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SNF M&A: The Provider Number Trap

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.

February 1, 2017 Posted by | Home Health, Hospice, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , | 3 Comments

The Supreme Court, False Claims Act, and Implications for Providers

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.

July 24, 2016 Posted by | Home Health, Hospice, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , , | Leave a comment

RehabCare, Therapy Fraud and Lessons Not Quite Learned

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:

(a) Liability for Certain Acts.—

(1)In general.—Subject to paragraph (2), any person who—

(A) knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval;
(B) knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim;
(C) conspires to commit a violation of subparagraph (A), (B), (D), (E), (F), or (G);
The application within healthcare fraud cases has traditionally focused on the actual provider as the actor, even if the elements of fraud included the acts of a contractor or the parties acted in collusion.  The reason?  The provider is the party that is charged with “presenting” or “causing to prevent” the false or fraudulent claim.  Arguably, no provider should allow a contractor such as RehabCare to conduct practices within its operations that would create a climate of fraud or cause the SNF to submit improper claims to Medicare.
Admittedly, what remains unknown is how many additional actions with settlements are pending against SNFs (tangential to this case) that have used RehabCare as their contractor.  These types of cases move slowly and in fragmented pieces as each is unique and within itself, complicated and fraught with elements of discovery and valuation (of the financial impact of the claims).  In short, while some have settled, others may be in the process of settlement and will disclose in forthcoming months.
The lessons or takeaway here may in fact, be too late for some.  The curious nature of whistleblower cases and False Claim actions is they emanate without direct disclosure to the provider.  If the government decides to join the claim, it takes over the case and pursues it while the rights of the whistleblower are protected (as is typically initially, though not always, the identity of the whistleblower(s)).  What this means is that any SNF, using RehabCare or not, may already be on the radar or in the queue for a False Claims act case. This being said, SNFs should not delay in immediately understanding and addressing the following.
  • 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.

January 17, 2016 Posted by | Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , | Leave a comment

Medicare, Billing Audits and Self-Disclosure

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.

 

April 10, 2015 Posted by | Home Health, Hospice, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , , | 2 Comments

SNFs, Therapy Contracts and Fraud: Redux

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 hislop3@msn.com.  If you comment to a post and want me to contact you, please leave valid contact information – can’t help without it.

April 7, 2015 Posted by | Skilled Nursing | , , , , , , , | 6 Comments

SNFs, Therapy Contracts and Fraud: Another Warning and Example

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.

March 5, 2015 Posted by | Skilled Nursing | , , , , , , , , , , | 2 Comments

Upcoming Webinar: SNF Therapy Contracts: Your Risks and What You Need to Know

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.

http://hcmarketplace.com/snf-therapy-contracts-shared-risk-arrangement-to-reduce-citation-risk?code= EW320945&utm_source=HCPro&utm_medium=email&utm_campaign=YL031015

February 4, 2015 Posted by | Assisted Living, Skilled Nursing | , , , , , , , , , | Leave a comment

Therapy, Medicare Fraud, Extendicare: Lessons for SNFs

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 hislop3@msn.com 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.

November 12, 2014 Posted by | Skilled Nursing | , , , , , , , , , | Leave a comment

SNFs, Therapy Companies, and Billing Risk

Readers, followers (Twitter, etc.) and folks who have attended one or more of my industry conference presentations know that I routinely harp on the “risk/reward” relationship between SNFs and therapy companies (the contract therapy provides).  Last year at LeadingAge’s annual conference in Dallas, the principals from Theracore Management Group and me did a full session on the differences between in-house vs. contracted therapy programs, focusing on the risk areas of contracted therapy programs in the SNF.  In a recent post on this site regarding SNF compliance issues, I covered this topic “briefly” again (http://wp.me/ptUlY-h1 ). Just today, a daily briefing from McKnight’s reinforces “why” I harp on this subject as often as I can.  The article link is here: http://www.mcknights.com/38-million-settlement-shows-nursing-homes-must-oversee-their-therapy-providers-feds-say/article/370169/?DCMP=EMC-MCK_Daily&spMailingID=9388936&spUserID=MTU4ODcyNDAzNjMS1&spJobID=380417055&spReportId=MzgwNDE3MDU1S

Summarizing: Two SNF companies contracted with a division of RehabCare.  In the process of providing therapy services through the SNFs, RehabCare provided inappropriate levels of therapy services to residents covered by Medicare.  The problem here however, is that the liability for the inappropriate care and thus the repayment is the responsibility of the SNF, not the therapy company or in this case, RehabCare.  Why?  The provider of the service under the Provider Agreement with Medicare/Federal Government is the SNF, not the therapy company.  The SNF failed to exercise the required oversight to assure that the bills it was submitting to Medicare were accurate and clinically relevant.  As the same were not in this case, the Department of Justice on behalf of CMS collected $3.8 million in inaccurate payments.  The message (and one I HAVE POINTED OUT TIME AND AGAIN) is the SNF holds all the liability with respect to Medicare billing and the services/care provided.  This cannot be shifted to any contractor – therapy or other.  If the care is determined unwarranted or inappropriate, the SNF has the duty to identify the same, correct it, and file a notice with CMS to provide repayment.  Failure to do so opens the door for Civil Monetary Penalties and other damages, in addition to the amount inappropriately billed and received (see related posts on this site with regard to False Claims Act, Fraud, etc.).

In closing, I have five reminders/recommendations for SNFs on this subject area.  These are my standard “cautions” or action items in this arena but clearly, they bear repeating.

  1. Review in detail, your contract with your therapy provider.  The standard immunity clause in the industry is for the therapy company to immunize the SNF against the cost of therapy for any claim deemed inappropriate and thus, non-paid or requiring repayment from Medicare.  This language means that the therapy company will “write-off” the cost of the therapy services associated with the claim(s) to the SNF – a mere fraction of the overall revenue lost from the denied claim ($450 per day in revenue vs. $125 per day in therapy cost, for example).  The risk is that SNF can lose hundreds per day in this kind of contractual relationship.  Require shared risk agreements between your SNF and the therapy company.  For more on this concept, drop me a note in the comment section of this post with contact information and I’ll follow-up.
  2. Establish a “triple-check” system for all therapy related Medicare claims.  Don’t ever assume that any single claim or case doesn’t require a level of review beyond the RUG determined through the MDS process. This requires the SNF and the therapy company to review each claim.
  3. Have a member or group of members on your team that are MDS Bulls**t proof.  Get current on the MDS process (trained and ideally certified) and task that person or persons with periodic reviews of bills submitted and documentation.
  4. Utilize an outside resource to conduct periodic audits of your Medicare utilization, billed RUGs, etc. plus documentation.  Again, contact me for recommendations.  A few thousand is far “cheaper” than a few million.
  5. Never, never, ever dance the “happy dance” to higher revenue PPDs or greater billed volumes.  Take the skeptic approach which requires the question of, “why us”?  The old adage of something being too good to be true is right-on.  Any utilization pattern that is generating lots of days, lots of Ultra High days, high PPDs, etc. better be justified by your case-mix (high ortho, neuro, etc.) and lots of admission traffic.  If this isn’t reality, then the risk is high that the Medicare “envelope” is being pushed – and inappropriately so.

September 8, 2014 Posted by | Skilled Nursing | , , , , , , , , | 6 Comments

Reforming the Medicare Hospice Benefit

As a wrap to my two previous articles regarding recent fraud and False Claims Act suits and issues in the hospice industry, a concluding piece is warranted.  As I have written before, the fraud issues and cases in the Hospice industry divide (though not equally) between the providers committing the fraud and an inferior Medicare Hospice Benefit combined with CMS’ ability to effectively administer the benefit.  As with all provider programs under Medicare, the payment methodology provides increased levels of reimbursement for higher intensity or higher acuity care.  These higher payment levels are often dramatically out-of-sync with how patients utilize care and how providers deliver care and support operating realities simultaneously.  Additionally, the justification methodologies employed by CMS for a provider to grab a higher level of care and thus garner more reimbursement provide no effective screen to the event.  In short, the governmental recourse is post-claim reviews, often not completed, and when complete, years post the payment fraud.  Oddly enough, the government (CMS) doesn’t even effectively monitor current claim trends against normative utilization patterns. Perhaps this is why the Department of Justice and the CMS Office of Inspector General estimate annual fraudulent billings to Medicare of between $60 and $90 billion.

Since inception, the Medicare Hospice benefit has received the least amount of re-work, structurally in terms of definitional language and organically in terms of payment methodology.  For all intents and purposes, other than per diem payment machinations, the payment levels and definitions remain unchanged. Likewise, the eligibility and benefit structure remains fundamentally unchanged.  These two core elements are incongruous to the industry growth and general health policy trends that have occurred since the benefits origin. While the number of patients and providers has grown dramatically over the past decade (twice as many beneficiaries using the benefit today), the payment and eligibility plus coverage criteria remain fundamentally unchanged.

The Accountable Care Act includes a mandate for the Secretary of HHS to reform the Medicare hospice payment system and thus, a rounded benefit program (ideally) to mirror the payment changes.  In effect, the benefit will be substantively revised, at least from a payment perspective.  As go payment changes in these programs, so comes regulatory language that ultimately, configures in whole or in part, the related coverage and benefits (e.g., acute and post-acute PPS).  Prior to this forthcoming change, Congress in 2010 authorized a demonstration project for Medicare and the hospice industry, allowing Medicare payments for, in concert with the per diem hospice benefit, certain amounts of curative care.  To date, no movement on this initiative has taken hold.

The hospice hardline exists between curative and palliative care. Enrollees must forego any curative care options in order to garner the Medicare hospice benefit and the services of a hospice.  For all too many patients, this is an unacceptable choice.  For all too many physicians, this keeps hospice out of the discussion as an option; saving the futility implication for a point later.  The net effect of this hardline is that hospice utilization, while up in numbers, is increasingly driven to the last days of life.  It also increasingly occurs in an institutional setting as opposed to the “hospice goal” of dying at home.

The dilemma for economic policy consultants such as me is that hospice is an aspect of the care continuum that should see higher, appropriate utilization. By appropriate, I mean less of the “push the envelope” growth evidenced in the Vitas complaint and less of the very last days of life growth that come only after all other options exhaust.  Hospice or palliative care is an exceptional delivery system that can save the Medicare program significant dollars while offering qualified patients, comfort and access to appropriate resources.  Getting to the modernization and reformed program level however, requires a conceptual shift in the Medicare hospice benefit.

  • Best practice diagnostic screenings and assessments need to take the place of the ‘certification’ standard presently in-place.  Medicine is very capable today of approximating death by types of disease.
  • The benefit needs to integrate transitional periods of curative technology and care, allowing patients to transition earlier.  If recovery occurs, so be it.  This conceptually, will satisfy the barriers in the minds of patients and physicians and removed the “futility” stigma. A payment methodology needs to incorporate this care.
  • A PPS methodology needs creation with logical review periods and standards, analogous to home health, SNFs, etc.  Logically, the hospice system is simpler and can encompass far less criteria.
  • Within the PPS methodology, the “place of care” issue requires reform.  Payment must reflect the care needs of the patients, not the paradigm of “death at home”.  An aging society is less and less likely to “die at home” as integrated families and non-paid caregivers are less and less the norm.  More patients on hospice, will die in institutional environments and the payment methodology must incorporate this reality.
  • A flaw exists in the Medpac remedy of per diem payments (same model adjusted) correlated to length of stay  unless the same correlates to an assessment and a resulting PPS model.  In this approach, length of stay is not  a factor; care required is the sole factor. If Medpac believes intensity changes through the stay, this model addresses that issue generically.
  • The concept of benefit periods needs revamping.  Personally, from an economic perspective,  I prefer someone using a palliative benefit program for a year or more compared tot the present fee-for-service Medicare model.  In fact, the Hospice benefit should incorporate end-stage care and palliative care payments as opposed to the current paradigm which is truly, end-stage.

While I can’t guarantee the above changes eliminate the fraud activity in the industry, they certainly level the field and address the flaws in the Medicare hospice benefit that contribute to the fraudulent activity.  Provider behavior, especially when a profit element is at play, will always follow to a certain extent, the economic axiom of “what gets paid for gets done”.

May 16, 2013 Posted by | Hospice, Policy and Politics - Federal | , , , , , , | 1 Comment