Originally published July 2005 in South Florida Hospital News.
How to Avoid or Prevail on a Medicare Audit
by Jonathan D. Schuman, Esq.
It Won’t Happen to Me
When I speak to physicians about the possibilities of obtaining preventative advice in order to survive a Medicare audit, the most common response is: "I will not be audited. My clinical records are OK and I do not bill for services not rendered." What the provider means, of course, is the mis-perception that the FBI or the Office of Inspector General (OIG), Department of Health and Human Services, audit providers who never see the patient or they mostly bust providers who are not licensed. The assumption today is that the FBI is so involved in terrorism that it is no longer auditing Medicare providers. Thus physicians can take leeway in the rendition of items and services and that you can render them frequently. This is not true. As discussed later, on the OIG work plan for 2005-2006 is the audit of provider use of the 25 modifier and up-coding of CPT codes by physicians.
When speaking with an allergist (case study), I ask the physician "Are you in your offices everyday from 12:30 to 2 p.m.? They tell me "No." I then ask the physician if the nurse administers antigen injections to patients during those times and the physician says "yes."
This is a violation of the Medicare statute. The administration of allergy immunotherapy requires the physician be available and on the premises for direct supervision of the nurse. Direct supervision means in the office suite, not making hospital rounds of your hospital patients. It does not matter if the hospital and the physician’s office building are connected by a walkway. In response to this, the allergist tells me, "Everybody does it. I will not be caught." The physician may not be correct. This type of situational ethics by the physician or office manager does not change the jail time actually spent by the Hawaii allergist and his office manager-wife who were sentenced to jail for this exact violation.
The defense to this charge of billing for allergy injections without a physician on the premises is that a level one office visit does not require the presence of the physician in his premises. However, this does not apply when rendering allergy injections. The same is true for the provider who is watching his or her cardiology practice and, at the same time, billing out for cardiac rehabilitation. A provider cannot do both. The provider must provide direct supervision of his cardiac rehab patients and not be in a nearby office suite rendering day in and day out evaluation and management codes.
Thus, one way to avoid a Medicare audit is to be certain that you are complying with the direct supervision rule.
With new business arrangements such as MD/DC groups, the chiropractor must be directly supervised if taking X-rays, or rendering physical therapy, at the specific request of the fully licensed MD or DO. This is difficult to do if you own multiple clinics and the MD/DO is at one clinic and the DC is at another clinic when services are rendered that require direct supervision. The allergist who prepares multi-dose antigens at one office setting and at the same time bills for office visits at another office setting, is likewise in violation of federal and state laws. (Actual case study)
Likewise, most private insurance claims for MD/DO services use the Medicare definitions of direct vs. indirect supervision when determining the validity of submitted claims. There is a distinction between billing for services not provided for as claimed and billing for services not rendered. Billing for services not "provided for as claimed" is a violation of the Medicare statute. It occurs when a physician actually renders a service but the service is provided in a manner not fully disclosed to the Government. For example, an internist or allergist rendering IV nutritional therapy to boost an immune system, but only reporting the billing of the IV without disclosing what is contained in the actual drip. Or, billing out for a lower extremity Doppler study but using a non FDA approved medical device. Or, when a provider submits a claim and actually has his staff render the services, but the provider was not on his premises. Thus, unlike an easy fraud case where the provider bills for services never rendered, billing for services not provided for as claimed is a more technical violation of the Medicare statue and regulations, but nevertheless, a complete violation in its own right. The failure to have medical (clinical) records substantiating the medical necessity of the services billed is another example of billing for services, not provided for as claimed.
What are medically necessary services and where do you find them?
If Medicare ran the interstate highway system, you would be allowed to drive as fast as is reasonable and necessary under all circumstances, and the Florida Highway patrol would not post that a reasonable and appropriate road speed is 55 or 65 MPH. By further analogy, the Florida Highway Patrol would attempt to promote highway safety by refusing to disclose speed limits. This same analogy applies to your rendition of Medicare services (My thanks to Tim Blanchard, Attorney San Francisco, for the idea of this analogy). How do you know what is a medically necessary item? Where do you find it published? Just as you do not expect to receive a speeding ticket for going 48 in a 65 MPH speed zone, neither do you expect to receive an audit letter for rendering too many evaluation and management codes for your patients if the parameters are not published. If the national Medicare carriers in the various states could be expected to promulgate a state speed limit statute in general terms (for example, "...drive as fast as is reasonable and necessary under the circumstances, subject to interpretation and enforcement by local authorities using undisclosed criteria)," this would be akin to the vagueness of the federal Medicare statute you function under today.
Do you really know where to find Medicare coverage rules and regulations? You look to statutes, regulations, national coverage decisions, and coverage discussions in part B updates or other carrier or FI publications, local coverage determinations, court cases and OIG advisory opinions. It is not likely you can know or do all of this without an attorney or other expert specializing in this area of law. Remember, your coding consultant has been retained by you to enhance your billings, an attorney is not concerned with your revenue but is ethically bound to be certain that all monies paid you were legally billed and documented. National and local coverage decisions and the appeals process have all changed. Effective now and in January 2006 are new rules and regulations, which affect the way you should be prepared to avoid or prevail on a Medicare or other insurance audit. Remember, once you put your claims in the mail, you are dealing with Federal mail statutes. Physicians need to be aware they may have clout with their State Representatives and Senators but that is not the same for U.S. Congressmen and Senators who all voted on legislation to reduce Medicare fraud and or abuse. If you ask them for intervention, they will not help. The FBI and Office of Inspector General are highly trained and more experienced at investigating Medicare and other insurance fraud, as is the Federal Health Care Strike Task Force, situated in Philadelphia, Pa.
Inspector General 2005 work plan
If you want to know what the government will focus on in 2005, its work plan was recently published. Among the list of "flags" and audit attention-getters is the proper use of the CPT modifier 25. That modifier requires that the physician must document that on the day a procedure or service was performed, the patient also had a significant, separately identifiable evaluation and management service above and beyond the usual post operative care or pre operative care associated with the procedure that was performed. (AMA holds a copyright to the "CPT" codes. CPT is a registered and protected symbol.)
A physician can correctly comply with the 25 documentation requirement by listing the symptom, complaint or condition for which an evaluation and management of an office visit code was needed. For example in your dermatology practice, on the same day as a scheduled visit for removal of a basil cell carcinoma, the patient complains of a sore throat, has a temperature of 101, and feels nauseous and the dermatologist treats those complaints with an appropriate level office examination for a UTI (upper respiratory infection) and prescribes appropriate medication. In this example, the 25 modifier would be appropriate if the clinical work-up was documented.
In 2005, the government will be auditing physicians for overuse of the 25 modifier not supported by required documentation. According to Lewis Morris, Chief Counsel to the Inspector General DHHS, his office is currently looking at a criminal audit of oncologists for over use of the 25 modifier. If you are an oncologist reading this article, I suggest that you review your office notes for patients you have billed using the 25 modifier and be sure that your office documentation is correct. Remember, the government typically goes back four years in paid claims when it attempts overpayment recovery actions; and for intentional fraud, in effect, there may be no limit.
In 2005, the OIG physicians work plan also includes investigations into relationships between providers and billing companies, (do you pay a fixed rate or a percentage of billed service?), focused medical review on cardiology and echo-cardiology services, an upgraded look into correct CPT coding, and whether ALL modifiers are being used correctly or for a purpose of getting around the national coding initiative.
How to appeal an audit
If audited, the new Medicare appeals are as follows: A provider/supplier has 120 days to appeal an initial determination and within 60 days, you should expect a decision. Second level appeals: if you do not prevail at the review of the initial determination, you have 180 days to file a reconsideration with the Qualified Independent Contractors (which replaces the carrier fair hearing effective for appeals of initial determination made on or after October 2, 2002). If you do not prevail at this level, you finally reach an administrative law judge at the third level.
You have 60 days to file an adverse decision by the QIC. The fourth level is directly to the Department Appeals Board (again within 60 days of an adverse QIC decision that must be rendered within 60 days). Last, is an appeal to federal court. For federal court, the amount in dispute must be $1,000 or more; for appeals after the second level, the dollar amount must be $100 or more and you can combine claims to make that amount.
I urge and warn all physicians to be careful before paying an attorney a large sum of money to obtain an injunction to stop the appeals process by declaring medical policy, local or national, invalid. Less than 5% of all injunctions against the DHHS prevail. It is elementary law that providers must exhaust administrative remedies before going to federal court. I suggest any provider being told to first attempt an injunction as a method of stopping an audit to obtain a second legal opinion. I also urge all clients that once the OIG is involved do not wait for it to render an opinion to the U.S. Attorney. During the time the OIG is investigating your case, have an attorney remain actively engaged in the case. I recently had a client who five years ago hired a highly regarded criminal attorney. The lawyer allowed the OIG to speak with provider patients, talk to the physicians office staff, obtain internal physician information, and only into the fifth year was he informed that "your client is facing a criminal indictment." Five years ago that client did not want to spend $3,000 a month for three months to end the case; now she faces legal fees of over $100,000, adverse publicity, and potential loss of license. Be certain that you obtain a clearance letter from the Government, only then do you know the case is closed.
First defense to an audit
Your best defense to an allegation of rendering unnecessary medical services or rendering them too frequently (not reasonable), is the quality of your clinical records. But the government will not tell you how to document your records and what is approved documentation If you are a rheumatologist, how carefully do you document the medical necessity of your routine depro medrol marcaine injection to the shoulder? "Pt complains of pain in right shoulder, cortisone injection given,". Will that suffice as an acceptable clinical record if audited?
Second defense to an audit
You can challenge the validity of the statistical sample that led to the audit. An audit started by a statistical sampling of your practice must be done according to due process requirements. This simply means that the contractor has correctly followed the CMS guidelines for drawing a correct statistical sample of a providers practice.
Third defense to an audit
Challenge the way local coverage determinations were made. CMS has guidelines that the "contractor" must follow, often times they do not. Let me give an illustration of a win I was lucky to obtain for a pro bono client. In the mid 90s, IDET orthopedic surgery was denied as being experimental and investigational.
When I did discovery against the Florida contractor at that time, I found out that in another State the same contractor had written a letter to an orthopedic surgeon saying this surgery was reasonable and necessary and not experimental as the Fla. Carrier had published. The Federal Administrative law judge gave me the win in a written decision. The message here is two fold: first, trust with some hesitation local medical policy, and second, do not give up a fight for reimbursement for a procedure you perform often and hopefully for the next twenty years of your practice without making sure that the local medical policy was correctly adopted, and the carrier has not written contradictory letters about the item or procedure in dispute. If a physician accepts a denial for a procedure performed every week, and you expect to bill out that code for the rest of your professional surgical/medical career, fight the initial denial. It is not worth only the money denied, but it is potentially worth a win for every time you bill out that procedure or office visit.
Advanced beneficiary notices
Fourth defense to an audit
Do you have a copy of an Advanced Beneficiary Notice. (ABN). The purpose of an ABN is to be certain that the beneficiary is notified before he or she receives a service that Medicare will not pay for this particular item or service. It allows beneficiaries to make an informed decision whether or not to receive your care with knowledge that they may have to pay out of pocket for the item or service. The typical reason for using an ABN is when the service may not be covered because it is not medically reasonable or necessary or it is always excluded by Medicare. While ABNs must be reported to the CMS on your claims form, remember, that an item or service never covered by Medicare in theory does not have to be reported to Medicare. Thus a plastic surgeon would not have to report a facelift to the Medicare program when done for aesthetic purposes only. If you told the Medicare beneficiary that his or her B12 injections or IV nutritional drips used by certain environmental allergists are not covered, if audited, the advanced beneficiary notice in your files saves you from returning that money to the government.
Who should use advance beneficiary notices
If a provider knew or should have known by prior denials, receipt of CMS/HCFA notices, Fla. Part B updates or other local contractor bulletins, you have a duty to use ABNs. A provider is presumed to know constructively, what is or is not a covered item or service or its frequency limitations; where as a beneficiary is presumed not to know. While new rules do not require beneficiary signatures, the best evidence is to obtain those signatures on an ABN each and every time you see the patient. An ABN cannot be given in an emergency (EMTALA) situation, or if the beneficiary is perceived to be in duress
Remember, that generic ABNs are not acceptable, nor are blank ABNs. You cannot say that you "never know whether Medicare will deny."
Make sure that your office staff knows the coding that goes with ABNs . GA modifier - Likely to deny as not reasonable and/or necessary, or an ABN on file; GZ modifier - Medicare is likely to deny as not reasonable and necessary, no ABN on file; and GY - the item or service is excluded by statute or not a covered Medicare benefit. A provider can bill full charges with a valid ABN.
There are two major benefits to using ABNs. It protects your appeal rights, and you avoid loss of money for denied claims. If you use an ABN to shift liability for claims that are partially bundled, as it is illegal to use an ABN to cover up a service the provider knows is free, such as double billing for bundled services. This is another example of an ABN: a 67-year-old male received a screening PSA test in 2004 that was normal, but the patient had prior digital rectal exams in 1999 or 2000 but remains concerned but has not had clinical symptoms. You see the patient now and perform a digital exam and a screening PSA and the patient continues to report no clinical symptoms and you find none on your examination. Example two: your out of state snow bird had a routine physical in June and had no complaints. He sees you now and says, "I am in Boca for the winter. I just want to make sure that everything is OK." This is a non-covered item or service. The patient is not seeing you for any complaints. You need to fill out an ABN. I am stunned by how many Florida physicians dictate in December, "pt. lives in NY 9 months a year, presents today for a physical to make sure his blood and cardiac enzymes are normal." There is no basis for a covered Medicare service in June. He/she previously received a yearly screening physical allowed by his HMO, PPO, or Medicare, if applicable.
ABNs used illegally
I recently heard of a business arrangement whereby a physician deliberately renders covered and non-covered services on the same day, and plans on charging a fixed rate of $70 for the non-covered services by having the patients sign an ABN notice with the GZ modifier. The physician told me, "some of my colleagues are doing this and charging $120," per visit. "The OIG won’t go after me," he said. " I am just small time."
I spoke to this provider’s office staff. They have NEVER used ABNs, itself unusual in an office practice; additionally, this provider is a non-participating physician. There is an erroneous assumption that non-participating physicians are not audited by the government because there is no money the government can recoup from them. In non par practices, the patients receive the checks and not the doctor. This does not stop the government from filing false claims actions against the provider. If the non par provider does not have ABNs, the government can recoup all money paid the doctor in addition to filing any ancillary actions.
The government also has the power to suspend your provider number, an act that will trigger the state licensing agency to take away your license. Furthermore, the Government can ask the IRS to attach your assets. Non-participating physicians should remember they still caused a bill to be submitted to Medicare (who actually receives the payment does not matter).
Physicians should not confuse dropping out of Medicare and charging what you want, with being a non participating physician and still having to comply with all Medicare coding, coverage and documentation requirements. For example, the OIG is on the lookout for non par providers using modifiers to get around national coding initiatives, or using modifiers as the sole basis for issuing ABN notices to their patients. Charging patients for otherwise bundled services is illegal and potentially fraud. An ABN is not a defense for illegal billings. If an item or service should be bundled, you cannot get around the bundling provisions by issuing an ABN.
Denying claims based on your clinical records
After more than 20 years of handling provider audits in more than 37 states, I remain stunned how often a physician receives a letter asking for 18 charts and the doctor sends them off without consulting a lawyer first. The doctor does not know that the government may extrapolate the results of those 18 charts to the universe of his or her patient population in a post payment review. All sampling has not been discontinued as many providers believe. There are five ways the government can deny your claim based on your submitted medical records. First, the medical services you render may not be necessary. Second, the items or services are medically necessary but you have failed to submit sufficient documentation to support the necessity for the items and services you billed. Third, you have provided sufficient documentation and the items and services you have rendered are necessary, but you have rendered them unreasonably. That is, too many physical therapy modalities, or too many office visits, or x-rays procedures, or blood studies, are claimed. They were rendered but in an unreasonable (too frequent) manner. Fourth, the items and services you have rendered are experimental, or not provided for as claimed (lack of supervision, no coverage for EPD if you are an environmental allergists and billed out as immunotherapy). Fifth, you have rendered services that are not within the scope of your license, i.e., a physicians assistant writing admission orders alone; a chiropractor drawing blood and billing it to Medicare as venipuncture; a nurse follows office protocol and alone orders x-rays for patients presenting with certain complaints. The doctor is not in the office and taking x-rays saves physician time.
Have you listed your correct specialty with Medicare?
Every item and service you render is marked in your Medicare Part B Provider Profile Analysis. Every CPT code you use is profiled and compared to your sub-specialty peers. This is why it is important that you list your specialty correctly with Medicare Are you an allergist rendering many 95115 codes; or is your practice really that of ENT rendering many procedure codes consistent with using a diagnosis of ear infections and ear lavage? How you list your specialty with the government determines which peer group you are checked against for utilization screens and frequency parameters. By comparing items and services by specific sub-specialty groups, the profiles the Government takes into account large vs.small groups. It is the number of items and services per patient per year that you render that is tracked by the DHHS. Thus, some audits start when your use of a specific CPT code falls out and off of the allowed "aberrance rate" for that code. Alternatively, an audit may start when your use of the code is simply the highest one or two percent of all providers submitting that code, and the Medicare contractor is REQUIRED to audit you as a condition of its contract with the CMS.
I urge physicians not to ask for a copy of their provider profile analysis unless they have first consulted an attorney. This profile analysis is a 10-page computer-generated document. It is not the line chart graph that the Fla. carrier has issued to Fla. physicians. This Medicare Part B Provider Profile Analysis is an excellent tool for seeing how your practice compares to your peers. It is also the best document the government has to illustrate educational contact and warning. If you see that you have billed out two views of each hip including the pelvic view (actual case study) 400 times a year and your next closest peer has used that CPT code only 289 times, you can learn and see (by the print out of CPT codes), how your medical practice is similar or different from your peers.
All audits should have a component to them that includes educational contact and warning, (ECW); it is a requirement of all Medicare carriers imposed upon them by CMS. By this provision, I urge physicians and suppliers not to be frightened to ask a Medical Director or Utilization Review nurse to "scope" your practice and have a meeting with you so you learn how your use of the CPT codes compares to your peers. In more than 20 years of practice, I have never had a carrier start an audit after the physician has asked for a copy of their provider profile analysis or for an ECW meeting. To the contrary, I find that many clients are frightened to ask for a such a meeting.
Have your patients fill out subjective history forms each visit as a way of avoiding or prevailing on an insurance or Medicare audit. A provider should use subjective history forms. Why should the CMS believe you? Why should an FBI agent look at the number of x-rays you take and believe they were all necessary? One way to help make the case of medical necessity is to have your patients fill out a subjective history form each visit. This pits the government vis-à-vis its own insured. By completing a subjective history form, the patient is stating their own medical necessity for the visit. Subjective complaints today: Your patients are in the waiting room - have them update not only their financial and personal information (home address, telephone number, and insurance identifier). There is a presumption that patients do not go to physician offices without a medical reason for the visit Have the patient support your clinical records with a statement in their own words, "What is your chief complaint today? You can also add a list of subjective symptoms the patients claim they have today by posting the most frequent complaints on a patient follow up form. If audited, this pits the government against their own insured
Providers who want to know more about the tendency and intent of the Inspector General and its contractors should review the OIG full 2005 work plan. The information contained in this article are those of the author alone and do not reflect those of this publication. Physicians are urged not to practice law, just as I urge lawyers not to practice medicine. If you receive a letter from the Government or a host of denials for items and services you render, you need to contest these governmental actions. More than 60 percent are reversed upon appeal. The scope of any audit should be commensurate with the alleged harm. Physicians should not rely upon their own analysis of legal issues. Your PI or transactional attorney may not have "in the trench experience" in avoiding or prevailing on a Medicare or other insurance audit. What is a medically necessary item or service is a legal decision, not a medical one. An attorney who has met with medical directors and knows the internal policy of the carrier, is best able to tell you if your clinical records suffice, if audited. The most difficult task of many lawyers who handle Medicare audits or overpayment cases is to convince the physician to accept preventative advice.
A tax lawyer or CPA can tell you how to better document business and lunch meetings from personal business. An attorney with CMS experience can tell you which five words you need to add to your clinical records to support the medical necessity and reasonableness of the services you render; an on-site audit can inform you how to correctly use your ABNs; a review of your EOBs can inform you of lost revenue; and by examining paid claims the attorney can tell the physician how to beef up clinical documentation for those claims.
Most important, by having an independent audit of your practice, your office manager is freed up to disclose business practices that you may have been deaf to hearing. It is not uncommon that during on-site audits the office manager suddenly remembers old letters CMS has sent you pertaining to certain CPT codes. The office manger recalls which patients threatened to go to CMS to make complaints about your practice. Suddenly the office manager produces a list of denied services for which you continue to bill (this needs resolution); or the office manager knows of an aberrant office practice they are afraid to discuss with you, but they readily tell the lawyer.
The opinions in this article are those of mine alone, and not the editor or publisher of this publication. Physicians are urged to contact their own lawyers and not rely upon this article or any other on the correct way to run your practice. Obtain firsthand knowledge on the status of your medical practice. Once in your professional career obtain an internal base line audit for your use only. The goal is not to obtain reimbursement, but to obtain reimbursement that is not recouped four to seven years after being paid. Taking a class in one state and applying those facts to billing and coding in Florida is not wise. Listening to a billing consultant or colleague discussing reimbursement and coding rules for Maryland, is not useful when billing in Florida.
Medicare is not a uniform national program, but is more than 50 different programs each with different local coverage, coding, frequency, and documentation requirements. You are charged with knowing local and national Medicare medical policy and how to comply with all Medicare requirements. Every day you drive on a Medicare interstate highway system that does not always list its speed limits; yet, you are subject to a "ticket" (audit) and possible arrest (recovery of paid claims) four years AFTER you have arrived at your destination and been paid. Govern yourselves accordingly.