The OIG 2014 Work Plan – Thoughts and Observations on Nursing Homes

On Jan. 31, the Office of Inspector General (OIG) released its 2014 Work Plan, in which it announces and discusses the projects it intends to focus on in the coming year.  I plan to do a number of posts on the Work Plan, but I want to start with an industry that receives surprisingly little attention in the document – nursing homes.

OIG only announced five areas of focus with respect to nursing homes.  The first concerns Medicare Part A billing.  OIG noted that it previously observed skilled nursing facilities (SNFs) increasingly billing for higher levels of therapy even though beneficiary characteristics remained the same; it also explained that SNFs had a high (25 percent) billing error HC BLOG_nursing home2rate.  There are two main takeaways from this.  Nursing homes need to really examine their billing practices and procedures and ask themselves if there are any systems or protocols that might improve accuracy.  And, it’s my experience that a high care level claim isn’t so much unnecessary on its face, it’s that the provider doesn’t keep or record enough information to prove that it was.  Therefore, insofar as high care level services are being billed, SNFs might think about expanding their recordkeeping practices to ensure that enough documentation is present to justify the claim.

OIG’s second area of focus involves questionable billing practices for nursing homes submitting Medicare Part B claims.  The agency specifically references stays during which benefits are exhausted or the three-day prior inpatient requirement is not met.  Obviously, that doesn’t give us much to go on.

The third area of focus is a little more specific, though probably inapplicable to most providers.  OIG indicates that it intends to focus on state agency verification of deficiency corrections.  Federal regulation requires nursing homes cited for deficiencies to provide state regulators with a plan of correction to explain how they will correct the problems.  The Centers for Medicare & Medicaid Services (CMS) State Operations Manual further requires states to verify that the cited deficiencies have been corrected.  In the Working Plan, OIG cautioned that “one State survey agency did not always verify that nursing homes corrected deficiencies.”  It’s unclear which state that was, or whether it was only the one state.  Nonetheless, I expect most states will crack down on post-correction verification.  This has two related ramifications.  When devising a plan of correction, it is essential that nursing homes be realistic.  Chances are, state surveyors will put nursing homes’ feet to the fire to make sure they take the steps they say they will.  Also, nursing homes should make sure they follow through and do what they say they will on the timetable promised.

OIG’s fourth targeted area is interesting.  It wants to evaluate the results of the CMS National Background Check Program (NBCP).  This program essentially gives states money at a 3:1 federal-state ratio (not to exceed $3 million) to help providers run comprehensive background checks on their employees.  States that participate in this program include Alaska, California, Connecticut, Delaware, Florida, Illinois, Kentucky, Missouri, New Mexico, North Carolina, Oklahoma, Rhode Island, and Utah as does the District of Columbia.  It’s interesting that the list of states is so small.  CMS has handed out tens of millions of dollars over the past several years, and most states – including Colorado – already require background checks for employees of long-term care (LTC) facilities.  The NBCP requires a more comprehensive background check system, but that seems like a lot of money to leave on the table for something states will do most of anyway.  In any event, I wouldn’t be surprised to see Colorado and a bunch of other states opt in to the NBCP or CMS make it mandatory.

The fifth area of focus involves Medicare patient hospital admissions as a result of manageable or preventable conditions at nursing facilities.  This was the subject of a 2013 OIG Report.  It’s hard to come up with a good recommendation for this one.  On the one hand, it’s probably a good thing when an LTC facility and a doctor err on the side of caution and hospitalize an ill or injured resident – to do otherwise would risk a treatable condition deteriorating.  On the other hand, though, if CMS or OIG is going to start tracking hospitalizations on a facility-by-facility basis and scrutinizing those facilities that have too high of a rate, erring on the side of caution may have real regulatory consequences.  I suppose the best thing to say is this is an issue that needs to be closely monitored going forward.

Image courtesy of Flickr by Pictures by Ann

CMS Nursing Home Regulatory Guidance — 2013 Developments

The Centers for Medicare & Medicaid Services (CMS) periodically issues guidance on federal nursing home regulations in the form of a memorandum to state survey agency directors.  The survey and certification memos can assist nursing homes in survey preparation and other regulatory compliance efforts.  Some of the important 2013 CMS guidance is summarized below. 

HC BLOG_nursing homeCardiopulmonary Resuscitation (CPR): Nursing homes should examine their CPR policy for compliance with recent CMS guidance.  S&C Memorandum, No. 14-01-NH.  According to CMS, nursing homes cannot implement facilitywide no-CPR policies.  Facility policy should specifically direct staff to initiate CPR when cardiac arrest occurs for residents who have requested CPR in their advance directives; who have not formulated an advance directive; who do not have a valid do not resuscitate (DNR) order; or who do not show American Heart Association (AHA) signs of clinical death as defined in the AHA Guidelines for CPR and Emergency Cardiovascular Care.  In addition, facility policy should not limit staff to calling 911 when cardiac arrest occurs.  Before emergency medical services arrive, nursing homes must provide basic life support, including CPR, to a resident experiencing cardiac arrest in accordance with an advance directive, or if there is no advance directive or DNR order.

Although CMS acknowledges that CPR is ineffective in the elderly nursing home population, CMS notes the changing demographics in nursing homes.  In 2011, approximately one in seven nursing home residents were under age 65, many of whom were short-stay residents.  In addition, nursing home residents have become more ethnically diverse, which emphasizes the need for full implementation of advance directives and individualized care, CMS says.

The guidance states that nursing homes must ensure that CPR-certified staff is available at all times to provide CPR when needed.  However, CMS does not address which agencies can certify nursing home staff in CPR.  Because CMS refers to the AHA’s standards, it is likely that CMS would deem AHA CPR certification acceptable.

Access and Visitation Rights: CMS has issued a reminder concerning the right of nursing home residents to receive visitors.  S&C Memorandum No. 13-42-NH.  Nursing homes must provide 24-hour access to all individuals visiting with the resident’s consent.  However, certain visitors can be subject to reasonable restrictions designed to protect the security of all residents in the facility, such as denying access to individuals who engage in disruptive behavior.  Because CMS is reminding surveyors to ask during resident and family interviews if they understand that visitors are allowed 24 hours per day, nursing homes should review their visitation policies, as well as the implementation of these policies, to ensure that visits are not being limited or restricted against residents’ wishes, unless there is a reasonable restriction.

Naso-Gastric Tubes: CMS has revised surveyor guidance relating to naso-gastric tubes by expanding and clarifying the definition of naso-gastric tubes.  S&C Memorandum No. 13-17-NH.  Since CMS issued the regulation relating to naso-gastric tubes, found at 42 C.F.R. § 483.25(g), their use has become extremely rare, while the use of other types of enteral feeding tubes has become prominent.  The surveyor guidance expands the definition of naso-gastric tubes to include any feeding tube used to provide enteral nutrition to a resident by bypassing oral intake, such as a gastrostomy tube, jejunostomy tube, and a transgastric jejunal feeding tube.  Nursing homes should review their policies and procedures to ensure compliance with 42 C.F.R. § 483.25(g) for all residents who receive nutrition other than through oral intake.

Dementia Care: CMS has issued surveyor guidance relating to nursing home residents with dementia.  S&C Memorandum No. 13-35-NH.  The guidance expresses concern about the practice of using psychopharmacological medications to try to address behaviors without first determining whether there is a medical, physical, functional, psychological, emotional, psychiatric, social, or environmental cause.  CMS has created surveyor training about behavioral health and dementia care and updated the interpretative guidance in Appendix PP.  Based on the increased scrutiny of residents with dementia and the use of medications, nursing homes should review dementia care practices, including ensuring that medications, such as antipsychotics, are being used with adequate rationale.

Apparently nursing homes are doing a good job decreasing the use of antipsychotic drugs.  Several months after CMS issued its surveyor guidance on dementia care and drug use, it issued a press release stating that new data show that antipsychotic drug use is down in nursing homes nationwide.  The data show that nursing homes are using antipsychotic drugs less and pursuing more patient-centered treatment for residents with dementia and other behavioral health issues.

Image courtesy of Flickr by Sima Dimitric

Medicaid Fraud Temporary Suspensions – Bringing a Thermonuclear Weapon to a Knife Fight

Turns out I missed this story when I was busy the last week or two.  Yes, this is a Colorado-based health law blog, and this story is from Texas, but (1) as someone who was born and raised and educated in Texas through college, I retain some interest in happenings in the state, and (2) I’m particularly interested in the goings-on at the Attorney General’s office there because my wildly more successful law school classmate is the Texas solicitor general.  So cut me some slack.

This brings up a topic that is central to a case I’ve been working on, and one that has really piqued my interest – the power of state Medicaid agencies to withhold pending claims and to “temporarily” suspend a provider’s participation in the Medicaid program in cases where they suspect fraud.  I should note that Knicole Emanuel has written a lot about this, particularly from aHC BLOG_bomb North Carolina perspective.

Here’s the scoop.  In 1987, the Department of Health and Human Services promulgated 42 CFR § 455.23, which permitted – but did not require – state Medicaid agencies to withhold payments “upon receipt of reliable evidence that the circumstances giving rise to the need for a withholding of payments involve fraud or willful misrepresentation under the Medicaid program.”  Every state has subsequently enacted laws or regulations adopting this fraud withholding power.  Colorado’s, for example, is here (click through to Section 8.076.4).

Furthermore, DHHS’s withholding authority was not just limited to the funds that could be associated with the suspected fraud.  To the contrary, commentary to the initial regulation expressly contemplated that if state Medicaid fraud investigators had reliable evidence that any of the funds owed to a provider were tainted by fraud, then all owed funds could be withheld.  (The federal printing office only makes the Federal Register available online through 1994, but for those with Westlaw or Lexis access, the cite is 52 Fed. Reg. 48814.)  The theory behind that decision is that it’s frequently difficult to determine which claims are fraudulent and which aren’t until after an investigation is complete, so states should have the ability to withhold all (or substantially all) funds until they can figure out what’s what.

That sounds onerous enough, right?  It gets worse.  In 2011, Section 455.23 was amended to drastically expand state Medicaid agencies’ withholding and suspension powers.  This isn’t just my characterization of the effects of the amendment; the official commentary makes clear that DHHS believes that the new burden of certainty or proof is significantly relaxed under the new language.  The amended regulation now requires (and not just permits) states to withhold payments to providers and suspend their Medicaid participation “after the agency determines there is a credible allegation of fraud for which an investigation is pending under the Medicaid program against an individual or entity unless the agency has good cause to not suspend payments or to suspend payment only in part.”  Subsection (f)(3)(i) goes on to say that good cause to partially withhold funds will only exist if the state determines that the suspected fraud is limited to a certain type of claim or certain business unit, meaning the overwhelming presumption is that if a “credible allegation of fraud” is asserted against a provider, that provider is essentially completely barred from receiving any Medicaid funds or participating in the Medicaid program until that allegation is resolved.

That’s not all.  Making this Medicaid withholding power potentially even more onerous, 42 CFR § 455.2 defines a “credible allegation of fraud” to be any allegations with an “indicia of reliability.”.  This includes allegations from seemingly unreliable sources like fraud hotline complaints or claims data mining.  To be sure, the Medicaid fraud suspension regulations caution that state Medicaid agencies should reviewed all allegations, facts, and evidence carefully and act judiciously on a case-by-case basis.  But this puts a lot of trust in those agencies to exercise their discretion appropriately.

That’s my main concern.  In theory, withholding is supposed to be a temporary action to avoid paying fraudulent claims while the provider in question is being investigated.  In practice, giving state Medicaid agencies the power to essentially withhold all of a provider’s claims for a year or two can often be a death knell for that provider.  That’s probably why withholding has been called “an aggressive and controversial penalty.”  (Note:  I’m not saying that the agency intends to use temporary suspension or withholding as a weapon to close down providers, just that it’s the way it works out sometimes.  I’m also not saying that it would be a bad thing to give state agencies the ability to come in and shut down providers altogether when there is sufficient evidence of fraud, just that it’s not or shouldn’t be the purpose of temporary suspension.)  This is especially true when the state is investigating a particularly problematic industry, where it can be tough to distinguish between legitimate providers and fraudsters.  The temptation to just shut everyone down can be hard to resist.

So that takes us to Texas.  Apparently, there has been a lot of fuss over the past several years about orthodontic and dental Medicaid fraud in that state. For example, Texas spent more Medicaid dollars on orthodontic services between 2008 and 2010 than all other 49 states combined.  State investigators ultimately determined that Texas had been bilked out of $550 million.  They initiated withholding actions against more than 40 providers.

Some of the providers didn’t think they did anything wrong, and they appealed the withholding.  Two of those cases made it up to an administrative law judge.  Guess what?  The state lost.  According to the article, both ALJs essentially held that although the claims at issue may have been technically deficient (for example, there seems to be substantial disagreement in at least one case between the state’s medical expert and the dentist who owned the provider in question about medical necessity), there was no evidence of intentional fraud or dishonesty.  Even after these decisions, Texas refused to release the money, and one of the cases went up to the courts.  The state lost again and it promises to appeal.  They’re really fighting these cases tooth-and-nail, which is par for the course, in my experience.

So what’s the takeaway from all of this?  I think there are two important lessons to be learned.  It can seem hopeless for a lot of providers caught up in a withholding action.  You lose time and time again – at the informal decision stage, at the informal reconsideration stage, and on and on.  But if you really are a legitimate Medicaid provider who just got lumped in with the fraudsters, and if you keep fighting for your reputation (and your withheld/suspended claims, though that’s usually a secondary concern for providers on the up-and-up), you have a good shot at ultimately prevailing, even if it requires going to the courts.

That said – and this is the second important point – it’s not going to be quick or easy.  Medicaid agencies tend to get their hackles up when providers fight back.  Positions harden, and the precautionary withholding becomes (in their eyes) a life or death fight to prevent crooks from operating in the state.  So if you can avoid contentious litigation (whether that’s at the administrative level or the judicial level) and negotiate a more amicable resolution with regulators, you should try to do so (says the lawyer who has fought this fight on both sides of the aisle).

Image courtesy of Flickr by Aaron Yendall

The Future of Medicaid Secondary Payer Reporting Regimes (Part III) – Medicare Secondary Payer Reporting and Medicaid Liens

Let’s do a three-sentence recap of the first two posts on this subject.  Medicaid is a federal-state partnership that pays for health care for poor people with a combination of federal and state dollars.  The Affordable Care Act recently expanded the recipient population to any persons making 133 percent or less of the federal poverty line, and it changed the makeup of the federal-state funding for this group so that all of the dollars until 2016 – and at least 90 percent after that – are from the federal government.  Finally, to the extent that a third party caused an injury that requires medical care paid for by Medicaid, the state Medicaid agency will have a lien against any judgment or settlement against that third party – but it will have to pay the federal government back its share.

See the problem?  The state is the one that needs to spend the time and resources chasing judgments or settlements that it may have some claim against.  But if it has to repay all (or nearly all) of the federal portion of that amount, what incentive will it have to go after liens against the Medicaid expansion population?  It’s all pain and no gain!

If you can see that, and I can see that, you can be pretty sure CMS can see that as well.  That’s one of Mary Re Knack and David Farber’s main points – this dynamic whereby states have the obligation but not the incentive to recover Medicaid lien funds is unsustainable, and we should expect to see some efforts by the federal government to correct this flaw.

What might those be?

(1)  The federal government could take over the job of pursuing Medicaid lien funds.  I’m not going to talk about that, because it’s wildly unrealistic, but more importantly, because there’s just not much I can say about it.

(2) Remember how CMS pays state Medicaid agencies?  The state provides a quarterly estimate of how much it thinks it’s going to spend over the next three months, and the federal government fronts its share of that – but only after it adjusts for any overpayment (or underpayment) from the prior quarter.  CMS could just deduct an amount corresponding to the lien funds from the quarterly advance, and if the state wanted to make up that deficiency, it would have to take action itself.  But there are three problems with this.  First, it seems draconian for the federal government to deduct a lien amount up front, when the state Medicaid agency might be able to recover it at some undetermined point in the future.  Second, states currently forego pursuing reimbursement actions for the vast majority of settlements and judgments – they are just too small to make it worth the Medicaid agency’s time to pursue them.  That discretion would vanish if CMS started deducting all potential lien amounts from its quarterly payments.  Third, and perhaps most importantly, how would CMS even know about settlements or judgments potentially subject to a Medicaid lien?  More on this in a second.

(3) There is one final way that the federal government could incentivize states to pursue settlements and judgments.  It could reimburse state governments for any costs associated with an attempt to recover Medicaid liens, by paying directly for those costs or (more likely) by paying a percentage of the recovery.  This is more promising, but it begs an important question – would a reasonable fee in successful lien cases be adequate to reimburse the state for monitoring and enforcement costs, which typically are incurred in all cases?  In other words, a state must pay for some sort of monitoring system to flag settlements and judgments; this will (presumably) identify a subset of settlements or judgments potentially subject to a Medicaid lien; the state will go after some smaller percentage of those settlements and judgments that are sufficiently large (and have sufficiently high prospects of success) to justify the effort; and the state will succeed in some smaller percentage of those reimbursement actions.  Any contingency fee paid off of recoveries in that last, smallest group of cases must be large enough to pay for all monitoring and enforcement costs.

What should be apparent from the last couple of points is that monitoring costs are hugely important.  While the Section 111 program has been more or less successful, it’s probably impracticable for states – or at least many of them – to duplicate it.  But it’s not realistic to operate under a beneficiary self-reporting system, like most states (including Colorado) do today.  As I mentioned before, the incentive for plaintiffs to report settlements or judgments that they then would have to give back is just too great for that sort of system to function.

I have an idea of a different sort of reporting system.  I know I said three posts on this topic, but we’re going to have to make it four.