NewslettersThe Health Law Advisor - Winter 2006COMPLIANCE CORNERCompliance Auditing - 3 Key Issues That Every Physician Should Consider As physician practices undertake compliance activities, they often engage in internal audits of billing and medical records, commonly referred to as a "compliance audit." Compliance auditing is an important component of compliance as it assists physicians in identifying potential problematic billing and documentation issues. Although compliance auditing is an important tool and should be conducted, physician practices must understand the potential risks involved in auditing and the ways to minimize risks. For example, if a physician practice is aware of overpayments involving Medicare and other governmental programs, through an internal audit or is otherwise aware, and fails to return those overpayments, the physician practice can have criminal exposure under Federal law. This compliance corner focuses on 3 tips related to compliance auditing. TIP 1 - Conduct the Compliance Audit Under the Attorney/Client Privilege: If internal audits are conducted by the practice or by a hired consultant for the practice without direction of legal counsel, the audit and all findings, including potentially harmful information, will not be protected. This means that the information can be obtained by the government in an investigation or could be discoverable in civil litigation. Although the attorney/client privilege may not be upheld in all situations, in order to provide the best protection for the practice, compliance audits should be conducted at the direction of legal counsel under the attorney/client privilege. The attorney/client privilege protects legal advice and factual information communicated for the purpose of securing and rendering the legal advice or assistance. The attorney/client privilege does not protect the underlying facts, general discussions, business or other non-legal advice that may take place. In order for a physician practice to invoke the privilege, the attorney must direct the compliance audit and all information such as reports and other documents should be marked "attorney/client privileged" and maintained separate from non-privileged documents and communications. During the compliance auditing process, legal counsel should be involved in counseling the physician with regard to handling issues that are identified including providing legal counsel with regard to potential refund issues that may arise. TIP 2 - Consider Conducting the Audit on a Prospective Basis if Possible: Compliance audits can be conducted on services that have already been billed by the practice ("retrospective audit") or on services that have been provided but the claims have yet to be submitted ("prospective audit"). In conducting an audit on a prospective basis, the billing records are prepared for submission but claims are held until completion of the audit. Because prospective audits may involve a higher level of administrative burden including holding claims for submission, some providers are hesitant to conduct audits in this manner. However, there are benefits from a legal perspective in conducting the audits prospectively. For example, if no claims have been submitted, the practice does not need to make specific refunds with regard to problems found in the audited services as the claims can be appropriately corrected, if applicable, prior to submission. TIP 3 - Be Prepared to Address the Results of the Audit: Every physician practice that conducts compliance audits must be prepared to address the results of the audit. Identifying potential problems but ignoring those problems or failing to take any efforts to address the problems can create significant legal exposure for a practice. Depending upon the issues that arise in the audit and the facts and circumstances, corrective action could include without limitation: (1) educating or re-educating providers and billing staff; (2) developing policies and procedures setting forth pertinent information with regard to the requirements for billing certain procedures and codes; and/or (3) determining whether a particular identified problem reflects a pattern of past billing problems that may have to be corrected, refunded or otherwise addressed. There are times when a physician practice must make important decisions as to how to handle issues or problems that are identified in an audit or otherwise. It is important for physicians to have legal counsel and advice when addressing these sensitive areas. THE NEW MEDICARE APPEALS PROCESSOn March 8, 2005, the Centers for Medicare and Medicaid Services ("CMS") issued its interim final rule regarding changes to the Medicare appeals process for both Part A and B appeals. The final rule was effective on May 1, 2005; however, because of the numerous changes impacting the appeals procedures, and because of the complex nature of implementing the changes, the final rule provisions are not being implemented at one time, but instead, are being phased into effect, beginning with Medicare Part A. The Medicare regulations for Part A and B appeals have been contained in 42 CFR Part 405 subparts G and H, respectively. These regulations will continue to exist for an indefinite transition period until all appeals have been completed that resulted from initial determinations made before the new procedures set forth in the final rule go into effect. The new regulations governing both the Part A and B appeal process are now contained in new subpart I of 42 CFR Part 405. Subpart I is comprised of the following:
The new five (5) step appeals process for both Part A and B providers is structured so that once a contractor makes an initial determination, a provider has 120 days to file a redetermination with the contractor. Following the contractors' redetermination decision, and within 180 days of receiving the determination, the provider may then file for reconsideration by a QIC. Following the QIC's decision, if the amount in controversy is met (i.e., $100 increased by the percentage increase in the medical care component of the consumer price index), the provider is then afforded the right to file a request for an ALJ hearing. This request must be made within 60 days from receipt of the QIC's decision. If the provider is dissatisfied with the ALJ hearing decision, the provider has 60 days to file the fourth level of appeal with the Medicare Appeals Council. The final level of appeal is the Federal district court. In order to exhaust the final level of appeal, the provider must submit the request within 60 days and meet the amount in controversy requirement of $1,000 or more. The amount in controversy requirement will be adjusted in accordance with the medical care component of the consumer price index. In June 2005, Andrew Wachler and Abby Pendleton of Wachler & Associates, P.C. published an article in the American Bar Association Health Law Section publication, The Health Lawyer, regarding the new Medicare appeals process. For a copy of this article, please contact Wachler & Associates, P.C., or click on the following link: http://wachler1.lawoffice.com/CM/Publications/The-New-Medicare-Appeals%20Process.pdf. MICHIGAN COURT OF APPEALS EMPOWERS PHYSICIANS TO CHALLENGE PRIVATE HOSPITAL STAFFING DECISIONSIn the decision of Feyz v. Mercy Memorial Hospital, et. al., published on January 13, 2005, the Michigan Court of Appeals significantly changed over twenty years of prior case law by empowering physicians with the ability to challenge private hospital staffing decisions in ways that were previously barred. Under Feyz, physicians who have been the victims of adverse actions against their medical staff privileges may now seek and pursue against the hospital certain causes of action such as breach of contract, tortious interference with contracts, tortious interference with business relations, invasion of privacy, and civil rights violations in challenging such adverse actions. The Feyz decision also limited the application of the peer review privilege in such adverse actions to a duly appointed peer review committee (e.g. an ad hoc committee convened for the purpose of investigating the hospital's allegations against the subject physician), stating that such privilege does not extend to a hospital's executive committee that was not designated as a review entity in accordance with the peer review immunity statute. |
