January 21, 2022 | By Sean Weiss, CHC, CEMA, CMCO, CPMA, CPC-P, CMPE, CPC
While I am sure you have heard it several dozen times by now, I want to welcome you to 2022 because that is where the pleasantries end. 2022 will see Medical Necessity put front & center not only in audits by payors (government and commercial) but also in False Claims Act (FCA) cases.
Provider engagement in 2022 will be critical to ensure claims are substantiated. Most folks would point to the fact that Evaluation and Management Service (E/M) codes have been simplified since the History and Examination components are no longer scored. This, however, is a fallacy because there is nothing in the Medicare Program Integrity Manual that says a History and Examination are no longer required. In fact, it requires that a “medically appropriate” History and Examination be documented. Cutting corners in documentation especially in 2022, after a full year of evidence showing the government and commercial payers are uber aggressive, is not the way to approach things.
I am writing this article for NAMAS on January 10th and can share with you that more than a dozen new and previous clients have reached out requesting assistance with audit appeal and consulting/expert witness testimony for upcoming cases. 2022 is going to be a true test of our resolve and ability to counterpunch payers when they hit us with refund demands or denials based on arguments that billed services were “not medically necessary.” You have to be prepared because the government is really reaching on their claims when it comes to the False Claims Act (FCA). Thus, I thought I’d dust off some old case law and focus on defensibility of claims from a consulting and testifying expert’s (non-legal) perspective. I believe the model that case experts and attorneys should look to is United States v. Prabhu, handled by the U.S. Second Circuit Court of Appeals. This is a fascinating case for a number of reasons, but it may be the only instance I am aware of that a $22M claim against the provider was transformed into a judgment against the government for $542K – because the government failed to prove its allegations.
There are a couple of items to keep in mind, first how we define the term “false or fraudulent” in the FCA. Per Webster’s Third New International Dictionary, “a common definition of ‘fraud’ is ‘an intentional misrepresentation, concealment, or nondisclosure for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or to surrender a legal right.’” Webster’s goes on to say that “‘false’ can mean ‘not true,’ ‘deceitful,’ or ‘tending to mislead’.”
Under the FCA, a person is deemed to have acted “knowingly” when they perform “acts in deliberate ignorance of the truth or falsity of the information” or “acts in reckless disregard of the truth or falsity of the information [31 U.S.C. §3729(b)].”
It is important to remember that true claims do not result in FCA liability and the FCA does not apply to claims that are not objectively false. The FCA does not apply when government officials are aware of the alleged misconduct nor does FCA apply to non-materially false representations. The FCA does not apply to merely negligent conduct nor does the FCA apply when the defendant’s conduct is consistent with a reasonable interpretation of law. In Prabhu, as to the medical necessity documentation issue, no rule existed regarding how a physician must document the need for these services. Thus, the physician offered medical testimony showing that each of these services were medically necessary and indicated. Now, under the Social Security Act (SSA), Medicare claims processing contractors may provide coverage only for those services that are “reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member [42 U.S.C. § 1395(A)(1)(A)].” I will address this a bit further down.
A topic I address on a regular basis has to do with the terms “medically necessary” or “medical necessity” and with close to 100 percent of the commercial payer contracts reviewed and as addressed by federal and state payer plans as defined at 2 CFR 438.210(a)(4) or, in the case of EPSDT, services that meet the criteria specified in Title 22, Sections 51303 and 51340.1. with multiple uses of the terms defined on Law Insider (https://www.lawinsider.com/dictionary/medical-necessity) ““medical necessity” or “medically necessary” shall mean health care services that a physician, exercising prudent clinical judgment, would provide to a patient for the purpose of preventing, evaluating, diagnosing or treating an illness, injury, disease or its symptoms, and that are: a) in accordance with generally accepted standards of medical practice; b) clinically appropriate, in terms of type, frequency, extent, site and duration, and considered effective for the patient’s illness, injury or disease; and c) not primarily for the convenience of the patient, physician or other health care provider, and not more costly than an alternative service or sequence of services at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of that patient’s illness, injury or disease. For these purposes, “generally accepted standards of medical practice” means standards that are based on credible scientific evidence published in peer‐reviewed medical literature generally recognized by the relevant medical community or otherwise consistent with the standards set forth in policy issues involving clinical judgment.”
As previously mentioned above, “medical necessity” is defined under Title XVIII of the Social Security Act, Section 1862 (a) (1) (a): “Notwithstanding any other provision of this title, no payment may be made under part A or part B for any expenses incurred for items or services which, except for items and services described in a succeeding subparagraph, are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.” The preceding is a legal doctrine by which evidence-based, clinical standards are used to determine whether a treatment or procedure is reasonable, necessary, and/or appropriate. The Medicare statute requires that any “rule” or other statement of policy (other than a material coverage decision) that establishes or changes a substantive legal standard must be promulgated by regulation, 42 U.S.C § 1395hh. CMS often fails to promulgate a standard for determining whether a service is reasonable and necessary, which is why courts give deference to the determination of the “treating physician” [United States v. Prabhu, 442 F. Supp 2d 1008 (D. Nev 2006)].”
Another point to make here that ties back to Prabhu is that clarity of medical necessity issues affects whether a claim is “false” and whether the requisite “knowledge” exists. It is important to keep in mind that “Claims are not ‘false’ under the False Claims Act (FCA) when reasonable persons can disagree regarding whether the service was properly billed to the government [Prabhu].” Remember, “A Defendant does not ‘knowingly’ submit a ‘false’ claim when his conduct is consistent with a reasonable interpretation of ambiguous regulatory guidance [Prabhu].” The limitation/waiver of liability provides coverage if the provider “did not know, and could not reasonably have been expected to know,” that payment would not be made due to the reasonable and necessary exclusion [42 U.S.C. § 1395 pp (Prohibition against any Federal interference)].
The problem that our clients and many providers run into is how CMS defines “medical necessity” – a problem that will be central to compliance in 2022. The fact is there are no actual regulatory provisions, leading CMS to issue broad and nondescript National Coverage Determinations (NCDs) from time to time. Local Coverage Determinations (LCDs) may be issued but oftentimes are ignored or the UPIC/RAC/MAC and/or other contractor(s) try to make arguments on coverage guidelines not in effect at the time the services were rendered.
As you know, “medical necessity” at the MACs is evaluated on a case-by-case basis, which then opens the door to subjectivity and interpretation as to what potentially benefits the payer.
The final piece I would like to speak to on structuring your strategy for successfully defending your claims is chapter 3, section 22.214.171.124 of the Medicare Program Integrity Manual, entitled “Medical Record Review (Rev. 825, Issued: 09-21-18, Effective: 10-22-18, Implementation: 10-22-18).” The guidance in this section applies to payers, and it requires that their coverage determinations be made only by RNs, LPNs, or physicians unless the task can be delegated to another licensed health care professional. Reviews of coding determinations, likewise, must be made by certified coders, but should also be made by those who possess the requisite skills in the specialty they are reviewing. Upon receipt of disclosure of the identity and qualifications of the auditors, a request for the disclosure of the identity and qualifications of the auditors should be made. The MACs, MRAC, CERT, RACs, and ZPIC/UPICs shall maintain a credentials file for each reviewer (including consultants, contract staff, subcontractors, and temporary staff) who performs medical record reviews. The credentials file shall contain at least a copy of the reviewer’s active professional license.
So, this gives us a model by which we can potentially defend medical necessity claims:
- Review guidance regarding the service from authoritative sources (CMS, AMA, Payor LCD, LCA, NCD). Understand the government’s regulatory basis for its claim.
- Retain experts with proven experience regarding the provision of services & billing requirements.
- Demonstrate services provided were consistent with generally accepted standards of medical practice and establish that, at worst, reasonable persons can disagree regarding the provision of the service. This is so important because if reasonable persons can disagree, then the payer cannot argue that a definitive violation of the FCA has occurred.
- Demonstrate “good-faith” that services were medically necessary and appropriate.
Folks, hang on tight because 2022 is going to be a rough one!