Flaws in CMS Recovery Process for Ineligible Home Health Payments

There are several shortcomings in the Centers for Medicare & Medicaid Services’ (CMS) approach to recovering $125 million of Medicare payments to home health, hospice, and durable medical equipment providers for services rendered to ineligible beneficiaries, according to a review by law firm SheppardMullin.

CMS is trying to recoup the alleged overpayments to providers for beneficiaries belatedly identified as ineligible for those services, such as being incarcerated or unlawfully present in the United States. However, the recovery process has some procedural shortcomings that the agency doesn’t expect to fix until October 2013, and there are some ways providers may be able to defend themselves against CMS’ demands.

Two January reports from CMS’ Office of the Investigator General (OIG) criticized the agency for making improper payments to providers for services rendered to beneficiaries later identified as ineligible at the time of service from updated Social Security Administration records.

The OIG recommended that CMS take steps to recover those funds, estimated at more than $125 million to hospital, physician, skilled nursing, DME supplier, home health, and hospice providers.

CMS has bypassed an available Regional Audit Contractors strategy to perform post-payment technical bill reviews in favor of implementing in Spring 2013 an Informational Unsolicited Response (IUR) Process, where the Common Working File system automatically flags and reports any previously paid claims where subsequent data updates indicate the beneficiary was not eligible at the time of service. 

However, this method fails to provide any explanation of the reason for an overpayment redetermination and doesn’t provide the required 15 day opportunity for rebuttal, says SheppardMullin. By using the IUR, CMS also fails to defer recoupment pending the 15 day rebuttal period and doesn’t address whether provider liability should be waived under the Social Security Act’s no fault waiver. 

Additionally, CMS failed to advise providers of their appeal rights by going the IUR route.

“Providers reacted with surprise, placing many calls to the MACs and SSA (to address mistakes in data),” says the law firm. “In many cases, SSA data indicating incarceration of a patient was simply erroneous; even if valid, it appears that, like CMS, provider were generally unaware of ineligibility at the time of service.”

While CMS has acknowledged that providers do have appeal rights after initially denying it, and has modified some of its positions based on provider objection, the agency has said most errors in the recoupment process won’t be fixed until October 2013.

“Critically, CMS has not yet addressed its failure to give providers proper notice, explanation of findings, rebuttal rights, its failure to consider no fault waiver,” says SheppardMullin. “CMS also has so far failed to honor the post payment restrictions on recoupment pending rebuttal and appeal.”

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Written by Alyssa Gerace

Alyssa Gerace

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