CMS Healthcare Claims Review
Healthcare fraud investigations often involve allegations of improper billing to federal healthcare programs. When a doctor, clinic, nurse practitioner, or other professional applies for Medicare privileges, they agree to numerous terms and conditions. Among them is a guarantee the provider will only bill Medicare for procedures, services, or products that are medically necessary in the treatment of a patient. Medical necessity has various definitions promulgated by private insurers and state and federal programs. For federal purposes, medical necessity is defined as “health care services or supplies needed to diagnose or treat an illness, injury, disease or its symptoms and that meet the accepted standards of medicine.”
Some forms of healthcare fraud are straightforward. Billing for services that are not performed or billing for products that are never delivered clearly involves false statements within the billing process. However, billing for services where a disagreement exists in the necessity of the billing is a far more complex issue. There are numerous instances where doctors and the federal government disagree on the need for a particular treatment or the viability of a particular treatment under currently accepted standards of medicine. For instance, what levels of lead in the blood qualify as an illness that requires treatment? If it is necessary to treat, what treatments are viable? When is it proper to run expensive lab tests on a patient? How much cancer history is needed before expensive predictive tests are appropriate? Should Medicare or a state program cover genetic testing to assist a pregnant patient in determining potential defects? When is physical therapy appropriate in a treatment protocol? How much physical therapy is “necessary” given a particular diagnosis? These types of questions are persistent throughout the medical industry, and all of them implicate issues with medical billing.
It is in this area where practitioners must be careful when billing a federal or state program. The federal government has their own ideas on the necessity of treatments and whether a particular ailment is a disease that is sufficient to trigger treatment protocols. Often, the government’s positions are not well known or developed slowly through publications via CMS. It may be fine to bill certain procedures in 2019 and clearly not acceptable to perform similar services in 2021. Practitioners must keep up with the Medicare guidance to ensure they are complying with relevant laws and regulations.
While determining whether a procedure or service is covered is as old as insurance itself, the inefficiencies of the Medicare program make this area particularly troublesome. The reality is Medicare will approve and pay claims they do not find medically necessary. They may approve and pay claims for millions of dollars over many years before changing course, finding it unnecessary, and attempting to claw back the payments. This process could involve substantial civil and criminal penalties for the practitioners who bill in an area that comes under federal scrutiny.
With that backdrop, this post will aim to highlight the government’s process for reviewing and paying claims submitted to Medicare. As we step through each stage of the process, we will provide insight into that process and its impact on the system.
What is the Centers for Medicare and Medicaid Services (CMS)?
CMS is a federal agency responsible for managing and implementing the federal healthcare programs. To that end, CMS is responsible for setting up the Medicare program, providing guidance to practitioners, enrolling providers, and handling Medicare claims across the country. CMS can be viewed as the foundational agency. From that foundation, CMS contracts with other agencies or companies to assist with implementation.
Who Processes and Reviews Medicare Claims?
CMS contracts with multiple agencies who process and pay out claims pursuant to Medicare guidelines. Medicare Administrator Contractors (MACs) are responsible for processing claims submitted by doctors, hospitals, and clinics. This responsibility includes reviewing claims for under or over payment. Zone Program Integrity Contractors (ZPICs) are tasked with conducting targeted investigations into improper billing. Supplemental Medical Review Contractors conduct nationwide medical reviews, including scanning for overpayments in specific areas. These three sets of contractors are responsible for finding waste and overpayments in the Medicare system. Most federal investigations will start in one of these agencies.
How do these Contractors Review Claims?
The Medicare claims’ review process is broken down into two distinct categories: complex and non-complex cases. The first category requires documentation from a practitioner justifying the submission. The latter is a file review process where additional practitioner involvement is not normally required.
MACs and ZPICs address Coding Errors
Each Medicare claim is submitted under a specific billing code. The billing code will determine the Medicare reimbursement rate for the service. While this may seem straight forward, proper coding is a difficult process. There are multiple codes that could cover a particular procedure. CMS attempts to clarify confusion in the coding structures as they arise, but this is a game of whack-a-mole as new coding irregularities emerge as quickly as one is resolved. Often, CMS’ attempts to clarify result in additional confusion as inconsistent information is given to practitioners from the Courts, CMS, billing agencies, and medical product companies. Most providers are left to file medical claims and wait for Medicare to provide additional feedback through review of the claims.
MACs and ZPICs are responsible for putting out charts that outline the proper coding structure for particular procedures, devices or services. These charts do not cover all coding issues, but rather, target areas of particular concern.
What is the Medicare Claim Review Process?
CMS has set up different processes for reviewing Medicare claims. The processes are related to the timing of the review; falling under either pre- or post-payment review.
Prepayment Review
Prepayment review occurs when CMS, and its agencies, review a medical claim prior to releasing payment. This process entails: 1) the reviewer determining which claims to review, 2) the reviewer requesting additional documentation, 3) ZPIC delivering an initial determination, and 4) the MAC making a final determination. This process will result in the claim being paid or denied with guidance for amending the claim when appropriate.
Post Payment Review
During a post payment review, the reviewer identifies claims that may have resulted in an overpayment. Once identified, the reviewer can request additional documentation or transfer the payment directly to the auditor. If transferred to the auditor, CMS will send a demand letter clawing back the payment. The provider can either pay the demand or submit an amended claim correcting the error.
If the reviewer requests additional documentation, the post payment review will mimic the prepayment review. The ZPIC and MAC will review the claims and make determinations under existing Medicare regulations. If fraud, or intentional improper billing, is suspected at any stage, the reviewer will refer the matter to the appropriate ZPIC or MAC.
Why Providers Cannot Rely on the Review Process
While the review process is well documented and understood, the implication of the review is not. The review process serves one goal in the federal government – clawing back funds. The review process is not aimed at assisting practitioners in proper billing or outlining the boundaries of medical necessity. Though CMS states their aim is to find over and under payments, we have yet to see this review process result in more money going to a practitioner who underbilled for their services.
The federal government knows there is substantial waste in the federal healthcare system. CMS, and their contracted agencies, are built to curtail that waste. This understanding of claims review is important. We have represented multiple doctors and clinics who are surprised that Medicare is quibbling over their billing after multiple patients were subject to pre and post payment reviews. After all, it seems illogical that CMS would review a specific claim, find no issues, and then turn around to allege healthcare fraud in a later filing.
While these reviews are great pieces of evidence to show a lack of knowledge under civil or criminal statutory schemes, the reviews will not stop the government from taking action against a practitioner. Put simply, passing a pre or post payment review does not mean the government approves of the billing codes or necessity of the services.
Given this reality, it is imperative that medical professionals stay up to date on literature from CMS. Often, CMS will give practitioners a warning on particular procedures or billing practices via publication before they begin formal investigations. There are numerous examples of the notice before enforcement phenomenon: 1) CMS provided guidance on neurotransmitter billing a year before opening federal investigations into multiple clinics, 2) CMS provided updated notes on home healthcare billing practices a year before targeting home healthcare providers in numerous civil and criminal suits, and 3) CMS provided clarification on stacking codes under genetic testing many years before they opened investigations related to the practice.
The reason for this notice before enforcement process relates to proof. The government knows the areas of billing and medical necessity are complicated. It is difficult to prove that a provider knowingly submitted a false claim under either theory. In that vein, the government needs sufficient notice to providers before they can meet the knowledge element. For instance, let’s assume a doctor is billing a service under three codes in 2014. The result is a large claim payment for each procedure. If the government opened a civil or criminal action in 2014, they would have to prove the provider either knew the billing was improper (criminal standard) or was recklessly indifferent to its properness (civil standard). Considering multiple claims were likely reviewed by Medicare, and approved, the government is going to have a hard time proving the mental state under either track.
Now, let’s assume that CMS put out notice stating that the billing scheme used by the provider was improper in 2014. If the provider continues to bill Medicare under the three code structure after the release, the government has the hook to prove the provider’s mental state . By 2017, the government has additional facts to suggest that the provider knew the coding scheme was improper. This would lay a foundation for liability under the civil or criminal statutes. It becomes more difficult to claim an honest belief in the coding structure when years have passed since guidance was released to the contrary.
This hypothetical is provided to detail the importance of providers staying on top of CMS guidance. The government presumes providers care about compliance and stay up to date with particular changes. While this is often a false assumption, it is wise to live up to their belief.
The Medicare review process is well understood, but it is imperative that practitioners understand the implications of that review. The government believes a claim review is untethered to a thorough medical necessity analysis. The government believes these reviews are not tied to the best billing practices. This view is stronger if CMS has issued guidance between the time of the review and the submission of the claims at issue. The reality is Medicare billing is full of land mines. As a particular land mine grows in dollar value, the government begins to isolate professionals involved in the pattern and assume they are gaming the system for profit. The best way to avoid federal intervention is to review the literature, ask for guidance, and remember, if a particular billing practice or service is producing large payments, the government is watching. And their approval of such claims does not insulate the provider from practice draining litigation.