Palmetto GBA has announced a new non-cancer prepayment edit targeted at hospices with significant nursing home populations.  Many providers have been through similar non-cancer probe edits repeatedly, while for others this may be a new experience.  In this post, Sheppard Mullin reviews several important points for providers facing such edits (from any Medicare Administrative Contractor).

CMS is charged with paying only Medicare claims that are reasonable and necessary.  In structuring the benefit policies, CMS imposes many highly specific and detailed requirements (such as detailed face to face requirements discussed here).  In a prepayment edit, MACs will rely upon any error to deny payment, no matter how trifling.

Because CMS cannot conduct prepayment medical review on all claims, MAC’s are instructed to target medical review resources to claims with a “significant potential to be non-covered” or that pose “significant risk to the Medicare program.”  Medicare PIM § 3.2.1.  Medical review can be provider-specific where there is a “likelihood of sustained or high level of payment error.”  For complex medical review, like hospice medical necessity, CMS requires a “high probability of aberrant billing practices” due to the higher cost and more subjective nature of complex claims analysis.  PIM § 3.4.2.

These requirements can help providers with a good prior track record avoid such edits.  Upon receipt of ADR requests, such providers can contact the MACs and urge withdrawal of the probe edit based upon their prior track record especially where, as in the new Palmetto edit, the edit is based on a general concept rather than provider specific facts.

In a prepayment probe edit, MACs will issue ADRs and review 20-40 claims at once for each affected provider.  The provider has 30 days to produce documentation; the MAC has 60 days from receipt to make a decision.  PIM §  Providers should take special care in reviewing, organizing, submitting, and tracking receipt of ADR packets.

Both of these provisions can lead to points of discussion:

  • Smaller Providers.  Because a prepayment edit defers revenue for providers for up to 90 days, providers face financial hardship from these edits.  For a small hospice, if the MAC initially selects 40 claims, this can often comprise 50% of  revenue.  The PIM instructs MACs to limit the “administrative burden on providers.  PIM § 3.2.2 A.  And, Congress has defined financial hardship as occurring where the circumstance affects as much as ten percent (10%) of  revenue.  42 U.S.C. § 1395ddd(f)(1)(B).  Providers can use this authority to advocate for smaller or staggered probe edit sampling.
  • Delayed Decision Making.  Non-cancer hospice probe edits often affect hundreds of providers, forcing the MAC to review thousands of complex claims within a short time (60 days).  MACs are often incapable of timely completing such review.  Providers can advocate for release of claims not timely decided.  (A provider who does not timely respond is subject to claim denial.  PIM § and (if MAC claims no documentation, provider has 15 days to supplement).)

On an initial claim determination, Congress requires CMS to provide “reasons” for any denial as well as notice of appeal rights (42 U.S.C. §1395ff; see Appeal Timeline Chart here).  But, in both regulation and the PIM, CMS differentiates between beneficiaries (entitled to “reasons” for any denial) and providers who are only entitled to “basis” by remittance advice coding.  42 C.F.R. § 405.921(b)(2); PIM § and 3.6.4.  In most cases then, providers facing these edits receive only a denial code.  These limited notice policies limits providers’ ability to respond to denials and should be the subject of advocacy by provider representatives.  Such limited notice practices also mean that providers must carefully watch remittances to identify decisions.

MACs and other auditors will deny claims on any basis without assessing whether the deficiency is material or trifling.  Trifling denials (such as certifications missing benefit period dates) are regularly reversed by ALJs, who focus on medical necessity.  As detailed in prior posts, such denials are legally improper and should be challenged vigorously.

CMS itself has provided that responses to deficiencies should be “appropriate given the level of non-compliance,” and yet full claim denial is the one response made to almost any probe edit deficiency.  The PIM fails to consider the alternative of a corrective action plan for technical deficiencies in a probe edit.  PIM § 3.7.  Although the PIM notes that it is not an “efficient” use of resources to deny claims that are “regularly reversed on appeal,” CMS has taken no steps to suggest corrective action plan options to stem trifling payment denials.  PIM §3.7.4 (suggesting MACs track appeals).

PIM provisions now provide further detail on signature and dating requirements, as well as the potential to amend records. PIM §§ and  For instance, providers could face denials for illegible doctor signatures, but can potentially avoid this issue by providing a signature log for its staff, providing sample signatures and matching those to medical staff by printed names.  Also, providers are permitted to amend documentation before submission, for instance to add benefit period dates to certifications if missing, but are subject to certain requirements to call out these amendments (sign and date).

It is also important to note that MACs review hospice claims using LPNs and RNs, while initial decisions to certify patients are made by doctors and a team of nurses and staff.  Courts have been critical of second guessing subjective life expectancy decisions made by doctors.  See U.S. ex rel Wall v. Vista Hospice Care, Inc., 778 F. Supp. 2d 709, 718 (N.D. Tex. 2011) (“physician must use his clinical judgment to determine hospice eligibility, and… [a] complaint about the exercise of that judgment must be predicated on the presence of an objectively verifiable fact at odds with the exercise of that judgment, not a matter of subjective clinical analysis”).

Because MACs cannot muster the resources that hospices do in making these decisions, medical necessity findings are quite often poorly reasoned and reversed on appeal (50%+ reversal rate for prosecuted appeals).  Even if denials are on medical necessity grounds, providers should strongly consider appeals.  As noted above, a provider’s track record in prior edits is relevant to later administrative review – protect your reputation.