1. David E. Jose, Esq. One Indiana Square, Suite 2800 Indianapolis, IN 46204 (317) 238-6211 djose@kdlegal.com July 29, 2010 Payor Audits: Preparation, Response and Opportunities

2. Audits: Here, There and Everywhere  External audits increasingly common  Use of audits as mechanism to recoup “overpayments”, but other purposes and consequences  Financial, regulatory and criminal penalties associated with billing “errors”

3. Audits: Here, There and Everywhere  Recognize threats and opportunities posed by external audits  Compliance program needs to include a credible internal audit system  Internal audit system addresses external audit, quality of care and performance improvement purposes

4. Topics for Presentation  Appreciating the Context for Audit Activity  RAC Audits as a Representative Sample  Preparing for and Responding to an Audit  Learning from the Audit

5. Constituencies  Government Payers  Commercial Payers  Enforcement Authorities  Civil Lawsuits  Other Treating Providers  Staff  Patients  Competitors

6. Sources for Concern  Disgruntled Employees  Disgruntled Patients Senior Medicare Patrol  Increase Awareness of Whistleblowing Opportunities  News Reports

7. OIG Testimony  ROI of $17 for $1 of Medicare and Medicaid Oversight  FY 2008 455 Criminal Actions 337 Civil Actions 3,129 Excluded Individuals and Entities 1,750 New Fraud Investigations Opened

8. OIG FY 2010 Report  $3.1 Billion for first half of FY 2010  $667 Million in Audit Receivables  $2.5 Billion in Investigation Receivables  293 Criminal and 164 Civil Actions

9. Government Enforcement Activities  Amounts Recovered “Fraud” Reducing Expenditures  High Profile Practices and Activity  Trolling for Excluded Individuals  Increased Funding Under Reform

10. OIG 5-Principle Strategy  Scrutinize enrollment  Establish payment methodologies responsive to marketplace  Assist providers in adopting practices promoting compliance, including quality and safety standards  Vigilantly monitor for fraud, waste and abuse  Respond swiftly and impose punishment to deter

11. Examples from OIG  Medicaid vulnerabilities relating to school- based services  2010 Work Plan focus on provider-based status  Implications Site-based services Physician partnering relationships Procedures vs. outcomes billing debate

12. RAC Audits Expanding  Health care reform extends RAC program to state Medicaid programs  Recent support in other areas of government contracting announced by President Obama

13. RAC Audits – What Can Be Learned  Automated vs. Complex Review  Priority of Targeted Providers (Volume and Value)  Targeted Claims Medical Necessity Coding Incorrect Payments Duplicate Claims  Contingency Fee Payments for Independent Audit Contractors

14. Issues for Claims Review Process  “Certainty Standard” vs. “Good Cause Reason”  Request for medical records and timely response  Licensed health care professional involvement  Notice of full or partial overpayment  Recoupment options and time frames

15. RAC Appeals Process  Rebuttal to auditor vs. direct appeal  Redetermination Appeal Avoiding recoupment pending appeal  Reconsideration – Qualified Independent Contractors  Administrative Law Judge First judicial-type review Review can go beyond “the record”  Medicare Appeals Council Review  Federal District Court Review

16. RAC Management Program  Enhancements to Compliance Program  Focus on Target Areas (e.g., one-day stays)  Timely Response to Records Requests  File Rebuttals and Appeals  Tracking System  Corrective Actions  Opportunities for Improvement

17. Preparation for Audits  Review Policies Clinical documentation Financial billing and collecting Responding to audit inquiries  Identify Risk Areas  Train Employees  Protocols for Pre- and Post-Audit

18. Issues for Billing Audits  Retrospective or Prospective  Sample Type and Size Random Payer specific Procedure specific  Issue or Criteria to be Applied  Risk Areas Coding Documentation Modifiers Medical Necessity

19. Top Medicare Billing Errors  Duplicate  Non-Covered Service  Medical Necessity  Bundled Services  Beneficiary Eligibility  Incorrect Carrier  Medicare Secondary Payer  Provider Eligibility  Place of Service

20. OIG Risk Areas  Documentation Timely Accurate and legible Complete (e.g., reason for encounter, history, examination findings, diagnostic test results, etc.) Comparison of denial rates with peer practices

21. OIG Risk Areas  Reasonable and Necessary Services Documenting diagnosis and treatment Seeking denial for secondary payer

22. OIG Risk Areas  Coding and Billing Services not rendered Supplies or services not reasonable and necessary Duplicate billing Non-covered services Unbundling Clustering Upcoding

23. OIG Risk Areas  Improper Inducements and Relationships Financial arrangements with potential referral sources Joint ventures Consulting contracts or medical directorships Office and equipment leases Gifts and gratuities

24. “Medical Necessity”  “… unless otherwise required by statute or regulation, means that a Health Service is compensable, as determined by [Insurer] for the treatment of an injury, sickness, or other health condition and is : (1) appropriate and consistent with the diagnosis or symptoms, and consistent with accepted medical standards; (2) not chiefly custodial in nature; (3) not investigational, experimental or unproven; (4) not excessive in scope, duration or intensity…; and (5) not provided only as a convenience to the Covered Individual or professional provider or health care facility.”

25. Background Preparations  Web Site of Commercial Payers Provider education Binding (?) pronouncements  Web Site of Government Payers and Agencies OIG web site for Corporate Integrity Agreements  Web Sites of Audit Contractors Targeted issues

26. Audit Coordinator  Advising personnel of pending audit  Ensuring authorization for disclosure of records  Gathering records  Overseeing auditor’s on-site activity  Organizing exit interview  Follow-up communications with auditors for clarifications or additional documents

27. American Association of Medical Audit Specialists  Billing Audit Guidelines  Use as Standards Internal audit External auditor relationship  Purpose for Health Records

28. Purpose for Health Record  “Health records exist primarily to ensure continuity of care for a patient; therefore, the use of a patient’s health record for an audit must be secondary to its use in patient care.” - American Assoc. of Medical Audit Specialists

29. Preparing to Respond  Tracking System and Specific Payer/Authority  Time Frames, Issues Raised, and Documentation Needed  Medical Necessity or Coding Assistance  Internal or External Assistance (including peer and association support)  Statistical Issues  Costs, Benefits, Distractions, and Consequences

30. Repayment or Recoupment  Regular Repayments  Provider Self-Disclosure Protocol  Audit Appeal Settlement  ** New obligation to repay within 60 days of “knowledge”

31. Audits with Potential Criminal Exposure  Confidentiality  Compliance with Subpoenas  Legal Ethics  Joint Defense Arrangements

32. Preparing to Appeal  Time Frames for Each Stage  Venue and Issues  Importance of the Record  Repayment vs. Delay  Designated Staff Assistance  Getting the “F-Word” Off the Table

33. Medicare Audit Defenses: What Can Be Learned?  “I’m right, you’re wrong, and here’s why.”  “Treating Physician Rule” Best position to opine on medical necessity for patient  Waiver of Liability” Clarity of contract and provider communications  Provider Without Fault”

34. AMA Report on Claims Processing Accuracy  Claims processing inaccuracies cost $15.5 Billion  Potential for errors in commercial audits  Most accurate: Coventry @ 88.41%  Least accurate: Anthem @ 73.98%

35. Creative Arguments  Context for the Services  Supporting Documentation  Technical vs. Fundamental Defect  Late Entries and Affidavits  Engaging Legal Counsel for Settlement

36. Operational Benefits from the Audit  Policies and Procedures on Outside Investigations More than payer audits  Enhanced Corporate Compliance Program Improvements to internal self-audits Connecting audits, compliance and quality  Improved Payer Communications  Getting Off the “Radar Screen”  Limiting Repayments

37. OIG Corporate Integrity Agreement  Employee Training Covering a variety of topics  Engagement of Independent Review Organization  Claims Review Process  Repayment of Overpayments’  Reporting of “Reportable Events”

38. Mandatory Compliance Programs  Health care reform legislation authorizes mandated compliance programs  Mandated core elements  Potential rigorous self-auditing and self- reporting features  Potential penalties for not having a credible program

39. Compliance and Audit Functions  Importance of independence from operations  Clear lines of reporting and authority  Management responsible for compliance and controls  Collaborative support for investigations  Ensure follow-up on recommendations

40. Audits, Risks and Quality  Regulatory Compliance  Medical Performance  Medical Records  Patient Safety  Supervision

41. Questions David E. Jose, Esq. Krieg DeVault LLP One Indiana Square, Suite 2800 Indianapolis, IN 46204 djose@kdlegal.com Office: (317) 238-6211 Cell: (317) 695-1084 Fax: (317) 636-1507