On February 12, 2016 the Centers for Medicare and Medicaid Services published the long-awaited final rule on the reporting and returning of Medicare overpayments (Federal Register, Vol. 81, No. 29). These new regulations went into effect on March 14 and apply to any ambulance service that receives Medicare reimbursement.
The regulations interpret the Affordable Care Act provision, in effect since March 23, 2010, which requires that any overpayment an ambulance service receives from Medicare must be reported and returned within 60 days after the date the overpayment was identified.
These extensive regulations spell out the specifics of just what an ambulance service must do to monitor Medicare payments to ensure that it receives proper payments, and just what needs to be done to promptly initiate procedures to investigate and ultimately “quantify” the amount of any suspected overpayments.
This is truly a game changer for legal compliance initiatives in EMS and the medical transportation industry. In these sweeping regulations, CMS outlines the steps that an ambulance service must take to proactively prevent overpayments from occurring in the first place and reactively respond by promptly identifying, quantifying, and refunding any overpayments.
What is an overpayment?
An overpayment is any Medicare funds your department or agency received to which you are not entitled to keep. An overpayment can happen in a variety of ways. Billing errors are most common, rather than outright fraud. Some examples of how overpayments happen include:
- Medicare payments for non-covered services like medically unnecessary ambulance transports, or mileage payments beyond transport to the nearest appropriate facility for which you were paid by Medicare or claims for ambulance service that are simply not supported by the documentation contained in the patient care report.
- Medicare payments in excess of the allowable amount for that particular service which could be due to internal coding errors or errors by the Medicare contractor.
- Duplicate payments to the EMS agency which can happen when claims are submitted twice by mistake or the Medicare contractor screws up and issues a duplicate payment
- Receipt of a Medicare payment when another payer had the primary responsibility for the claim which happens often in EMS with vehicle accidents, slips and falls and other third-party liability cases where Medicare should not be the primary payer even if the patient is a Medicare eligible patient.
And it doesn’t matter if Medicare screwed up. If they overpaid your agency, you are responsible for monitoring the payments you received to ensure that you do not keep any more money than you are entitled to keep. If you fail to promptly identify and refund overpayments those can become “false claims” under the federal false claims act and your organization, as well as individuals within it, could be susceptible to harsh civil and criminal penalties.
Providers and suppliers are responsible for compliance
So if you’ve been putting off things like implementing a comprehensive compliance program, or decided not to budget for regular internal and external audits of your Medicare paid claims — well, those days are simply over. This quote from CMS’s comments to the regulations make it crystal clear that ambulance services who have no compliance program or simply give lip service to compliance will be under the gun:
“Providers and suppliers are responsible for ensuring their Medicare claims are accurate and proper and are encouraged to have effective compliance programs as a way to avoid receiving or retaining overpayments. We believe that undertaking no or minimal compliance activities to monitor the accuracy and appropriateness of a provider or supplier’s Medicare claims would expose a provider or supplier to liability under the identified standard articulated in this rule based on the failure to exercise reasonable diligence if the provider or supplier received an overpayment.”
And if you think for a moment that you can use the “innocent provider” defense for situations where errors are made by a third party billing company, well, think again. The ostrich defense won’t work.
CMS clearly states in its comments: “Providers and suppliers are responsible for the actions of their agents, including third party billing companies.”
After all, it is the ambulance service that is receiving the payments from Medicare, so you must have a contract in place with your billing company that addresses compliance and you must have effective communications and a solid working relationship with your billing company partner.
Services must promptly identify, quantify and refund overpayments
The only way to effectively comply with these regulations is to exercise “reasonable diligence” in identifying, quantifying and refunding overpayments. CMS states that this reasonable diligence must include “both proactive compliance activities conducted in good faith by qualified individuals to monitor for the receipt of overpayments and investigations conducted in good faith and in a timely manner by qualified individuals in response to obtaining credible information of a potential overpayment.”
Fortunately, if an ambulance service exercises reasonable diligence in identifying and quantifying the amount of an overpayment, the regulations give you a bit of a beak — up to six months maximum to complete the investigation and quantification process. This might include looking at additional claims beyond the suspect claim at issue to determine the extent of the problem and going back as far as six years.
So what can you do to stay in compliance with this new regulation? Here are some critical steps to follow:
1. Monitor for overpayments on a daily basis.
It is much easier to deal with small overpayments on one or two claims at a time than to deal with six years’ worth at once. But you need billing staff trained on how to identify possible discrepancies that could be overpayments.
2. Conduct internal and external audits.
Verify the accuracy of claim submission and payments and investigate detected overpayments to determine if it is a one-time mistake or a larger issue. At least yearly have an external claims review by a qualified outside party and keep in mind that consultant reports can be easily discoverable. It is always better to go through legal counsel when conducting external audits to help protect attorney-client privilege and potentially limit the discoverability of any reports.
3. Establish multiple ways to report potential overpayments.
Most overpayments are identified by your own staff. Make sure they have multiple ways of reporting to you, including anonymous hotlines and other easy to access methods. You want staff to come to you with concerns rather than go to the government or outside lawyer. Listen to their concerns and take appropriate action.
4. Regularly monitor payments and promptly investigate potential overpayments.
Make sure you thoroughly look into any credible information that an overpayment may have occurred. Consistently monitor payment data to identify and investigate aberrancies such as a spike in the number of claims submitted for a particular level of service.
5. Develop and implement solid billing policies.
These policies must clearly outline the procedures for preventing, detecting and quantifying any potential overpayments to ensure that refunds to Medicare are made within 60 days of quantifying the overpayment. Otherwise, the overpayment becomes a false claim so timely action is needed on any suspected overpayment.
6. Train all staff members.
Everyone must be trained to prevent overpayments from happening in the first place and to identify and quantify them when they do occur. This includes training billing personnel on proper claim review and coding procedures, and training field staff on proper documentation skills so that appropriate medical necessity and level of service determinations can be made.
Now is a good time to put in place a retraining program on patient care documentation. Seek out training from qualified and experienced professionals that can be delivered onsite or video recorded for online distribution.
Every department must have a system in place to detect and prevent overpayments. Once you are on notice of a potential overpayment, you must investigate without delay. And after you’ve determined that an overpayment exists, you must have procedures in place to fully quantify the extent and amount of the overpayment.
Finally, you must then immediately refund that overpayment back to the Medicare program. If you received a Medicare payment that doesn’t belong to you — you must give it back and promptly!
