By George G. Olsen, JD
The strong effort in Congress and within the Bush Administration to reform administrative processes at the Centers for Medicare and Medicaid Services (CMS), formerly the Health Care Financing Administration (HCFA), has come to fruition. The strength of this movement is demonstrated by two facts. First, the Medicare Education and Regulatory Fairness Act of 2001 (MERFA), which was introduced on March 6, 2001 by Congressman Patrick Toomey (R-Pa) and Congresswoman Shelley Berkley (D-Nev), now has 236 bipartisan cosponsors, more than a majority of the House of Representatives. Second, Congresswoman Nancy Johnson (R-Conn), chairman of the Health Subcommittee of the House Ways and Means Committee, and Congressman Pete Stark (D-Calif), the ranking member of that subcommittee, introduced a new bill, HR 2768, the Medicare Regulatory and Contracting Reform Act of 2001 on August 2, 2001. This legislation is the product of dealings between these health care leaders and consequently constitutes a formidable piece of legislation. Issuance of Regulations HR 2768 provides that the release of new interim final regulations would be done on a specific and regular time frame to “insure that interested parties know when changes are pending.” Under the proposal, new regulations could be issued on the first business day of every month and a compendium of all new program guidances will be released every 4 months. Furthermore, the director of the Office of Management and Budget (OMB), in consultation with the Secretary of Health and Human Services (HHS), is directed by the bill to establish a regular time line for the progression of proposed rules to interim final rules to final rules. If the final regulations are not issued within this time frame, the CMS must reissue the interim final regulation along with the explanation of why the regulation was not finalized on time. The bill also states that final rules must be a logical outgrowth of the relevant notice of proposed rule making. According to a section by section description of the bill, “if a provision of the final rule fails to meet this logical outgrowth standard, that portion of the rule may not be finalized but instead shall be subject to an additional comment period (and will not be in effect during that time).” Compliance with Changes MERFA specifies that new policy guidance affecting providers and beneficiaries may not be applied retro- actively to services provided before the date the new policy was issued unless the Secretary determines that such retroactive application would have a positive impact on beneficiaries or providers or unless the retroactivity would be necessary to comply with statuary directives. Medicare providers would have 30 days after the receipt of notification from contractors of policy changes to comply with them. Furthermore, the proposal stipulates that if providers follow written contractor guidance, and if the Secretary determines that they have accurately presented their circumstances to the contractor in writing, then if the contractor changes its policy and there ultimately proves to be a problem with the claims, providers are protected from extrapolation against those claims retroactively. Increased Flexibility in Medicare Administration The bill expands the Secretary’s authority to contract with Medicare administrators for any of the following purposes: determination of payment amounts; making payments; beneficiary education and assistance; provider consultant services; communications with providers; provider education and technical assistance; and any other appropriate function. In selecting contractors, the Secretary is authorized to use competitive procedures. The maximum length of any Medicare administrative contract is 4 years, although the Secretary has the discretion to recontract annually. The Medicare administrative contractors will replace fiscal intermediaries or carriers as they are now known. Provider Education and Technical Assistance The bill mandates that provider education programs financed by the Medicare Integrity Program shall be coordinated to maximize the cost-effectiveness of these efforts. The legislation creates incentives for contractors to establish effective provider education and outreach programs. The incentives would be tied to specific claim payment error rates for contractor processing or reviewing of claims on behalf of the Secretary. Such rates could form the basis for performance bonuses for the Medicare administrative contractors. The Secretary is also directed to identify best practices developed by individual contractors for educating providers. The legislation stipulates that Medicare administrative contractors must provide providers with clear, concise, and accurate answers to specific billing and class reporting questions. CMS shall also implement, in consultation with provider groups, standards for timely and accurate responses to questions from providers to be included in contracts with carriers and intermediaries. Medicare contractors would be required to conduct education and training regarding billing, coding, and other appropriate items for providers. HR 2768 mandates that contractors shall conduct outreach to institutional providers with fewer than 25 employees and positions practitioners and suppliers with fewer than 10 employees to implement education programs designed for the special needs of small businesses. Small Provider Technical Assistance Program The Johnson-Stark proposal creates a new technical assistance option to be made available on a voluntary, demonstration basis to small providers. This program will offer technical experts to visit providers to assist them in evaluating billing systems, with program compliance, and with the implementation of cost-effective ways to meet Medicare obligations. The program will examine provider internal controls and systems to establish whether their compliance programs can lead to accurate Medicare payments. Of specific importance to providers is a provision in the bill stating that at the discretion of the Secretary, and where no fraud is involved, any errors found on compliance reviews would not be subject to recovery action if the technical assistance experts determine that the underlying problem has been corrected to their satisfaction within 30 days and remains corrected throughout subsequent follow-up monitoring visits. The bill calls on the Secretary to create a provider ombudsman program to assist Medicare providers in resolving conflicting guidance from HHS, its regional offices, or its Medicare administrative contractors. The ombudsman shall also have the responsibility of making recommendations to the Secretary to respond to patterns of confusion in the program, and concerning treatment of self-identifying overpayments. Provider Appeals HR 2768 substantially increases funding for administrative law judges and for improving the education and training of Medicare judges and their staffs. The Act creates a parallel structure to the provider reimbursement review board pursuant to which providers could obtain judicial review of any action of a Medicare administrative contractor that concerns a question of law or regulation relevant to the controversy. Recovery of Overpayments Legislation stipulates that providers shall have up to 3 years to offset or repay overpayments if the alleged overpayment exceeds 10% of its Medicare revenues for the most recently submitted cost reporting period for providers that file cost reports (or the previous calendar year for physicians, suppliers, and others that do not file cost reports). Of great note is the fact that the legislation allows that if a provider chooses to appeal, neither the Secretary nor contractors may recoup an overpayment until the first level of appeal is exercised. If the ruling is against the provider, then the overpayment may be collected. The bill bars contractors from conducting random prepayment reviews except when they are used to develop contractor-wide or program-wide prepayment claims payment error rates. Furthermore, a Medicare contractor may not recoup or offset payment amounts based on statistical extrapolation unless a sustained or high level of payment error has been identified, or unless educational intervention has failed to correct the payment error. Other overpayment recovery reforms include permitting contractors to request supporting documentation for a limited sample of claims to ensure that underlying billing errors have been resolved; extending to providers the opportunity to submit additional information in a consent settlement process creating a concrete end point to prepayment review; requiring that providers be notified of postpayment audits; requiring that a full review and explanation of the findings of all non-law enforcement audits be made available to providers; and notifying providers when a particular billing code is being overutilized. The legislation also directs the Secretary to create a procedure for renewal of enrollment of providers in the Medicare program. Furthermore, the Secretary must establish an appeals mechanism for providers that are disenrolled. The Act also mandates that the Secretary develop a process to afford providers a chance to correct minor errors or admissions in the submission of claims without having to initiate an appeal. Like MERFA, the Johnson-Stark proposal constitutes a welcome and very significant step forward in the effort to reform Medicare administrative processes. Rehabilitation providers should strongly encourage their members of Congress to cosponsor and support these pieces of legislation. George G. Olsen, JD, is a partner of the firm Williams & Jensen, PC, Washington, DC. He is also legal counsel for the National Association of Rehabilitation Agencies.
