Under a new final regulation published by the Centers for Medicare and Medicaid Services (CMS) in the Dec. 5
Federal Register, laboratories could be at higher risk than other kinds of providers because of the large number of claims they submit. Under the rule, CMS can revoke billing privileges if a laboratory exhibits a “pattern or practice of submitting claims that fail to meet Medicare requirements.” Labs could potentially exhibit such a pattern or practice sooner than other kinds of providers because of the sheer number of individual claims they routinely submit. CMS already has the authority to revoke billing privileges of a laboratory that abuses its privileges, but this regulation expands that authority. Currently, CMS can revoke a laboratory’s billing privileges if it submits a claim or claims for services that could not have been furnished to a specific individual on a specific date of service—for instance, if the beneficiary is deceased or the physician is in a different state or country on the claim date. Under the new rule, titled “Requirements for the Medicare Incentive Reward Program and Provider Enrollment,” CMS can revoke billing provisions for reasons such as unpaid Medicare debt or a previous felony conviction of a managing employee. However, this article will focus on the pattern or practice criteria because this area potentially creates greater risk for laboratories than for other kinds of providers. The effective date for the new provisions is Feb. 3, 2015.
New Authority Sets Criteria CMS Will Use Under the expanded authority, CMS will make the determination of what constitutes billing privilege abuse mainly through measuring claims submissions to detect a pattern or practice of submitting improper claims. Claims denial is the metric, and the pattern of abuse is based on predetermined criteria based in part on provider and supplier input to an April 29, 2013, proposed rule. The new criteria to measure a lab’s improper claims submittal patterns will include:
- The percentage of submitted claims that were denied;
- The reasons for the claim denials;
- Whether the provider or supplier has any history of final adverse actions (as that term is defined under §424.502) and the nature of any such actions;
- The length of time over which the pattern has continued;
- How long the provider or supplier has been enrolled in Medicare; and
- Any other information regarding the provider’s or supplier’s specific circumstances that CMS deems relevant to making its determination.
In the proposed rule, CMS sought input on criteria by seeking comments from stakeholders. Some of the key comments raise valid concerns on the part of providers such as laboratories. Commenters asked CMS to include only claims that have been fully adjudicated in its measure of improper claims, excluding claims under appeal. The logic of these commenters is that if a claim denial is overturned in the appeals process, it should not be counted as an improper claim. CMS did not agree with these commenters, saying that excluding claims that are in the appeals process may spark providers to file unmerited appeals to circumvent the application of this rule. Another group of commenters said that CMS’s proposal is arbitrary and subjective and grants too much discretion to CMS and its contractors. These commenters also said that the proposed criteria were not fully discussed and that CMS does not adequately define “pattern or practice.” Further, there is nothing in the rule that limits CMS and its contractors’ authority under the rule, they noted. While CMS stated in the proposed rule’s preamble that it or its multiple contractors would not use this provision to revoke a provider’s privileges for isolated and sporadic claim denials or innocent billing errors, there are no safeguards to prohibit that. Commenters also noted that CMS contractors’ errors in interpreting Medicare rules and billing guidelines can lead to inappropriate claims denials. CMS did not agree with these commenters either, stating that sporadic billing errors would not result in inappropriate revocation of billing privileges and that CMS, not its contractors, will be making all revocation decisions. The agency also said that it did not define pattern or practice on purpose “to maintain flexibility to address a variety of factual scenarios.” CMS said that providers should be reassured that the revocation authority would be applied fairly because it is listing factors that it would consider when making determinations and promised to apply revocation only in situations where provider behavior could not be considered sporadic. Further, CMS said it would revoke billing privilege only after “the most careful and thorough consideration of the relevant factors.” In this response, and in other sections of the rule, CMS reminds providers that they have the responsibility to “diligently seek and obtain clarification of Medicare policies should there be a misunderstanding or confusion.” Also, providers and suppliers have the responsibility to submit only claims they are certain are correct and meet Medicare requirements. Similar comments were received by other stakeholders with essentially the same response from CMS. Providers have the responsibility to submit accurate claims, and they receive ample notification from CMS or its contractors of the reasons claims are denied. CMS again makes the oft-repeated statement that honest providers have no reason to worry because this rule is not intended to punish them, only providers who consistently and continually submit claims that do not meet Medicare requirements.
Reinstatement After Revocation Provider or suppliers, such as laboratories, that have their billing privileges revoked under this rule will be barred from participating in the Medicare program for at least one year after they receive the mailed notice of the revocation. The same bar may also be applied to managing employees or owners. The re-enrollment bar can be up to three years based on the severity of the basis for the revocation. Revoked billing privileges can be reinstated through the use of a corrective action plan (CAP) only in the limited circumstances. A CAP cannot be used when the provider is determined to be not in compliance with the enrollment provisions. CMS notes in the rule that “providers and suppliers generally should not be exonerated from failing to fully comply with Medicare enrollment requirements simply by furnishing a CAP, for it is the duty of providers and suppliers to always maintain such compliance.”
Actions Laboratories Should Seriously Consider Laboratories must ensure that claims they have reason to suspect will be denied are not submitted to Medicare or other government payers until they are corrected.
Laboratories should also institute a post-claims submittal review of their remittance advice from Medicare and Medicaid for denied claims and aggressively address repeated denials for the same reasons. This can be as simple as reviewing 10 or 20 pages of a remittance advice report and noting the kind and frequency denials. However, many laboratory billing systems will produce reports that group and summarize claims denials, and using such a system is a much better option. Compliance officers should make sure those tools are being appropriately applied to claims submittals. Laboratories should also conduct monthly comparative analysis to make sure they detect any changes in denial patterns as early as possible. In addition, reviews of claims denials over longer periods may have the added benefit of detecting longer-term trends on claims denials and the reasons for those denials. A critical component of reviews and analysis of claims is to correct any detected patterns of denials and document the outcome. Any contact with Medicare contractors to attempt to get clarification of claim submittal requirements to address denials should be thoroughly documented in case they are needed to demonstrate good-faith effort to address denials.
Takeaway: It is incumbent on laboratories and other providers to use all tools and reviews necessary to prevent claims that will be denied from being submitted or face revocation of their Medicare billing privilege for at least one year. 
