In early May 2008, the U.S. Department of Health and Human Services’ Office of Inspector General (OIG) released a report finding that improper processing of the denial of payment for new admissions (DPNA) enforcement remedy by the Centers for Medicare and Medicaid Services (CMS) and/or Medicare Fiscal Intermediaries (FIs) resulted in overpayments to skilled nursing facilities (SNFs) in 74% of sampled instances where the remedy was imposed. The study, based on 2004 data, looked at 200 randomly selected cases involving the DPNA in 726 SNFs. After adjusting for claims involving Medicaid-only facilities and those in which the DPNA never went into effect, the OIG’s sample involved 192 cases and a projected number of DPNAs of 697.

The DPNA remedy is used for 1) facilities that remain out of compliance with federal Medicare participation standards for more than three months; and 2) facilities that have repeated instances of substandard quality of care on three consecutive surveys. The OIG’s study focused only on denial of payment for Medicare claims, and did not study corresponding patterns in states’ denials of Medicaid claims. The study summarized the process by which CMS notifies the FIs of a scheduled DPNA, noting that CMS must give the FI advance notice of the scheduled remedy in a timely manner, and subsequent cancellation or ending of the remedy, for the FI to properly establish review edits that kick out claims subject to the remedy.

The OIG found that of the 697 DPNAs in effect during calendar year 2004, 516 of them suffered from processing and/or payment errors that resulted in SNFs receiving inappropriate payments totaling more than $5 million. According to the OIG, 3,133 Medicare claims were paid to 276 facilities where the SNF admitted Medicare-eligible residents during the period the facility was under a DPNA remedy.

Key findings from the study include the following:

• 49% of the improper payments resulted from the FIs’ late creation of edits designed to kick out prohibited claims, either because CMS did not provide the FI with proper instructions until after the start date of the DPNA remedy or the FI received timely instructions but did not properly implement them. Several FIs told the OIG they had no process for reviewing payments already made once a DPNA remedy is put into place to ensure their propriety.

• 17% of the payments resulted from communication breakdowns between CMS and the FI, with the FI claiming to have never received DPNA instructions. The OIG concluded it was difficult to tell whether CMS actually sent the FI proper instructions or misdirected them, or whether the FI simply mishandled otherwise appropriate DPNA instructions. The OIG did note that in many cases the only notice and instructions to the FIs about a scheduled DPNA was a “cc” to the FI on the remedy imposition letter sent to the facility. • In 14% of the cases, CMS sent its DPNA instructions to the wrong FI.

• In 12% of the cases, FI staff misinterpreted CMS’ instruction to “cancel” the DPNA remedy because substantial compliance had been achieved as an instruction to rescind the remedy, thus resulting in payment of claims that were properly denied during the DPNA effective period.

• 1,898 claims were appropriate for payment during the effective date of a DPNA remedy, because the residents at issue were “readmissions” and not new admissions, were improperly coded by the facility. These claims were ultimately paid properly, but resulted in additional work for the FI. SNFs are instructed to code claims for readmissions, which are exempt from the DPNA remedy, with a specified code to ensure they are not kicked out by the DPNA edit in the FI’s system. Several FIs reported no standard process for verifying the prior stay of a resident claimed as a readmission to confirm the facility’s claim that the resident qualified for exemption from the DPNA remedy.

The OIG, and CMS in its response to the report, agreed that changes to the ASPEN Enforcement Management System, and other process changes being implemented or already implemented since 2004 by CMS, would reduce the likelihood of similar errors in the future. The OIG nonetheless recommended several changes, to which CMS agreed, including the following.

• Ensuring that all DPNA instructions are sent in a timely fashion to the FIs or the Medicare Administrative Contractors (MACs) who are taking over many of the FIs former functions and requiring the FIs and MACs to review claims already paid prior to creation of the DPNA system edit.

• Including standard, comprehensible instructions to the FIs and MACs regarding imposition of a DPNA remedy and creating a common procedure for confirmation by the FI or MAC that it has received the DPNA instructions.

• Updating and clarifying guidance to providers, FIs and MACs on coding readmissions during a DPNA, and requiring the FIs and MACs to confirm the readmission status of residents for whom Medicare payment is claimed during the effective dates of a DPNA remedy.

Of particular interest to providers, CMS noted in its written response to the report that the DPNA remedy is not one of the top three remedies used by CMS in terms of frequency used, but is viewed as one of the most effective enforcement remedies. CMS also noted that in many cases a facility has achieved substantial compliance before the effective date of a DPNA remedy but a revisit has not occurred to confirm compliance. CMS promised to develop a “communication protocol” between itself and its Medicare contractors to ensure follow-up notification to CMS that a DPNA was implemented as requested. Finally, CMS promised to develop conference calls and/or training, as needed, to address the mutual roles and responsibilities of CMS and its contractors for DPNAs. Notably absent from the CMS response was any commitment to solve the problem providers face when they have achieved and alleged compliance but no revisit occurs to confirm that allegation prior to the time a DPNA is scheduled to take effect. Currently, providers are left to plead with state survey agencies to return for a revisit in time for cancellation of the DPNA by CMS. In North Carolina, the state agency has worked with providers to ensure a scheduled DPNA is rescinded retroactively by CMS if the facility has alleged compliance before the scheduled effective date of the DPNA and a subsequent revisit occurring after the effective DPNA date confirms those allegations.

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by Kevin Ceglowski

Note from the editor: Our clients often ask us to verify various posters advising employees of their rights under state and federal laws that all employers are required to post in their workplaces. Below is a list of the primary labor and employment posters employers are required to post in the workplace. We have identified several posters that are required only in special situations, and thus required only of employers who experience those situations among their employees. The remainder of the posters are generally applicable to all employers. We have also included an Internet link or other information identifying where or how employers can obtain the required posters.

Federal Posters

Job Safety and Health Protection Poster http://www.osha.gov/Publications/poster.html Equal Employment Opportunity is the Law Poster http://www.nclabor.com/posters/English/EEOC%20Poster%20-%20English.pdf

Fair Labor Standards Act (FLSA) Poster http://www.dol.gov/esa/regs/compliance/posters/flsa.htm

Your Rights Under the Family and Medical Leave Act Poster http://www.dol.gov/esa/regs/compliance/posters/pdf/fmlaen.pdf

Required supplement available at http://www.dol.gov/esa/whd/fmla/NDAAAmndmnts.pdf

Uniformed Services Employment and Reemployment Rights Act Poster http://www.dol.gov/vets/programs/userra/userra_private.pdf

Employee Polygraph Protection Act Poster http://www.nclabor.com/posters/English/EPPA%20Poster%20-%20English.pdf

The following four posters do not need to be posted by all employers, but only those with the special situations described.

Workers With Disabilities Paid at Special Minimum Wage Poster http://www.dol.gov/esa/regs/compliance/posters/pdf/disabc.pdf

Employers Working on Government Contracts Poster http://www.dol.gov/esa/regs/compliance/posters/pdf/govc.pdf

Employees Working on Federal or Federally Financed Construction Projects Poster -  http://www.dol.gov/esa/regs/compliance/posters/pdf/fedprojc.pdf

Poster for Employee Migrant or Seasonal Agricultural Workers http://www.dol.gov/esa/regs/compliance/posters/pdf/mspaensp.pdf

State Posters

North Carolina Labor Laws Poster http://www.nclabor.com/posters/Labor_Law_Poster_English_July_2007.pdf

Unemployment Insurance Poster

Must call the Employment Security Commission at 919.707.1170 to get this poster

Workers’ Compensation Notice Poster http://www.nclabor.com/posters/English/NCIC%20Form%2017%20-%20Workers%20Comp%20Poster%20-%20English.pdf

For more information about the posters or other employment law-related issues, please contact Kevin Ceglowski at 919.783.2853 or kceglowski@poynerspruill.com or Susie Gibbons at 919.783.2813 or sgibbons@poynerspruill.com.

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by Ken Burgess

On May 15, 2008, Lew Morris, Chief Counsel to the Inspector General for the U.S. Department of Health and Human Services, testified before the House Subcommittee on Energy and Commerce about nursing facility quality of care issues. His report, entitled In the Hands of Strangers: Are Nursing Home Safeguards Working?, highlighted a number of improvements in nursing facility quality of care, but also noted continuing areas of concern for the government. Morris’ testimony also provides insight into the Office of Inspector General’s (OIG) enforcement “wish list.” Morris made three specific recommendations to the House Subcommittee.

• Improved screening of all nursing home staff through creation of a national centralized database that includes information from the OIG’s exclusion (from federal health care programs) database, state nurse aid registries, and disciplinary actions by state licensing boards. Morris noted the current difficulty providers face in effectively screening potential employees because of the fragmented nature of law enforcement and state agency information sources. He recommended creation of a single national database in which providers would be required to check all direct care employees before they are hired, to be funded in part by a user fee providers would pay to access the database.

• Requiring mandatory corporate compliance programs for certain nursing facilities. The OIG has long advocated that all health care providers implement corporate compliance programs. Providers that are prosecuted by the OIG for civil or criminal infractions are usually required to enter into a Corporate Integrity Agreement (CIA) with the OIG, which includes a compliance program and frequent monitoring by a federally designated outside monitor. Morris noted that since 2002, over 1,300 health care facilities, mostly nursing homes, have operated under “quality of care CIAs” and that currently 11 nursing home chains operate under CIAs, covering about 400 long term care facilities. Morris recommended to the subcommittee that Special Focus Facilities (SFF) be required to implement compliance programs and advocated for a demonstration project in which a SNF’s Quality Assurance Committee would be the starting point for building a compliance program. The OIG seems to be inching closer to making compliance programs, which it now carefully describes as voluntary, mandatory for the long term care community.

• Enhancing CMS’s Nursing Home Compare database and/or similar resources to provide more clinical data about nursing homes to help providers better police themselves and to help the public make more educated decisions about long term care placement. Specifically, Morris recommended including on such data sources more information about trended, comparative resident-level performance measures that allow facilities to compare themselves to other facilities.

Morris was also critical in his comments of State Survey Agencies and CMS on several fronts:

• failing to investigate complaints with the required time frame;

• failing to collect a large portion of CMPs initially imposed against providers because of settlements and reductions during appeals;

• failing to impose the denial of payment remedy often enough due to processing and communications errors between CMS and the fiscal intermediaries who actually implement the remedy; and

• failing to terminate facilities even where the applicable law requires mandatory termination.

Finally, Morris touted the OIG’s Draft Supplemental Compliance Guidance for Nursing Facilities, released earlier this year, in which the OIG identified additional “risk areas” providers should focus on and additional steps providers should take as part of their compliance programs. These included:

• regular assessment of staffing patterns to evaluate whether the facility has sufficient staff;

• ensuring an interdisciplinary approach to care plan development;

• ensuring the use of psychotropic medications is limited to cases where adequate indications exist for these drugs and ensuring careful monitoring and documentation of use of these medications;

• ensuring robust training and regular monitoring of all staff involved in prescribing, administering and managing resident medications, and appropriate policies for keeping accurate drug records and tracking medications; and

• developing adequate procedures to prevent staff-to-resident and resident-to-resident abuse, neglect and misappropriation of property, including a method for staff, residents, families, and visitors to confidentially report instances of abuse.

CMS Proposes Adjusted Medicare Rates for Skilled Nursing Facilities

by Mike Hale

On May 7, 2008, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule to update the Medicare Prospective Payment System (PPS) rates for skilled nursing facilities (SNFs), effective October 1, 2008. The proposed rule, in part, reduces the current 2008 PPS rates by an average of 0.3% nationwide in fiscal year 2009 (FY 2009).

The Social Security Act requires annual updates to SNF PPS rates, and these rates are adjusted, in part, by adjusting the market basket index (MBI). The MBI reflects changes in the cost of covered services and supplies, including routine and ancillary services and capital-related costs. The proposed adjusted MBI results in an increase of approximately 3.1% over the current FY 2008 rates. CMS also points out that the president’s budget includes a provision that would establish a 0% MBI for FY 2009 through 2011, and that any provisions in the proposed rule would need to reflect any legislation enacted to adopt the president’s budget. The impact of the president’s budget on the proposed rule is unclear at this time.

Even though CMS proposes to increase the MBI by 3.1%, it also proposes to recalibrate and reduce the PPS case-mix adjustment by approximately 3.3%. The recalibration of the SNF PPS rates is due to an overestimate of the case-mix index projections that were made when the Resource Utilization Groups, Version III (RUG-III) model, changed in 2006 from 44 groups to the current 53 groups.

In an effort to maintain parity between the two groupings, CMS estimated the payment rates in the 9 additional RUG-III categories based on FY 2001 claims data, which was the most current data available at that time. CMS has since determined that the actual utilization patterns in the additional nine RUGs differ significantly from its initial projections, and is now proposing to readjust the RUG-III case-mix indexes to reflect actual 2006 utilization data.

This recalibration results in a decrease of the current PPS rates by approximately 3.3%, which is offset by the 3.1% MBI. The result is a net decrease of approximately 0.3%, with the rate adjustments varying by census region and rural and urban designated areas. The projected impact of the proposed rate adjustment in the South Atlantic Region, which includes North Carolina, is a projected PPS reduction of 0.5% in the urban areas and a projected reduction of 0.2% in the rural areas.

CMS also proposes to maintain its current temporary increase of 128% for any SNF resident with Acquired Immune Deficiency Syndrome through at least FY 2009, and indicates its intent to introduce new case mix rates in FY 2010 based on results of time studies that are currently being analyzed and which may result in a new RUG-IV model.

SNF providers should be aware of these proposed reductions in the PPS rates in order to budget their resources accordingly. SNF providers may also wish to comment on the proposed rule no later than 5 p.m. on June 30, 2008, as any reduction in Medicare rates may adversely impact the provision of SNF services, especially for those providers that depend on a high Medicare utilization.

Mike Hale is a health care attorney advising clients on a variety of regulatory, contractual and operational issues in hospice, home care, and long term care settings. He may be reached at 919.783.2968 or mhale@poynerspruill.com.

Firm’s Clients and Friends Make Special Donations to Nicaragua’s Hogar de Ancianos

In February, we put out a call for donated medical equipment for the Hogar de Ancianos (Home of the Ancients), the center for homeless seniors in Jinotepe, Nicaragua, that Poyner & Spruill has been helping renovate and expand since early 2007, and in which so many of the firm’s clients and friends have helped with donations of money and in-kind gifts. The Jessie F. Richardson of Oregon, which is sponsoring and funding the center’s renovation and expansion, has recently hired a full-time physician for the center, the first geriatrician in Nicaragua.

In February, we received a call from Keren Wilson, the foundation CEO, telling us that another volunteer group was sending an 18-wheeler from North Carolina to Jinotepe and had offered us some space on the back of the truck. Since customs fees and duties generally make it financially impractical to send goods from the U.S. to Nicaragua, this was a wonderful gift. The shipping organization had worked out a deal with the Nicaraguan government to waive normal duties and customs charges.

Hence, our February call for donated equipment. In particular, the center needed mobility assistance devices to help a volunteer physical therapist, Amie Miles, who is moving to Nicaragua for a year with her husband, a medical student, and is volunteering her time at the center to help with therapies for the center’s residents.

In response to our call, Su Modlin Johnson of Care Matters Consulting and her colleague Rhonda Derr kicked into high gear. Within weeks, Su and Rhonda called to say they had secured donations from the Presbyterian Home of Hawfields (Max Kernodle, administrator) and the Highlands-Cashiers Hospital skilled nursing facility (Ava Emory, administrator). Rhonda went to Highlands, picked up a load of equipment, and met me on a Saturday at the Presbyterian of Hawfields facility, where Max and his staff had a room full of wheelchairs, gerichairs, walkers, canes, and other equipment for us.

We loaded up my mom’s van to the brim, and I headed to Greenville, N.C., to meet the truck, Amie, and her husband Jeremy, a third-year medical student at Duke University who will be spending time in Nicaragua studying and conducting research. Amie was thrilled to have equipment to aid her in helping the residents of the Hogar de Ancianos.

Through the extremely generous efforts of Su, Rhonda, Ava and her staff, and Maxand his staff, we sent over 40 separate pieces of mobility assistance devices, exercise mats, braces, toileting assistance devices, and various other much-needed pieces of rehabilitation and mobility equipment. Amie told me that this shipment alone provided enough equipment for two-thirds of the center’s residents and will make a world of difference in their lives. And, we have another van full of equipment waiting for the next shipment. I should have taken a larger truck.

I wanted to give a public thank-you to all of Poyner & Spruill’s clients and friends for their continuing support in our efforts to help the Hogar de Ancianos in Nicaragua, and a very special thank-you to Su and Rhonda of Care Matters Consulting, Ava of the Highlands-Cashiers Hospital skilled nursing facility, and Max and his staff at the Presbyterian Home of Hawfields for these wonderful donations. It was a real thrill for me to watch the equipment being loaded onto a big truck headed for Jinotepe and to know how much these items will improve the lives of the seniors at the center. So, to Su, Rhonda, Ava, Max, and the entire staff of the Highlands-Cashiers Hospital nursing facility and Presbyterian Home of Hawfields, THANK YOU, THANK YOU, THANK YOU . . . Ken

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