Hot Topics in Laboratory

Regulatory AffairsPresented By Christopher P, Young, CHC

cpyoung@cox.netwww.labcomply.com

at the:2011 Ohio River Valley CLMA/AACC Conference

March 18, 2011

Objectives

• Understand what the government intends to do in the area of regulatory and Medicare and Medicaid compliance in the near future.

• Plan for upcoming regulatory and billing changes that may be imposed by the government by hearing specific “best practices” for these changes.

• Get specific information about questions participants may have concerning their own laboratory problems and issues during the question and answer portion of the program.

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Recent Congressional Testimony

• Daniel R. Levinson, Inspector General (IG), Dept of Health and Human Services (HHS)

• March 2nd and March 9th gave testimony before several congressional committees

• “New Tools for Curbing Waste and Fraud in Medicare and Medicaid”

• Lewis Morris, Chief Counsel to the HHS IG– March 2nd testimony to House Ways and Means

subcommittee on Oversight

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Recent Congressional Testimony

Gerald T. Roy, Deputy Inspector General for Investigations, HHS

Omar Pérez, Assistant Special Agent in Charge, OIG, HHS

Testimony before The House Committee On Energy and Commerce Subcommittee on Oversight and Investigations

“Waste, Fraud and Abuse: A Continuing Threat to Medicare and Medicaid”

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Daniel Levinson – HHS - OIG

“the majority of health care providers are honest and well-intentioned”

In the last fiscal year (FY 2010), the OIG has:

Opened more than 1700 investigations Resulting in over 900 criminal and civil actions More than $3 billion in “expected” recoveries Including $1 billion in audit receivables

“Fraud is a serious problem requiring a serious response”

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Common Health Care Schemes

Purposefully billing for services never provided

Purposely billing for services that are not medically necessary

Billing for a higher level of service than was provided

Misreporting cost or other information to increase payments

Paying or receiving kickbacks

Illegal or improper marketing of products

Providing substandard or poor quality care

Stealing providers’ or beneficiaries’ identities

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Waste, Fraud and Abuse

CMS estimates that 10.5% of fee for service claims paid in FY 2010 did not meet program guidelines

Government considers these “errors in payment” found through its error testing audits like CERT and RAC audits

Main reasons:

Insufficient documentation Miscoded claims Medically unnecessary services

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Collaborative Effort

“Collaboration and innovation are essential in the fight against health care fraud”

HIPAA of 1996 established the Health Care Fraud and Abuse Control (HCFAC) Program

Return on investment in this program is $6.80 returned for every $1.00 spent

$4 billion in FY 2010, $18 billion since 1997

May 20th, 2009 HHS Secretary and Attorney General announced creation of Health Care Fraud Prevention and Enforcement Action Team (HEAT)

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HEAT

Assembles resources from different government agencies and enhances partnerships between agencies

“Strike Forces are designed to identify and investigate fraud, and prosecute the perpetrators quickly “

Strike Force teams are composed of dedicated prosecutors from DOJ and U.S. Attorneys Offices and Special Agents from OIG; the Federal Bureau of Investigation (FBI); and, in some cases, State and local law enforcement agencies

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HEAT

Enforcement teams are supported by data analysts and program experts

Teams use data to identify suspicious billing patterns as they occur

OIG created a team of data experts composed of OIG special agents, statisticians, programmers, and auditors

Have decreased the time from start of investigation to prosecution by approximately half

10

ACA Enhancements to Program Integrity

Increased funding for new technology and “boots on the ground”

More robust enrollment screening and more intense payment oversight for new providers

Enrollment “moratoria” when the Secretary identifies fraud “hot spots,”

Heightened disclosure and transparency requirements

Mandatory compliance programs 11

Other Enforcement Tools

Authority to suspend payments pending investigation of “credible” allegations

Changes to the False Claims Act, the Federal anti-kickback statute, OIG’s administrative authorities, and the Federal Sentencing Guidelines to allow more effective prosecution and stiffer penalties

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Permissive Exclusion Authority

No program payment may be made for any item or service that an excluded person or entity furnishes, orders, or prescribes

Entities cannot employ excluded individuals

OIG weighs fraud risk against considerations like access to care

Some entities cannot be excluded because they are too big or are a sole provider, etc.

Discretionary exclusion allows the government to exclude individuals and executives of companies

Are excluded as “responsible corporate officers”

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Permissive Exclusion of Executives

Seen as a deterrent in cases where the executive or employee may be willing to risk non-compliant behavior because the cost/benefit ratio of getting caught can be absorbed by the business or affects the business but not them directly

As long as the profit outweighs the cost may be considered part of the “cost of doing business”

Excluding individuals responsible for the non-compliant behavior of a company serves the purpose of deterrence

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Permissive Exclusion of Executives

Can be imposed even if the employee was not actually convicted of any crime themselves

OIG has used this authority in over 30 cases since 1996

Previously only used in smaller companies but now may be used in larger, more complex organizations

Would be imposed in those cases where evidence shows that an individual knew, or should have known of the fraud

OIG will operate with a “presumption in favor of exclusion”

Guidelines are published on the OIG website

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Enlist The Public and “Honest Providers”

Provides guidance documents for beneficiaries and health care providers to help them prevent or detect fraud and abuse

Provides compliance program guidance for providers

Provides training for companies on how to prevent and detect non-compliant behavior

Published “10 most wanted” list of fugitives

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HEAT Provider Compliance Training

Free half day seminars on how to create a “culture of compliance”

Hear from the Office of Inspector General and other government experts as they educate local health care providers, compliance officers, and their legal counsel about the realities of Medicare fraud and the importance of implementing an effective compliance program

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HEAT Provider Compliance Training

Get the Facts. Understand the law and the consequences of violating it

Make a Plan.  Cultivate a culture of compliance within your health care organization

Know Where to Go. Learn what to do when a compliance issue arises

All classes are filled but the Washington DC training on May 18th will be webcast

http://compliance.oig.hhs.gov/index.html

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FERA of 2009

Fraud Enforcement and Recovery Act (FERA) of 2009

Significantly expanded the scope and applicability of the Federal False Claims Act (FCA)

Coupled with the ACA, cases against providers for FCA violations have new meaning and significantly improves the government’s chances at successful prosecutions for FCA violations

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FERA and FCA

Changes the requirement that a claim must be “presented to the government” to include claims presented to agents and contractors of the government

Definition of claim now includes; “requests or demands for money or property where the government has paid or will pay any portion of the money, regardless of whether the government actually has title to the property at the time of the request or demand.”

Ensures that the FCA is applicable to Medicaid and Medicare Advantage Plans

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FERA and FCA

Removes the language that required “specific intent” to defraud the government and replaces it with language that says a liability under the FCA may exist as long as the false record or statement was “material” to the claim meaning it had a tendency to influence the payment or receipt of money or property

Some interpret this as making it possible to include vendors in FCA actions

FERA also extends liability to keeping funds retained through a false claim by making the refunding of that money an “obligation”

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FCA Title 31, Section 3729(b) Expanded

(b) KNOWING AND KNOWINGLY DEFINED.—For

purposes of this section, the terms ‘‘knowing’’ and ‘‘knowingly’’ mean that a person, with respect

to information—

(1) has actual knowledge of the information; (2) acts in deliberate ignorance of the truth or falsity

of the information; or (3) acts in reckless disregard of the truth or falsity of

the information, and 6402(f) adds no proof of specific intent to

defraud is required

Reporting and Returning Overpayments

• If a person has received an overpayment, the person “shall”– Report and return the overpayment – Report means a written statement of the reason for the

overpayment– Report shall be to the “Secretary, the State, an

intermediary, a carrier, or a contractor, as appropriate, at the correct address”

• The deadline for returning and reporting is 60 days from the date the overpayment is identified or the date a cost report (if applicable) is due

• Failure to report and refund by the 60 day deadline constitutes an actionable violation of law (an obligation) so, missing the deadline turns a simple error and refund into a potential FCA violation

Obligation To Return

Laboratories now must meet the 60 day deadline which means:

Investigate a potential overpayment situation,

Reconcile possibly complex computations,

Consider possible defenses with in-house or outside counsel,

File an appropriate report explaining the facts, and

Make a full refund of a potentially large amount of money

Example Refund vs FCA

Example: Overpayment caused by computer error discovered in a routine audit – Test X @ overpayment of $10.00 per test. Test X volume is 15 tests/day

Refund example: Example – Test X @ $10.00/test – volume of 15/day for 3 months (21 days x 3=63 days) = 945 tests with a refund of $9,450.00

If not refunded in 60 days it becomes an “obligation” and is an FCA violation. Here is what happens under FCA

Treble Damages - 3x amount of the overpayment or $28,350.00 (refund part)

Penalties - $5,500 - $11,000 per false claim filed @ minimum penalty = $5,500/claim x 945 claims = $

5,197,500 @ maximum penalty = $11,500/claim x 945 = $10,867,500.00

For a $9,450.00 refund problem not paid back in 60 days, FCA sanctions could go as high as $10.8 million

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FBI Fugitives-10 Most Wanted

•OIG Fugitives: Clara Guilarte and Caridad

Guilarte were captured in Colombia on March 13, 2011

•The Guilartes allegedly defrauded Medicare of nearly $4.3 million (and submitted $9.1 million in

false and fraudulent claims), according to a Federal

indictment26

2012 Budget for Fraud and Abuse

Proposes nearly doubling the expenditure for discretionary spending for HCFAC operations

Discretionary spending is in addition to that already mandated by the 1996 HCFAC

Expands the HEAT program from 7 cities to 20 cities

Touted as leading to savings of over $10 billion in the next ten years based on “conservative projections” of the benefits of prevention

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Predictive Modeling

Data analysis tools designed to analyze claims data to prevent payments based on the risk that the claim is likely improper

Uses “Innovative risk-scoring technology” to detect improper claims before they are paid

Uses a wide range of data to generate each risk score, such as claims data, complaints to the Medicare hot line, and law enforcement information

CMS would thoroughly test the technology to ensure it provided a low rate of false positives and did not disrupt legitimate providers

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HIPAA Cases in the News

Two recent, well publicized HIPAA violation cases remind us “don’t forget about the privacy rules”

Cignet Health fined $4.3 million for a relatively minor violation because it did not cooperate with the investigation and failed to correct the problem on its own

Massachusetts General hospital fined $1 million and forced to implement a 3 year “corrective action plan” for files lost when an employee left them on a subway train

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FDA Oversight of LDTs The Food and Drug Administration has decided to

take up the active oversight and regulation of LDTs

They believe they already have the authority because LDTs are considered “medical devices” and they have the authority to regulate all medical devices

They have chosen to exercise an “enforcement discretion” authority in the past and not actively regulated LDTs

The expansion of new genetic testing, personalized medicine and Direct to Consumer (DTC) genetic tests has convinced the FDA that there are patient safety issues at stake requiring them to regulate LDTs

What Is An LDT?

Most people think that when you talk about an LDT you are talking about some kind of complex molecular diagnostic or genetic test

Truth is, almost all clinical laboratories are probably doing a few LDTs

Any time that you use an FDA approved test in any way that is outside of what that test is specifically approved to do, you are performing an LDT

For instance testing urine samples with a test kit approved for serum samples

Some tests have no FDA approved kit

Problems Related to FDA Regulation

Clinical labs and device manufacturing companies are different in many ways and those differences have never been addressed by FDA

Medical device manufacturers develop test kits for distribution to many laboratories who then interact with the ordering physician providers

Laboratory developed tests are developed by one laboratory and provided directly to the physicians who order them

Problems Related to FDA Regulation

Laboratories are regulated by CLIA and LDT’s are only performed in laboratories categorized as highly complex laboratories under CLIA

Adding FDA regulation without taking into account the regulations labs already meet under CLIA will result in unnecessary duplication

FDA may not have the resources necessary to effectively and efficiently regulate LDT’s

FDA would face a serious learning curve because it lacks a clear understanding of how clinical laboratories work and how LDT’s are performed in a clinical laboratory

Legislation for 2011

During the past four congressional sessions, bills concerning genomics, personalized medicine and laboratory developed tests have been introduced

They have addressed various aspects of these issues

We expect that new bills, or reiterations of old bills, will be introduced in 2011

Congress needs to balance patient and consumer safety issues and rights against innovation and development of advancements in medical testing

Potential Legislation for 2011

Potential reintroduction of a revised version of HR 5440 - “Genomics and Personalized Medicine Act of 2010”

Would create an Office of Personalized Healthcare (OPH) within HHS

Defines roles of FDA and CMS related to responsibilities for oversight of diagnostics

Would address Direct to Consumer testing issues in the marketplace

Potential Legislation for 2011

"Better Evaluation and Treatment Through Essential Regulatory Reform for Patient Care Act”

Developed by Senator Orrin Hatch of Utah during 2010 but never introduced

Would create Center for Advanced Diagnostics Evaluation and Research

Would be responsible for ensuring the safety and efficacy of a new category of tests called "advanced personalized diagnostics," comprising both test kits and laboratory-developed tests

OIG Workplan 2011

Laboratory Test Unbundling by Clinical Laboratories

Medicare Part B Payments for Glycated Hemoglobin A1C Tests

Frequency of tests should not be less than every 3 months

Trends in Laboratory Utilization

What tests are done and difference in ordering by specialty and geography

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OIG Workplan 2011

Lab Test Payments: Comparison of Medicare with Other Public Payers

Compares top 10 tests Medicare payments against other payers like the VA and Medicaid programs

Medicare Payments for Claims Deemed Not Reasonable and Necessary

Not necessarily lab specific

Looks for GA and GZ modifiers and compares similar claims for similar services

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OIG Workplan 2011

Medicare Billings With Modifier GY

Not necessarily lab specific

Examines use of GY modifiers

Payments for Services Ordered or Referred by Excluded Providers

Variation in Coverage of Services and Medicare Expenditures Due to Local Coverage Determinations

Over 2800 LCDs exist 39

OIG Workplan 2011

Zone Program Integrity Contractors’ (ZPIC) Identification of Potential Fraud and Abuse

Essentially a review of the effectiveness of these contractors and barriers they encounter in fulfilling their responsibilities

Early Results From Medicaid Integrity Contractors (MIC)

Examines the effectiveness if these contractors

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EMRs and EHRs Compliance Risks

Likely a high risk area for compliance issues under the Stark and Anti-kickback regulations

Labs are different when it comes to placement of computers and software

Most people do not understand this difference

Lots of confusion about what is and is not allowed and the details of how e-prescribing and EMRs are provided by different kinds of providers

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Physician Signatures

Even though the April 1, 2011 implementation date looms

Even though CMS officials have told numerous individuals, associations and groups

CMS has not yet published an “official document” rescinding the physician signature requirement for paper laboratory requisitions

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Drug Screens

Many problems still exist with the coding and billing of drug screens

CMS HCPCS codes G0431 and G0434 descriptions are incorrect or confusing

The QW modifier for waived tests was added to the wrong HCPCS code

This has recently been corrected

A transmittal seemingly wrongly identified CPT code 80100 as not payable under Medicare Part B fee schedule for labs

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Drug Screens

Best guess for billing these drug screens

Use G0431 for drug screens on instruments where multiple classes of drugs require multiple assays to detect

Use G0434 for drug screens using dipstick and other rapid testing methods where multiple drugs are detected with one procedure

See MedLearn Matters SE1105 Currently, CPT 80100 is being denied in some

jurisdictions leaving providers with no way to bill for drug tests done by chromatography

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Modifiers

Transmittal R2148CP (Change Request 7228) is titled “Auto Denial of Claim Line(s) Items Submitted With a GZ Modifier”

Instructs “all MACs, CERT, RACs, PSCs and ZPICs shall automatically deny claim line(s) items submitted with a GZ modifier”

Also includes information about -59, -91, GA, GY and GX modifiers

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New Molecular Diagnostic CPT Coding

Effective in the 2012 AMA CPT code book, a new set of codes for molecular diagnostics will be published

Changes do not affect microbiology and most cytogenetic assays

Analytes/tests that have new codes assigned and are listed in Tiers 1 and 2 MUST be coded using the most specific CPT code available and NOT with ‘stacking codes’ (83890-83914)

Most likely, stacking codes will be eliminated by 2013

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New Molecular Diagnostic CPT Coding

Tests are divided in “tiers”

Tier 1 tests are the most commonly performed tests and each will have a specific CPT code

Tier 2 tests have been assigned to 9 resource level codes similar to the currently existing system for surgical pathology

Any tests not included in tiers 1 or 2 would be coded using the existing stacking codes

Codes include all analytical services required to perform the assay (e.g., cell lysis, nucleic acid stabilization, extraction, digestion, amplification, and detection)

Interpretations may be required for these tests47

New Molecular Diagnostic CPT Coding

Definitions are provided to ensure all reviewers are interpreting information in the same way

Example: Exon: typically, one of multiple nucleic acid sequences used to encode information for a gene product (polypeptide or protein). Exons are separated from each other by non-protein-coding sequences known as introns. Exons at the respective ends of a gene also contain nucleic acid sequence that does not code for the gene’s protein product.

Very useful for those who are both knowledgeable and those who are not in terms of providing coding guidance

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New Molecular Diagnostic CPT Coding

It is important to note the following (from the AMA request for feedback)

The information below is NOT final. Code assignment and final wording can be a source of confusion if portrayed as final

The codes and descriptors below are NOT yet available for reporting and are NOT yet recognized in any code set

The code numbers that precede each descriptor below are administrative alphanumeric placeholder designations used by the MPCW to track progress in construction of the code set and are not valid code numbers

The inclusion of an analyte in the CPT code set does not imply any health insurance coverage or reimbursement policy. While these descriptors describe a service, payment policy will determine appropriate payment for these services

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New Molecular Diagnostic CPT Coding

Tier 1 examples:

BXXX7 BRCA1, BRCA2 (breast cancer 1 and 2) (e.g., hereditary breast and ovarian cancer) gene analysis; full sequence analysis and common duplication/deletion variants in BRCA1 (i.e., exon 13 del 3.835kb, exon 13 dup 6kb, exon 14-20 del 26kb, exon 22 del 510bp, exon 8-9 del 7.1kb)

BXXX8 185delAG, 5385insC, 6174delT variants

BXXX9 uncommon duplication/deletion variants

Tier 1 includes 92 codes including the HLA typing codes

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New Molecular Diagnostic CPT Coding

Tier 2 are used for tests not included in Tier 1

They are arranged by level of technical resources and interpretive work by the physician or other qualified health care professional

Each code includes a parenthetical describing the criteria used to classify tests into that level

Each level includes lists of specific tests that are included

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New Molecular Diagnostic CPT Coding

Tier 2 examples:

L2XX1 Molecular pathology procedure, Level 1 (e.g., identification of single germline variant [e.g., SNP] by techniques such as restriction enzyme digestion or melt curve analysis)

ACADM (acyl-CoA dehydrogenase, C-4 to C-12 straight chain, MCAD) (e.g., medium chain acyl dehydrogenase deficiency), K304E variant

ACE (angiotensin converting enzyme) (e.g., hereditary blood pressure regulation), insertion/deletion variant

AGTR1 (angiotensin II receptor, type 1) (e.g., essential hypertension), 1166A>C variant

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More Tier 2 Examples L2XX3 Molecular pathology procedure, Level 3 (e.g., >10

SNPs, 2-10 methylated variants, or 2-10 somatic variants [typically using non-sequencing target variant analysis], immunoglobulin and T-cell receptor gene rearrangements, duplication/deletion variants 1 exon)

CYP21A2 (cytochrome P450, family 21, subfamily A, polypeptide 2) (e.g., congenital adrenal hyperplasia, 21-hydroxylase deficiency), common variants (e.g., IVS2-13G, P30L, I172N, exon 6 mutation cluster [I235N, V236E, M238K], V281L, L307FfsX6, Q318X, R356W, P453S, G110VfsX21, 30-kb deletion variant)

KIT (v-kit Hardy-Zuckerman 4 feline sarcoma viral oncogene homolog) (e.g., mastocytosis), common variants (e.g., D816V, D816Y, D816F)

MEFV (Mediterranean fever) (eg, familial Mediterranean fever), common variants (eg, E148Q, P369S, F479L, M680I, I692del, M694V, M694I, K695R, V726A, A744S, R761H)

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New Molecular Diagnostic CPT Coding

The AMA CPT Editorial Panel is seeking feedback on these new codes

Concerns about the specific wording of any particular code descriptor

Concerns that a specific analyte is not currently identified in the code list

Concerns that a currently medically useful multi-analyte molecular pathology assay (MMA) is not currently identified in the code list (e.g., In Vitro Diagnostic Multivariate Index Assays)

Feedback may include revisions to the code descriptors or suggested additional analytes

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New Molecular Diagnostic CPT Coding

Feedback request letter provides web sites to submit requests or suggestions including the appropriate forms to use for those purposes

To obtain the request for feedback letter go to this website

http://www.ama-assn.org/ama/pub/physician-resources/solutions-managing-your-practice/coding-billing-insurance/cpt.shtml

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Key Areas and Actions

There is controversy concerning the level of professional required to provide interpretations for these

Currently the -26 modifier used for interpretations only can only be used if a physician does the work

Many of these tests are interpreted by PhDs or other professionals with no way to bill for that service

Make sure that those people at your lab that are involved in this kind of testing and billing are aware of this information

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Key Areas and Actions

The introduction of these codes will require a complete revamping of your chargemaster to accommodate the new codes

The introduction of these codes will affect new LDTs that are developed in genetic and molecular testing facilities

These tests will be priced during the CMS new test code pricing process conducted starting in July of 2011

Provides an opportunity to properly value these tests based on the work and expertise required to perform them

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How to Cope With Increased Compliance

Scrutiny It is important that the laboratory industry

steps up in the face of these new government efforts

Each laboratory must take certain basic actions to make sure they are prepared in the case of a problem or issue with the government

Use the information in the next few slides to create a list of basic actions to take

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Best Practices

Make sure there is an effective and well functioning compliance program in place

Make sure your policies and procedures are current and reflect actual practice

Make sure employees are trained and that they actually follow the written policies and procedures

Make sure there is an adequate system to document all activities in the risk areas of the laboratory

Best Practices

Make sure the record retention policy is followed

Make sure you know the names of all of the government agencies and subcontractors that have oversight and monitor and audit the laboratory

Make sure that the employees who receive mail are trained to recognize correspondence from these entities and know how to route mail received even in the absence of key employees

Best Practices

Make sure the compliance officer and the compliance committee know the rules and regulations that govern the laboratory and its activitiesMake certain they have readily available

consultants and legal counsel to provide support Make sure there is a comprehensive auditing

and monitoring program that covers all areas of risk for the laboratory

Best Practices

Make sure there are open lines of communication for employees to report problems or ask questions

Make sure all management level employees are properly trained in their compliance responsibilities

Make sure that all billing and coding activities are properly and completely documented

Make sure there is appropriate and complete documentation of all corrective actions and disciplinary actions

Objectives

Understand what the government intends to do in the area of regulations and Medicare and Medicaid compliance in the near future.

Plan for upcoming regulatory and billing changes that may be imposed by the government by hearing specific “best practices” for these changes.

Get specific information about questions participants may have concerning their own laboratory problems and issues during the question and answer portion of the program.

QUESTIONSAND

ANSWERS64