovered, did not disclose) engaged in certain activity to cause payment to the provider for Medicare services that (not exhaustively listed);
- Were not provided
- Were provided but not necessary
- Were provided improperly, through illegal or unethical means such as via a kick-back scheme, etc.
- Were or are not substantiated by patient need
- Were provided by a person or organization not in compliance with relevant Medicare Conditions of Participation
- Were provided to patients that did not meet coverage criteria
The dominant False Claims Act suits relate to care not provided, care billed for at a particular level despite a related patient need (over-billing), or care provided by but not substantiated by assessment, documentation, or certification. In the case against Chemed/Vitas, the Federal government is alleging that Vitas intentionally over-billed Medicare for higher reimbursement amounts by “up-coding” patient needs absent any real need and, admitted patients for care and billed for services where there was no definitional or certifiable need on the part of the patient. In this case, each violation is alleged against Vitas as a hospice provider organization.
Through various cited examples to substantiate its case, the Federal government alleges three primary activities and/or schemes ( the support for the listed causes of action) that led to a series of False Claim Act violations, spanning from 2002 to current.
- Coding a patient as requiring Continuous or Crisis Care where no such need existed. Continuous Care or Crisis Care is the highest reimbursed care level within the Medicare Hospice Benefit; today, averaging just short of $1,000 per day. Because of the definition standards and requirements for a hospice to provide and therein bill for Continuous Care, the utilization across the industry averages less than 2% of all days of care. (Vitas averaged nearly 20% of its days in this category.) The requirement for a hospice is a patient’s current symptomatic needs are so complex and unstable that the hospice provide at minimum, 8 hours of licensed nursing care to the patient within a 24 hour period. Typically, this care is rendered by RNs and somewhat less often, LPNs or LVNs. Its rarity stems from two components. First, the true need of a patient in crisis with an end-stage disease for 8 or more hours of licensed nursing care. Second, the reality of hospice staff levels and the availability of dedicated, licensed nursing coverage for a single patient. Medicare Conditions of Participation do not allow nursing services via agency contract. All nursing, except for very episodic and highly unusual instances, must be provided by the hospice employees exclusively.
- Enrolling patients and thus accepting the Medicare hospice per diem (presently averaging around $160 per day) that did not meet the hospice certification criteria of ‘likely terminal, sans curative interventions, within 6 months or less’. Citing numerous examples, the complaint details a pervasive practice of increasing revenues and thus, patient volume via enrolling patients and fraudulently certifying the same as terminal, when the patient was not under any common review, proximal to death.
- Employing aggressive marketing campaigns and incentivizing employees and agents, to knowingly misrepresent patient conditions and/or falsely enroll and then subsequently, code as appropriate for hospice including, at higher reimbursement levels such as Continuous or Crisis Care levels.
Reading the complaint, I was struck with a number of thoughts. First, the magnitude of the complaint is huge. It encapsulates the entirety of Chemed’s hospice holdings, collectively Vitas. The majority of False Claims Act complaints are against a single provider or geographically and agency limited. Additionally, the time period referenced encompasses over a decade of claims. As I have followed False Claims Act cases in health care for years and paid close attention to the hospice activity, a reasonable estimate of the dollar amount (Vitas)involved is hundreds of millions of actual claims that are exposed to treble damages before the imposition of Civil Monetary Penalties. There is also the shadow of criminal prosecution for certain Vitas actors and management looming. Finally, this complaint is in the midst of other complaints against Vitas, open or soon to be open. A significant False Claims Act case is open against them in Texas and a newly opened complaint with a physician whistleblower in Los Angeles just broke and is today, wrapped in the broader complaint. Shareholder suits, although relatively meaningless are popping (meaningless in damages, still damaging in costs to defend). As is always the circumstance in matters such as this, the complaint will have tentacles and I suspect there are many.
In an earlier post, I wrote how the parallel is striking between Vitas’ current problems and the investigations that crippled and continue to cripple Amedysis. Amedysis was the “big dog” in the home health industry until it became the target of Department of Justice investigations and Senate inquiries. Once trading at nearly $60 per share, Amedysis trades today around $10. Their earnings estimates continue to shallow and at 10x projected earnings, their share price today should be around $5. Once a billion dollar plus company, Amedysis today has shrunk by more than half. They continue to close agencies and scramble to maintain market share. Major network contracts have cut their exposure to Amedysis and thus, payments. Their aggressive Medicare business is a fraction of what it once was and they remain today, under investigation. The last likely play is to go private via a private-equity sale and simultaneously restructure, outside of the publicly traded arena.
Reading various investment analyst reports and Vitas’ disclosures, the “take away” on the part of Wall Street is more wait and see with some folks marking this up to “cost of doing business” and others trying to grasp the magnitude. As I consult for a number of firms that invest in the health care industry, I understand the difficulties in wrapping one’s head around the complaints and the possible fall-out for Chemed/Vitas. Because of my working knowledge of the health care industry, depth of experience with the regulatory process, etc., my view is more solid (not necessarily right perhaps) today than that of most investment firms. My view comes from thirty years of research, operational, and consulting work in the industry.
From my vantage point, Vitas is about to begin a slow and profound slide into an abyss that they will not recover from. The complaints current and yet forthcoming, paint an overall picture of a business model that is grossly non-compliant and steeped in fraud at the core. Retooling this model, just as occurred with Amedysis, will shrink revenue, market share, and company value expressed via price per share. Unlike Amedysis, Vitas exists in the “hospice space” only. They have no other revenue source or model. Amedysis had and continues to have, some ability to ply the entirety of the home health industry and to a much lesser scale, the hospice industry. Their revenue model is sufficiently broader, though flawed in its reliance on exploiting Medicare and the therapy components thereto. Vitas exists in an industry where Medicare is the primary payer and the overall market for hospice by definition, is very narrow. A significant “clip” to their volume and revenue streams resulting from having to adjust in response to current and future investigations will begin the shrinking process and as more is disclosed, the process accelerates.
True enough that the ultimate settlement may not be fully crippling even though the scope could be hundreds of millions of dollars. The real damages lie in the go-forward world of continued compliance monitoring and being subject to a lengthy period of oversight by the Feds. Again, I offer Amedysis as a reference. The complaints won’t resolve timely and thus, the slow dance of revision begins. Moreover, everything now public suggests a clear tone from the Department of Justice and CMS of a focused intent to shrink the prevalence of large, for-profit hospices and curtail dramatically, the incentive to suspiciously enroll non-terminal patients. Their words in various locations, tell me straight-forward that the industry has a fraud pandemic and the day of reckoning has arrived. Vitas, just as Amedysis on the home health side, is the poster-child face of the “bad actors” per the Feds. Vitas is the example and the governmental intent is clear: get them compliant at any cost including the death of the company. The Washington view is that ample providers exist to care for the organic demand (my view as well) and the loss of Vitas will have no negative impact on access (again, my view as well).
What next? The implosion of Vitas begins and the hospice industry will bear some of the fall-out. The Feds are ramping-up investigations and reviews across the industry and for the providers who think vulnerability doesn’t exist, I offer words of extreme caution. Mandated by the ACA, the Secretary of HHS must promulgate new payment methodology for the industry after October 1, 2013 and before September 30, 2014. The cases against Vitas and others that have committed similar violations will form the backdrop for payment restructuring and associated rule-making. As has happened across the health care industry, payment reform and restructured rules associated with the same, emanate from sector dynamics current. My guess is that the next round of payment reform for the hospice industry will organically change provider business models and not toward greater profitability.
Note: Readers with subject level interest in hospice and/or separately, the topic of fraud and compliance in healthcare will find a number of prior posts on these topics, on this site.