Hospital boardrooms are beginning to sound more like those on Wall Street, with talk of upside and downside risk, capitation and a hefty addition of new acronyms.
Hospitals, health systems and physician groups are now in the process of deciding which of the two possible reimbursement paths they will take under the Medicare Access and CHIP Reauthorization Act, which replaced the rarely implemented sustainable growth-rate formula for determining physician pay.
“This is not practice as usual,” said Aric Sharp, vice president of accountable care at UnityPoint Health, based in West Des Moines, Iowa. “This is not what we’ve done for the past 10 to 20 years in group practice. This is a whole new world.”
There was much rejoicing in April 2015 when Congress replaced Medicare’s extremely unpopular SGR formula with an overwhelmingly bipartisan vote. The focus, however, was far more on the joy of getting rid of the annual doc fix to payment rates and all of its frustrations than it was on the system now set to replace it—MACRA.
Under MACRA, providers will use either the Merit-based Incentive Payment System, known as MIPS, or an alternative payment model. Under MIPS, physician payments will be based on a compilation of quality measures and the use of EHRs. HHS will announce the eligible measures, and providers will have some options on which to report. More on how this will work is expected in the final rule, which is likely to be published in November.
About 90 percent of physicians are expected to take this path.
MIPS consolidates three highly unpopular incentive pay programs: the Physician Quality Reporting System, or PQRS; the Physician Value-based Payment Modifier; and the electronic health record meaningful-use program. Providers will now be graded on quality, resource use, clinical practice improvement and meaningful use of certified EHR technology. Medicare revenue would be affected by as much as 4 percent in 2019, the first year the payment changes take effect, and increase to up to 9 percent in later years.
Most providers will choose MIPS because they are not ready to take on the other option, a qualifying alternative payment model that requires a hefty amount of risk. Many don’t have the capital to set one up or to risk losing money with subpar performance. Although MIPS requires putting some profits on the line, it is much less of a gamble than heading into an APM without experience and confidence that quality measures are high.
But a few large groups are planning to accept payment adjustments based on their performance under already existing alternative payment models. To qualify for that track, providers must bear “more than nominal financial risk.” They will receive a lump sum incentive payment and higher annual provider payment as benefits. They will also be exempt from the MIPS reporting measures.
UnityPoint decided relatively early on that it would participate in an APM because of the success of the Pioneer accountable care organization in one of its regions. The system’s other eight regions were in track one of the Medicare Shared Savings Program, and that track is not eligible as an APM under MACRA.
Most physicians and physician practices will opt for being measured on quality under Medicare’s new payment system since they’re not ready to assume the downside risk of alternative payment models.
The system began its shift toward value-based pay about five years ago and has extensive experience with taking risk. Executives viewed MACRA as a nudge to push themselves toward an APM model because they believe the change is necessary and inevitable, Sharp said. “It could continue to move our culture forward from volume-based to value-based and that was very important to us,” he said.
But most physicians aren’t ready to take on that level of risk. Dr. Lisa Bielamowicz, chief medical officer of the Advisory Board Co., said the “average doctor on the street can barely tell you what MACRA is.” And indeed, a survey released in July by Deloitte found that about half of non-pediatric physicians had never even heard of MACRA, much less understood its implications.
The transition to MIPS may not be too difficult for those groups that have been pursuing value-based payment methods previously and have reporting mechanisms in place. But APMs are a different story.
Blair Childs, vice president of public affairs at the healthcare consulting company Premier, said moving to an alternative payment model is a big step that many providers are not ready to take. Some may just plan to stay in MIPS for the foreseeable future.
No matter what path they choose, physician practices, whether part of a hospital system or independent, will have major decisions to make in the months ahead.
Organizations also need to consider how they will be supporting their community of physicians and helping them succeed with the new model, Childs said. Most of those who choose MIPS should begin trying to transition to an APM—perhaps a no-risk track ACO—so that the eventual change is as smooth as possible. “It’s a question of how you want to scale and how you want to build your model,” he said.
American physicians have already been declaring independence from Medicare, states the Association of American Physicians and Surgeons (AAPS), but the imposition of new payment methods may lead to a rush to imitate the British in exiting the regime of a remote, unelected, unaccountable bureaucracy.
MACRA (the Medicare Access and CHIP Reauthorization Act of 2015) replaced the threatened but never implemented annual fee cuts of the Sustained Growth Rate formula with a complex system of bonuses and penalties. The Centers for Medicare and Medicaid Services predicted that 87% of solo practice physicians would be penalized.
According to a Medscape Medical News survey, almost four in 10 physicians in solo and small group practices predict an exodus from Medicare within their ranks because of the program’s new payment plan.
The 962-page Final Rule received more than 2,200 comments. AAPS noted that:
- A physician’s “compliance score” is tied to “resource use.” Physicians will be increasingly pressured to make decisions that save resources for Medicare instead of decisions that are in the best interest of their individual patients.
- Compliance is also tied to mandatory use of government-certified electronic health records, which are harmful to patient medical privacy and also detract from face-to-face patient care. The government would gain even greater ability to access patient medical records.
- The rules allow ALL insurance-based care, not just Medicare, to be phased in to these harmful payment models.
AAPS executive director Jane M. Orient, M.D., commented: “It is impossible to practice medicine under this rule, for ethical and practical reasons. The rule makes it impossible to protect confidentiality, and one is in a constant conflict of interest: What is best for the patient may be bad for the financial viability of the practice. It would take a dedicated team of legal specialists to even attempt compliance. Full compliance is probably impossible even with such a team, which is beyond the means of a small practice.”
She concluded: “Physicians need to withdraw from Medicare or any other program that subjects them to this rule.”
The CMS wants to pay practices a monthly fee to manage care for as many as 25 million Medicare beneficiaries in the agency’s largest-ever plan to transform and improve how primary care is delivered and reimbursed.
The Comprehensive Primary Care Plus initiative will be implemented in up to 20 regions and include up to 5,000 practices, which would encompass more than 20,000 doctors and clinicians.
The regions are as of yet unidentified as the CMS plans to first assess interest by providers.
Provider practices will be able to participate in two ways. In Track 1, the agency will pay a monthly fee to practices that provide specific services. That fee is in addition to the fee-for-service payments under the Medicare Physician Fee Schedule for care.
Providers currently perform a service and then submit a claim to Medicare for payment.
In Track 2, practices will also receive a monthly care management fee and, instead of full Medicare fee-for-service payments for evaluation and management services, they will receive reduced Medicare fee-for-service payments and up-front comprehensive primary-care payments. This hybrid payment design will allow greater flexibility in how practices deliver care outside of the traditional face-to-face encounter, the agency said.
For example, practices might offer telemedicine visits or simply provide longer office visits for patients with complex needs.
Practices in both tracks will receive upfront incentive payments that they might have to repay if they do not perform well on quality and utilization metrics.
To be eligible for the incentives under the programs, practices will need to ensure:
• Services are accessible, responsive to an individual’s preference, and practices should offer enhanced in-person hours and 24/7 telephone or electronic access.
• Patients at highest risk receive proactive, relationship-based care-management services to improve outcomes.
• Care is comprehensive and practices can meet the majority of each individual’s physical and mental healthcare needs, including prevention. Care is also coordinated across the healthcare system, including specialty care and community services, and patients receive timely follow-up after emergency room or hospital visits.
• It is patient-centered, recognizing that patients and family members are core members of the care team, and actively engages patients to design care that best meets their needs.
• Quality and utilization of services are measured, and data is analyzed to identify opportunities for improvements in care and to develop new capabilities.
The CMS will accept practice applications in the determined regions from July 15 through September 1.
Story in progress…
While the Centers for Medicare and Medicaid Services is touting the success – 11 months ahead of schedule – of tying 30 percent of fee-for-service Medicare payments to alternative payment models such as accountable care organizations and bundled payments, questions still remain over how much money value-based programs will save.
In 2014, CMS said the 20 ACOs in its Pioneer program and the 333 in the Medicare Shared Savings Program, saved a total of $411 million.
However, after paying bonuses to the strong performers, the ACO program reported a net loss of $2.6 million, according to Kaiser Health News.
And the fact that only nine health systems remain in Pioneer ACO program is telling as many jumped ship over penalties tied to benchmarks deemed too high.
In fact, three Dartmouth-Hitchcock Medical Center in New Hampshire, Beacon Health in Maine, and Franciscan Alliance in Indiana all owed money.
When it came time to sign up for Pioneer’s evolution into Next Generation ACO program, which began on January 1, the two New England systems that each lost about $3 million in Pioneer, came to very different decisions.
Beacon Health made the leap to Next Generation, joining 21 other providers in the latest ACO model, while Dartmouth-Hitchcock decided to take a break from both programs.
Beacon Health CFO Jeff Sanford said the move made sense, as the increased risk of Next Generation also meant a greater share in the potential savings. If Beacon is going to make the switch to population health management, Sanford indicated he’d rather go all in.
“The big takeaway for us, the entire population over the long run has a better chance of doing well,” Sanford said. “I’ve spoken to lots of CFOs who initially found it not appealing, but if I’m going to go to population health, I’d rather take on more risk. If (providers) succeed they will gain a lot more.”
The less risky Medicare Shared Savings program gives little reward, Sanford said. If providers reduce utilization by 10 percent, they only get half of that, he said. Under Next Generation, the return is 80 percent, Sanford said.
“If I have the infrastructure and know the financial upside, it’s worth it,” he said.
Pioneer had other drawbacks, he said.
One, the model used a national trend to calculate the baseline, rather than regional benchmarks that would have showed that in the northeast, medical costs trend higher; two, the methodology didn’t seem to work for low-cost providers, which was the case with Beacon; and three, Beacon was growing its population through acquisitions in 2015, which put it at a disadvantage.
Next Generation accounted for regional differences in health cost trends, and by 2016, Beacon had a more stable population.
“The other thing CMS did was change the equation on how population risk is determined and factored in,” Sanford said. “They started making this change in Pioneer. It really becomes more important in Next Generation. We tended to have a high mix of dual eligibles.”
Next Generation has a more comprehensive risk-scoring methodology, he said.
It also includes a prospectively, rather than retrospectively set benchmark and tests beneficiary incentives such as increased availability of telehealth and care coordination services. The new model allows for enhanced home health visits after hospitalization.
“One of the things we learned in Pioneer, once you get behind, it’s almost impossible to catch up,” Sanford said. “We saw from the first- quarter results it wasn’t going to work for us in 2015. It was either go to Next Generation, or do what Dartmouth did and pause for a year.”
Dartmouth-Hitchcock Medical Center was among three hospitals that chose to drop out of both Pioneer and Next Generation. The other two were Brown & Toland Medical Group in California and and Mount Auburn Cambridge Independent Practice Association in Massachusetts. Dartmouth-Hitchcock said it would defer joining Next Generation until 2017, a decision that was surprising as earlier it had indicated it would enter into the next phase of the risk-sharing model.
The esteemed trauma center said it hoped for more attainable financial targets in 2017, after losing money in Pioneer for two years, according to Dr. Robert Greene, executive vice president and chief population health management office.
“When we looked at the proposed benchmark target,” Greene said of the 2016 model year, “we’d be at risk for a significant loss again.”
The frustrating piece for Dartmouth-Hitchcock was that it was doing all it could to meet CMS benchmarks, according to Greene.
Overall, the launch of the Next Generation is encouraging for providers willing to take on the Medicare shared-risk model, according to Christopher Kerns, executive director, Research and Insights at research and consulting firm.
The hesitation in the market is coming from private payers, he said.
“CMS is moving aggressively,” Kerns said. “Providers are willing to take risk-based payment from Medicare and accept the fact that CMS wants to move the provider industry towards more risk.”
Kerns agrees Next Generation offers providers a better incentive through the larger, 80 percent sharing rate.
“It gives providers greater ability to reap the benefits of the savings they’re generating,” Kerns said. “It gets providers ever closer to full risk-based payment. For those providers aggressively moving towards population health, this is a greater financial incentive to do so.”
The downside to Next Generation is that providers unable to reduce utilization have to pay back Medicare.
The riskier ACO models are designed for the most experienced, and some would say, larger health systems, that can afford to invest in infrastructure, new data systems and care management and coordination improvements.
The majority of providers in ACOs are in less-risky models. In 2016, there are about 477 ACOs across the Medicare Shared Savings Program, Pioneer, Next Generation and a Comprehensive End-Stage Renal Disease Care Model, according to CMS.
“I believe these programs can save a lot of money,” said Richard Barasch, chairman and CEO of Universal American Corp., whose subsidiary, Collaborative Health Systems, operates 25 Medicare ACOs.
He told Kaiser Health News that nine of their ACOs earned $27 million in shared savings. The most important difference, he said, is that it gives providers better tools to engage beneficiaries. For instance, currently under fee for service, a patient must be in the hospital for three days before being eligible for a skilled nursing facility.
Under beneficiary engagement, a waiver is available to send those patients directly to a skilled nursing facility, he said.
Providers and doctors know pay for performance is coming and want to score well whether they get paid for that or not, Barasch said.
Jeff Goldsmith, a health industry analyst and professor at the University of Virginia, has a different perspective.
ACOs have limited leverage to control the costs incurred by highly paid specialists such as surgeons and cardiologists, he said in the Kaiser report. Patients in ACOS can still go to any doctor who accepts Medicare’s fee-for-service method of paying.
The ACO program has such a bad enough reputation in the provider community the program can’t grow sufficiently enough to replace regular Medicare, Goldsmith said.
However, Attorney Deborah Dorman-Rodriguez, a partner at Freeborn & Peters in Chicago, said ACOs are not the new HMO, the health maintenance organizations that became the popular method to contain costs in the 1970s and ’80s.
“There is the true intent and hope that by providing comprehensive care and sharing a risk, the quality is improved,” Dorman-Rodriguez said of ACOs. “It’s not just monetary; that can be very exciting to providers.”
Even in an election year and with the control of the House and Senate at stake, Kaufman said most believe some of the reforms will stay in place.
“I think in the long term these types of models are where the federal government is going to be,” he said. “It’s going to be tough not to be participating in it.”
Vantage Health Plan executives saw an opportunity when they realized few of their female Medicare members were being screened for osteoporosis after they broke bones.
The test to identify women at increased risk for fractures is one of 40 measures that Medicare applies to produce its 5-star ratings comparing the private plans chosen by nearly a third of seniors over traditional coverage.
More than $3 billion is in play for insurers. Health plans earning at least four stars qualify for federal bonus payments. Those that don’t, lose out.
To improve its score, Vantage last year bought a $10,000 mobile ultrasound unit so it could give bone density screenings to its elderly women members in their homes. The proportion of eligible women tested soared from 13 percent in 2014 to 71 percent in 2015.
“The ten grand we spent on the ultrasound machine was more than worthwhile,” said Billy Justice, director of marketing and sales for Vantage, an insurer with 16,000 Medicare members in Louisiana.
Here’s why: Vantage lifted its overall star rating to 4 stars from 3.5 and set itself up for as much as $8 million in extra federal funding next year. By law, the bonus money must go to pay for extra benefits, which helps plans attract more members and in turn makes them more profitable.
Many Medicare plans undertook similar initiatives to improve their 2016 ratings, leading more to qualify for bonuses than ever before, according to the latest ratings released in October. Actions included offering members more preventive care, helping them better manage chronic conditions and handling complaints and appeals in more consumer-friendly ways.
For Medicare beneficiaries, the development is good news. “More plans are providing better care,” said Stacy Sanders, federal policy director at the Medicare Rights Center, an advocacy group. “To us, the incentives created from the bonus system are leading to quality improvement.”
Reducing high blood pressure is one example. The overall share of Medicare Advantage members who have their pressure under control is 71 percent in the 2016 star ratings, six points more than in 2015.
Aetna mailed complimentary blood pressure cuffs to its members to use at home last year. Now, 81 percent of its members have their pressure under management, up from 69 percent in 2013.
Since the bonus payments began in 2012, the percentage of Medicare plans earning 4 stars or more has doubled to 40 percent, reports the Kaiser Family Foundation (KHN is an editorially independent part of the foundation). About 71 percent of seniors in 2016 are in a plan with at least 4 stars, up from 60 percent in 2015, 50 percent in 2014 and 38 percent in 2013, according to the Centers for Medicare & Medicaid Services.
There’s a payoff for insurers, too. Bigger bonuses lay ahead for most of the giant companies that dominate Medicare Advantage. United Healthcare, the biggest player in the program, is due for $1.4 billion, up $532 million from the prior year, estimates Wedbush Securities analyst Sarah James. Humana could get $1.5 billion, a $244 million drop because it has fewer plans eligible for bonuses, she said.
The figures are estimates because the plans’ 2017 enrollments will determine actual payments.
Cigna’s bonus — $252 million, according to James — is at risk because CMS sanctioned it in January, suspending all its Medicare plans from doing enrollment and marketing, after finding the insurer failed to provide members with services and benefits that CMS requires. Cigna’s star ratings will be lowered and its plans ineligible for bonus payments next year if its deficiencies are not fixed by March 31, CMS said.
The 2016 star ratings are based on 2014 operations and the results determine insurers’ 2017 bonuses.
“The quality bonus has given companies a pathway to success,” said Sean Cavanaugh, CMS deputy administrator and director for the Center for Medicare. The average monthly premiums that beneficiaries pay are about the same as in 2010 while the benefits offered are up slightly, he said. Some plans have tightened their provider networks, Cavanaugh acknowledged, but not enough to inhibit access to care.
A Secret Of Insurers’ Success
New and improved services don’t fully explain the membership growth in high-rated star plans. Some insurers shifted members into bonus-eligible contracts as they consolidated plans. Medicare contracts — which may include one plan in one state or several in different places — typically vary by state or region. A company with separate contracts in two states can move members from an unrated contract in one state and into a high-rated one elsewhere. That happened to about 900,000 enrollees for 2016 as insurers transferred them into contracts with at least four stars in different states and regions, said Carlos Zarabozo, an analyst with the Medicare Payment Advisory Commission, which advises Congress, at a meeting in December.
The star ratings bonuses have helped Medicare Advantage plans weather cuts in federal funding mandated by the Affordable Care Act in 2010. Some analysts then predicted insurers would have to reduce benefits, diminishing plans’ popularity compared with traditional Medicare.
Instead, the opposite has occurred. Enrollment in Medicare Advantage has soared from 11 million in 2010 to 17 million last year.
At the same time, the government pushed insurers to get better by toughening its standards for bonus eligibility. Starting with the 2015 ratings, it stopped paying bonuses to plans with 3 and 3.5 star ratings, forcing insurers to shoot for 4 stars.
Here’s how it adds up.
Plans are paid about $10,000 per member annually on average, although the precise amount varies by county and other factors.
For plans with 4, 4.5 or 5 stars, bonuses bring in an extra 5 percent a year per member — about $500 each, said Monisha Machado-Pereira, a partner at consulting firm McKinsey & Co. A four-star plan with 1 million members would earn $500 million in bonuses.
“Getting to 4 stars is really, really critical,” said Michael Kavouras, vice president of star ratings at Aetna.
Past bonuses helped Aetna retain zero premium plans in many markets and offer options such as dental and vision coverage, he said. Those benefits help attract more enrollees.
Plans with 4 or more stars increased dramatically the past four years — there are 167 plans with 4 or 4.5 stars — but five-star plans are no more plentiful. There are 12 of them in 2016. Two possible explanations are that 5-star standards are difficult to achieve and plans get the same bonuses for 5-star plans as they do for 4-star ones.
What sets 5-star plans apart is they can take new beneficiaries year-round. All others are restricted to a two-month enrollment period ending in early December.
Star ratings are available for all to see on Medicare’s website when comparing costs and benefits, but they don’t reveal everything a consumer might want to know, as a recent CMS audit of a major insurer shows.
Strong Ratings Can Obscure Problems
Cigna’s performance looked impressive on Oct. 8 when CMS announced 2016 star ratings. One Cigna contract earned a rare 5-star rating and five others got 4 or 4.5 stars out of 14 Cigna contracts that CMS rated.
And that was all the public had to go on during the annual Medicare Advantage enrollment period from Oct. 15 through Dec. 7.
A lot more was learned in late January when CMS sanctioned Cigna after auditing its Medicare operations. In a 12-page enforcement letter, CMS accused the insurer of “widespread and systemic failures” affecting Cigna enrollees’ ability to obtain medical services and prescription medications. Prior to the audit, Cigna had received “numerous” notices of noncompliance, warning letters and corrective notices over the previous several years, the letter said.
In employing more serious enforcement powers against Cigna — that is, an audit followed by sanctions — CMS’s disciplinary action threatens to drop all of Cigna’s 2016 star ratings to below bonus-eligible levels. CMS disclosed that its audit started Oct. 5 — three days before the center announced its 2016 star ratings — and ended Oct. 20, according to the letter. CMS did not publicly disclose findings for more than a month after 2016 enrollments ended.
David Lipschutz, managing attorney for the Center for Medicare Advocacy, said the Cigna sanctions raise questions about the validity of the Medicare star-ratings system.
“This doesn’t look good from a consumer perspective,” he said.
CMS’ sanctioning of Cigna so soon after Medicare’s open enrollment season ended, he said, raises questions about whether the government should have told the public about Cigna’s deficiencies when seniors were choosing plans.
Star ratings do take into account how health plans handle consumer appeals and grievances — a problem area uncovered in CMS’s audit of Cigna, Lipschutz pointed out.
“When you have a high-rated plan that is given enrollment sanctions, that could have the effect of undermining the trust the public has in the ratings system,” he said.
Cigna said it is working with CMS to resolve its issues. CMS, addressing questions from KHN about the conflict between Cigna’s high star ratings and audit results, said the two reviews look at different things.
Star ratings measure members’ quality of care and the plan’s customer experience, the center said, while the audits look at “operational areas” that impact beneficiary access to drugs and services.
Improved ratings have prompted skepticism about whether the industry’s progress is real or the federal government is grading easier. McKinsey officials said their analysis shows today’s plans really are better than in the past, which has made the biggest difference. “What this means is seniors are effectively in position to get improved quality of care,” Machado-Pereira said.
For all the attention paid to star ratings by insurers and the government, their influence on consumers may not be great.
Most advocates say seniors still choose plans based on cost and whether their doctor or hospital is in the network. A McKinsey & Co. study in 2015 found that only 21 percent of those who had enrolled in a Medicare Advantage plan knew their plan’s star rating.
On February 12, 2016, the Centers for Medicare & Medicaid Services (“CMS”) published the long-awaited final rule implementing an Affordable Care Act requirement for healthcare providers and suppliers to report and return identified Medicare Part A and Part B overpayments (“Final Rule”). Under the Final Rule, overpayments must be reported and refunded by the later of: i) 60 days of identification, or ii) the date of any corresponding cost report, if applicable. Clarifications in the Final Rule create more reasonable requirements for returning Medicare overpayments before penalties start accruing.
One of the most important clarifications is CMS’ interpretation of when an overpayment is ‘identified’ for purposes of starting the 60 day repayment deadline. The proposed rule failed to define what CMS would consider as ‘identification,’ and, therefore, providers were uncertain as to when the 60 day time frame began. The Final Rule defines “identify an overpayment” as when the “person has, or should have through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment.” CMS concluded that an overpayment must be quantified to be identified because “that calculation necessarily must happen before the overpayment can be reported and returned.” This is one of the most important clarifications under the Final Rule because it gives providers a better understanding of when the “identification” is deemed to occur so providers can avoid potential penalties for failing to report timely.
The Final Rule also implemented a requirement for providers to exercise “reasonable diligence” when determining whether an overpayment occurred. In the Final Rule, CMS replaced ‘all deliberate speed’ to identify and return an overpayment, with a ‘reasonable diligence’ standard. CMS further explained when a person obtains credible information concerning a potential overpayment; the person needs to act with reasonable diligence through a “timely, good faith investigation”, over a period of time, which may be “at most six (6) months from receipt of credible information, absent extraordinary circumstances”, to determine whether an overpayment has been received and to quantify the amount. The reasonable diligence requirement, and six (6) month time frame, will help to provide protection for good faith efforts to report and return an identified overpayment within the 60 day requirement. The 60 day clock will begin when either the reasonable diligence is completed, (or on the day the person received the credible information of a potential overpayment if the person failed to conduct reasonable diligence). Thus, a provider or supplier that conducts a timely investigation has a total of up to eight (8) months to identify, report and return Medicare overpayments, absent extraordinary circumstances. CMS indicated that if a health care provider or supplier has reported a self-identified overpayment to either the Self-Referral Disclosure Protocol managed by CMS or the Self-Disclosure protocol managed by the Office of the Inspector General the provider or supplier is considered to be in compliance with the provisions of the Final Rule so long as they are actively engaged in the respective protocol.
While technically there is no legal basis to hold providers and suppliers accountable for overpayments that they “should have” known about, CMS also made clear that effective compliance programs must be proactive, not just reactive. The Final Rule intends for ‘reasonable diligence’ to include both proactive compliance activities conducted in good faith by qualified individuals to monitor claims and reactive investigative activities undertaken in good faith and in a timely manner in response to receipt of credible information about a potential overpayment. Along with the requirements to remain reasonably diligent and institute compliance programs, CMS also advised providers to document their diligence efforts in a way which serves as concrete evidence to satisfy the requirements, such as time stamping documents to show when a potential problem was first brought to the attention of the provider, as well as the initial response to the information about an overpayment.
CMS also shortened the proposed ‘look back’ period once an overpayment is discovered. Under the proposed rule, providers were required to look back 10 years once an overpayment was identified to determine if similar overpayments occurred within the previous10 year period. Many commenters to the proposed rule expressed concern that a 10 year look back period would be overly burdensome and costly. The Final Rule relaxed that requirement, and reduced the time period that overpayments must be reported and returned to within six (6) years of the date the overpayment was received. CMS indicated it chose six (6) years because “many providers and suppliers retain records and claims data for between 6 and 7 years based on various existing federal and state requirements.”
The Final Rule becomes effective on March 14, 2016 and implements many provisions which make compliance with the 60-Day Overpayment Rule more realistic for providers. If you have questions about any of the updates to Medicare’s 60 Day Overpayment Rule, or general compliance concerns, please contact either Erin Aebel at 813.227.2357 or email@example.com, or Kelly Thompson at 813.676.7281 or firstname.lastname@example.org for Florida inquiries, and Kelly Leahy at (614) 628-6815 or email@example.com for Ohio and other inquiries.
Shumaker, Loop & Kendrick, LLP is a 90 year old law firm with offices in Florida, Ohio and North Carolina. It provides full service business law advice and has a robust health care industry team with 12 health care regulatory attorneys and more than 50 lawyers who also provide legal services to the health care industry. Shumaker is proud to be involved in public service and philanthropy in all of the communities it serves.
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