Compliance Today - December 2019

Compliance program elements

IAs require that the practitioner establish and maintain a compliance program that includes certain specified elements, including those outlined below.

Reporting requirements

Breach and default provisions

In addition to the false certification penalty, the IA includes breach and default provisions that allow the OIG to impose daily penalties (typically, $1,500 per day) for the practitioner’s failure to comply with the obligations of the IA, including (among other things) the failure to implement the various compliance program requirements, the failure to timely submit the required reports, and the failure to grant the OIG access to the books, records, and personnel necessary to verify the practitioner’s compliance with the IA. In addition, the OIG may find a practitioner in material breach of the IA for certain specified violations, including the failure to report a “reportable event,” repeated violations or a flagrant violation of the IA obligations, and the failure to engage and use an IRO. The consequences of material breach are severe—exclusion of the practitioner from participation in the federal healthcare programs. The IA includes appeal rights relating to any penalties that are imposed and any finding of a material breach, which include the right to request a hearing before an administrative law judge.

Claims review requirements

As noted above, IAs require the practitioner to retain an IRO to perform quarterly reviews of claims submitted to the Medicare and Medicaid programs. Although CIAs provide for annual claims reviews, the OIG requires quarterly claims reviews in its IAs, so the practitioners subject to the IA have the opportunity to identify issues with their claims throughout the year. This puts them in a better position to correct those issues, rather than waiting for the end of the annual reporting period with the potential for a much larger overpayment to accrue.

Role of the IRO

The IRO’s review typically consists of a review of 30 paid claims that are randomly selected by the IRO from a list of all claims submitted by the practitioner and reimbursed by federal healthcare programs during the preceding three-month period. The IRO uses RAT-STATS, the OIG’s statistical software (available through the OIG’s website), to select the 30 paid claims.^[3] The paid claims are reviewed by the IRO to determine whether the items or services were medically necessary and appropriately documented and whether the claim was correctly coded, submitted, and reimbursed.

The IRO must prepare a report of its findings for each quarterly claims review that includes the information specified in an appendix to the IA. For the initial claims review, the report must include a description of the practitioner’s billing and coding systems, including the personnel involved in the coding and billing process, and describe the controls in place to ensure that all items and services billed to Medicare or a state Medicaid program are medically necessary and appropriately documented. The claims review report also must include the quantitative results of the review (i.e., the number and percentage of claims billed in error) and a narrative of the IRO’s findings (i.e., reasons for the identified errors, patterns, and recommendations for improvements to systems or controls). The IA requires that any overpayments identified by the IRO in its claims review must be refunded to the appropriate payors within 60 days, consistent with the requirements of the CMS overpayment rule.

Because the claims review performed by the IRO includes a review of the medical necessity of the items and services billed, the IRO retained by the practitioner must be able to assign licensed nurses, physicians, or other licensed healthcare professionals who have the relevant education, training, and specialized expertise to make the medical necessity determinations. IRO personnel also must have expertise in the Medicare and state Medicaid program requirements applicable to the claims being reviewed. IRO personnel who conduct the coding review must have a nationally recognized coding certification. The IRO also must be able to certify that it can perform an independent and objective claims review. For purposes of the IA, “independence” and “objectivity” are defined in the Government Auditing Standards issued by the U.S. Government Accountability Office (the Yellow Book).^[4]

With practitioners, the role of the IRO is not always well understood. It is quite different from the monitor assigned to the IA by the OIG. IROs are auditors. They must comply with the most recent Government Auditing Standards in the Yellow Book.^[5] IROs must be and remain independent and objective in their reviews. They are neither an agent of the government nor an advocate, consultant, or advisor for a practitioner under an IA. The scope of the IRO’s work is outlined in the appendices to the IA. An IRO’s scope of work does not include the preparation or assistance with the implementation report or annual report or managing the IA integrity obligations for the practitioner. The IRO also does not send its reports to the OIG directly but provides them to the practitioner for submission. Practitioners may face several common issues and challenges, especially during the first quarter of the first IA reporting period. Being aware of those can make the difference between just surviving or thriving under an IA.

Timelines

IAs have various due dates and timelines for reports. From an IRO perspective, planning, developing, and communicating a schedule are critical. It is important to watch the timeline. This is not only true for the IRO but equally, if not even more so, important for the practitioner.

The clock for compliance with the IA by the practitioner starts with the Effective Date (i.e., the date of the last signature on the IA). However, the clock for the claims review starts 30 days following the Effective Date. The following is a sample timeline:

• IA Effective Date: January 1, 2019

• Implementation Report due date : April 1, 2019

• End of first three-month claims review period: May 1, 2019

• IRO selection of claims review sample: May 16, 2019

• IRO’s first quarterly claims review report due date: June 30, 2019

The IRO may provide additional deadlines to the practitioner based on the IRO’s work plan. If a deadline (whether set by the IRO or one established in the IA) cannot reasonably be met, the practitioner should request an extension as soon as possible. It is a good idea to review IRO record requests and initial submissions of claims materials very carefully to avoid unneeded delays. The initial submission should be as complete and accurate as possible, and unnecessary supplemental material requests be avoided. Staff changes at the practice can have a major impact and cause delays. It is important to designate a main contact (e.g., practice administrator) to deal with the IRO’s requests but also have a backup for that person in case of illness, turnover, temporary leave, etc. Furthermore, good record keeping at the practice about all IA-related documents and requests is a must. Both the primary contact and the backup need to know how all documents and information can be accessed, if needed.

Data issues

The IRO will ask for a data set of paid claims for purposes of selecting the random sample of claims to be reviewed. The practitioner may not have readily available extraction processes or the capability to present the claims data in an appropriate format and with all needed data fields (e.g., dates of service, dates of payment, CPT code, paid amount, patient name, and payor). In the first three-month review period, it is wise to test the claims data extraction process and assess if assistance from the software vendor of the electronic health record or billing system is needed. Due to the independence and objectivity requirements, the IRO cannot perform a test review of sampled claims with the practitioner and provide an assessment of the test. The IRO can, however, conduct a test of data set extraction with the practitioner to assess if meaningful and appropriately formatted claims data extraction is possible and if source data for a claims population can be made available in a timely manner. If not, additional programming and application back-end work is needed, and the practitioner needs to work on getting the extraction process ready.

Estimates

The IRO reviews a random sample of paid claims for the quarterly claims review and calculates two important claims statistics: (1) the error rate and (2) the mean point estimate. The error rate is a financial error rate and is calculated by dividing the overpayment identified in the quarterly claims review sample by the total dollar amount associated with the paid claims in the sample. Underpayments may not be netted out in the calculation of the error rate (i.e., a gross financial error rate is applicable). The mean point estimate expands the average overpayment in the sample to the population of paid claims. Practitioners must determine whether to refund the identified overpayments from the claims review sample or an extrapolated overpayment (i.e., the mean point estimate). In past IAs, the OIG had provided a threshold financial error rate (5%) that mandated specific further action, such as sample expansion and extrapolation. There is no longer a 5% threshold to trigger certain follow-up action steps. Instead, the practitioner must consider whether the CMS overpayment rule requires the repayment of an extrapolated overpayment or other corrective steps, such as additional auditing or education. It is important to note that the IRO does not and should not determine if the sample overpayment or an extrapolated overpayment should be refunded.

The IRO just calculates the estimates. However, information included in the IRO’s claims review report, such as the confidence interval and precision of the estimate, the error rate, and any systemic patterns noted, may factor into the practitioner’s decision-making.

If the practitioner is not familiar with the details of the CMS overpayment rule, then after the first quarterly claims review is completed, the practitioner may not be prepared to determine the amount of the overpayment that has been identified and therefore should be refunded. As a result, practitioners should be proactive and engage with attorneys or other advisors prior to or in connection with the signing of the IA to understand the requirements of the CMS overpayment rule.

Document requests/supplemental materials

The IRO must request all documentation and materials required for its review of claims in each quarterly claims review sample, and the practitioner must furnish such documentation and materials to the IRO, prior to the IRO initiating its review of the sample. The IRO may request and accept supplemental documentation or materials. However, which supplemental materials are accepted, and the weight given them, must be documented and part of the IRO’s claims review report.

Supplemental materials should be the exception and not a means to provide what should have been made available in the first place and with the initial submission to the IRO. The need for supplemental materials may indicate a document management and retention issue. It is in the IRO’s discretion to accept supplemental materials or not. On the one hand, the practitioner should pay careful attention to the assembly of the initial submission to ensure it is complete and neatly organized. On the other hand, the IRO should be specific enough with its request for the information needed to perform the claims review and the manner in which such information should be submitted to the IRO. Communication with the IRO on how this document submission process should work is important.