Medicare Eases Rule on Termination of Provider Medical Records Review by:Andrew Wachler

Medicare providers and suppliers targeted for prepayment complex medical review understand

the financial burden that review of records prior to payment places on a medical practice.

Prior to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA), a provider or supplier subject to non-random prepayment complex medical review remained on this targeted review until it met all Medicare billing requirements and demonstrated an "acceptable error rate."

The Medicare contractor was given the discretion to determine when the provider or supplier achieved an "acceptable error rate," resulting in providers and suppliers being subject to lengthy review.

In heartening news for providers and suppliers impacted by non-random prepayment medical review that believed no end was in sight, the Centers for Medicare and Medicaid Services (CMS) recently published a final rule addressing termination of non-random prepayment complex medical review, which became effective Jan. 1, 2009 (73 Fed. Reg. 55753. See also 42 C.F.R. 421.501 et seq.)

The final rule implements Section 934 of the MMA, which required CMS to establish termination dates for non-random prepayment complex medical reviews performed by Medicare Administrative Contractors (MACs), or performed by intermediaries and carriers until MACs are in place.

CMS will impose the same limitations on medical reviews performed by program safeguard contractors, to ensure that consistent criteria for terminating non-random prepayment review are applied to all providers and suppliers.

The final rule mandates that, in most cases and unless an exception applies, CMS will terminate a provider or supplier from review no later than one year from the initiation of the review, or when the provider's or supplier's error rate decreases by 70 percent from the initial error rate.

Significantly, in addition to the one-year time limit and 70 percent error rate reduction provisions, the Final Rule also specifically states that, "[t]here is no minimum timeframe that a provider or supplier must be on review," and the review can be terminated based upon the discretion of the Medicare contractor.

Therefore, should a Medicare provider or supplier be placed on non-random prepayment complex medical review, it should understand that effective strategies can be implemented to limit the amount of time the provider or supplier is subject to pre-payment review.

When Does Non-Random Prepayment Complex Medical Review End?

Generally speaking, in most cases and unless an exception applies, a Medicare contractor will terminate a provider or supplier from review no later than one year from the initiation of the review, or when the provider's or supplier's error rate decreases by 70 percent from the initial error rate.

The Medicare contractor will evaluate the provider's or supplier's error rate on a quarterly basis. In most cases, non-random prepayment complex medical review will end, at the latest, one year from its initiation.

At the conclusion of the one-year timeframe for review, if the Medicare contractor determines that the provider or supplier continues to have a high error rate, the Medicare contractor is mandated to consider the following:

Referring the provider or supplier to Benefit Integrity Review

Continuing educational interventions (without performing further medical review)

Initiating a post-payment audit

In some cases, the one-year time limit for non-random prepayment complex medical review can be extended. Specifically, a Medicare contractor is authorized to extend the one-year limit in situations where a provider or supplier takes steps to alter its billing practices to avoid contractor review.

For example, the Medicare contractor may extend its review under the following circumstances, among others:

If a reduced error rate is the result of a reduced number of claims submitted under a specific billing number (i.e., 25 percent or more reduction in claims submitted)

If the provider or supplier shifts billing to another inappropriate code.

If the provider or suppler fails to respond to requests for medical records.

When Can a Medicare Contractor Re-Institute Non-Random Prepayment Complex Medical Review?

Once a Medicare provider or supplier has been terminated from prepayment complex medical review, if it wishes to reinitiate a review, the contractor must conduct another probe review to confirm that there continues to be a high level of payment error.

If this review finds a high-level of payment error, the Medicare contractor can re-institute non-random prepayment complex medical review.

Your Organization Has Just Been Placed on Non-Random Prepayment Complex Medical Review. Now What?

Non-random pre-payment complex medical review poses challenges for Medicare providers and suppliers as a result of interrupted cash flow.

Ideally before a problem arises, but definitely once a Medicare provider or supplier is notified that it has been placed on non-random prepayment complex medical review, the Medicare provider or supplier must take an honest, hard look at its documentation and coding practices and look for areas for improvement.

For example, the provider or supplier should consider the following:

*Are the services fully documented to establish medical necessity, taking into consideration applicable Medicare NCDs, LCDs, and policies?

*Are claims appropriately coded? For example, with respect to evaluation and management services, are all claims billed at a level 4 or level 5?

As further noted herein, unusual billing patterns and billing errors related to high-dollar values are red flags for Medicare reviewers. It may be beneficial to engage the services of an independent auditor to review a sampling of medical records and identify areas for improvement.

In addition, a qualified healthcare attorney or consultant can assist your organization to review its documentation and coding practices for compliance with Medicare policy. It may be advantageous for providers and suppliers to incorporate the suggestions of the independent auditor, healthcare attorney or consultant to potentially avoid future claim denials.

Importantly, although it is advisable that a Medicare provider or supplier subject to non-random prepayment complex review analyze its documentation for compliance with Medicare policy, and initiate corrections as appropriate, the Medicare provider or supplier must be cognizant that it not replace one improper billing practice with any other improper billing practice.

As further noted herein, if a provider or supplier engages in improper claims or billing-related activities in an effort to avoid review, the Medicare contractor is authorized to extend the timeframe for review.

The provider or supplier also may find it advantageous to meet with the Medical Director of the Medicare contractor reviewing its records as part of the non-random prepayment complex medical review. This meeting will provide the provider or supplier with an opportunity to gain an understanding of its situation, understand the specific areas identified as deficiencies, and understand the medical review process. A meeting also gives the provider or supplier an opportunity to explain its practice and any potential legitimate reasons for billing anomalies (e.g., a home care physician with numerous high-level evaluation and management codes, due to a highly-complex elderly patient population with numerous comorbidities).

Furthermore, providers and suppliers must be cognizant that should they experience claim denials as a result of the review, appeal rights through the Medicare appeals process apply. Accordingly, the provider or supplier should have systems in place to track claim denials and appeal deadlines. An experienced healthcare attorney can assist your organization to successfully appeal claim denials, by utilizing various strategies including drafting a position paper, employing an expert consultant/witness, arguing the merits of the underlying claim and employing legal defenses.

Medicare contractors focus medical review activities on providers and suppliers they believe pose the greatest risk to the Medicare Trust Funds. Medicare contractors have discretion to determine what constitutes a "sustained or high level of payment error," but some examples include the following:

*Unusual billing patterns, including inexplicable increases in the volume of claims submitted, and

*Billing errors, including a significant billing error rate or errors on claims with a high dollar value.

Once a Medicare provider or supplier has been chosen for non-random prepayment complex medical review, the provider or supplier must submit medical records to the Medicare contractor for review before payment will be made.

A licensed medical professional will review the records. The reviewer must use National Coverage Decisions and Local Coverage Decisions in conducting his or her review, but is also permitted to use his or her clinical judgment to determine whether an item or service is covered and is reasonable and medically necessary.

If, at any time during medical review, the Medicare contractor suspects possible fraud, then the contractor refers the issue to the benefit integrity contractor.

About the author

Wachler & Associates, P.C., is a law firm providing healthcare legal services to healthcare providers, suppliers and entities nationwide. Since 1980, the attorneys of Wachler & Associates, P.C., have successfully defended thousands of Medicare, Medicaid and other third party payor audits. Our lawyers are recognized as authorities in this area of healthcare law. http://www.racattorneys.com

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