Episode 28: Let’s Talk Compliance: Medicare Advantage Compliance Enforcement Underway

In this episode, partner Jana Kolarik of Foley’s Health Care Practice Group interviews partner Michael Tuteur of Foley’s Government Enforcement & Defense Investigations Practice Group and Valerie Rock, Principal of PYA on Medicare Advantage compliance and enforcement trends and why this is a hot topic in the health care industry.

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Please note that the interview copy below is not verbatim. We do our best to provide you with a summary of what is covered during the show. Thank you for your consideration, and enjoy the show!

Jana Kolarik

Thanks so much, Angie. Hi everyone, this is Jana Kolarik. I’m a partner with Foley’s Health Care Practice Group, and I’ll be interviewing Valerie Rock from PYA and Mike Tuteur from Foley.  Valerie and Mike, can you tell us a little bit about yourselves?

Valerie Rock

Thank you, Jana. I’m Valerie Rock. I’m a Principal with PYA. I oversee our revenue integrity services that include all nature of post-acute, hospital, and physician practice, coding and auditing, and we do all nature of government appeals and as well as routine audits. I’ll turn it over to Mike.

Mike Tuteur

Hi everybody, I’m Mike Tuteur. I’m a partner at Foley and Lardner. I’m a government enforcement, defense and investigations partner here with a focus specifically on health care and the False Claims Act. I’ve dedicated a lot of time to Medicare Advantage and other government programs insofar as they are connected with investigations by the Office on the Inspector General (OIG), Centers for Medicare and Medicaid (CMS) and the Department of Justice (DOJ).

Jana Kolarik

Great. Thanks guys, so much. It’s great to be joined by you today. I want to level set for the audience and give a little background on the state of, frankly, what is Medicare Advantage (MA). Let’s talk about what is happening with Medicare population growth; what’s happened with Medicare Advantage, that type of thing. Maybe Valerie, could you launch us into a little bit of that background?

Valerie Rock

Sure, absolutely. Thank you, Jana. I think it’s good to understand a little bit about where we are right now from a population perspective, but Medicare Advantage is the plan that is called Part C of the Medicare program. It was designed to allow for private industry commercial payers to take part and administer the Medicare program claims. They’re allowed to do a little bit more than what Medicare can cover, but nothing less than what Medicare can cover. We’ll talk in a minute  about where that is now the rub, but when we look at where Medicare Advantage is going, we have to look at the population of the United States. When we look at our current population being about 330 million in total, we have about 58 million in Medicare beneficiaries. That’s about 18% of our total US population and our baby boomers that are now aging up into this bracket, will be fully aged into this bracket as of 2030.

We have about 73 million people that are baby boomers and will be moving into that bracket fully by 2030. The MA plans are trending up towards, based on the entirety of the Medicare beneficiary population, the 50% mark, but it’s anticipated that we’ll be about 61% by 2032. If we’re about 28 million right now in Medicare beneficiaries that are part of the MA plans, we’ll be looking at about 45 million of MA beneficiaries by 2032. We’re going to have about a nearly doubling effect in the next few years. Up to nine years we’ll be looking at double the MA beneficiaries. This is no small thing that we’re running into. Of course, Medicare is focused in on the compliance of these MA plans and how they’re running and making sure their beneficiaries are covered well. This is how we end up with our compliance issues and the focus, the hotspot it is today, Jana.

Jana Kolarik

That makes sense. I think really Medicare Advantage in the past, and I’ve been practicing for a while, wasn’t a big focus of the government [enforcement]. I mean, it was really traditional Medicare. I’m curious about kind of – and I think Mike deals with plans and has experience in that space too – has there been any trending with regard to the population itself, Mike, over the last several years that add to things that are happening in the market or things that plans are having to deal with that may be different than they have maybe in the last 10 years?

Mike Tuteur

There definitely is, Jana, and it’s interesting to watch the government’s increased interest in Medicare Advantage as these populations and the demographics change. Just to back up for a second, I think one of the things that’s important is that for payers, at least for commercial payers, the idea of the False Claims Act and government investigations into the payments of money are, well, they’re not a new thing any more because the payers have gone pretty deep into Medicare Advantage. The fact that the government is paying the premiums for Medicare Advantage plans is what brings in the scrutiny, brings in the False Claims Act liability and brings in a whole new area of government intervention and government oversight. I think plans have really struggled to bring themselves within that compliance regime because it really is different from what they had been doing in the commercial space where if there was False Claims Act liability, for example, it was the providers that were making claims to the government under Medicare and other programs.

Here in Medicare Advantage, what is so different is that the claims for money are really being made by the payers. They’re getting the money from the government and then they’re providing the medical services. To go to your question, what we’re seeing happen is a change really in the demographics of the Medicare Advantage population. As it started, the marketing and the purchase of Medicare Advantage plans were skewing towards the better educated people who could make their way either with brokers or themselves through the thicket that is the Medicare program. They could find for themselves the differences in the Medicare Advantage plans that really fit their particular needs. The skew was towards the better educated and as a result, and this is just a fact, the better educated are generally healthier and as a result, the need for services is somewhat lower, and they often need less internal handholding and so forth, just because they’ve got the resources outside of the plan programs.

What’s happening now is that the Medicare population, that group is certainly growing, but lower income and working people who are reaching retirement age, that population is the part that is growing for the plans. Again, just a quick digression: For the commercial plans, the commercial population is not a growth area between commercial insurance is turning almost into a regulated utility; but also, just the population trends. There isn’t a lot of room for growth. You’re going to have to fight for market share just by taking it from somebody else. In Medicare Advantage, there really are opportunities for growth. The major payers and many others are really aiming to grow that population. The challenge that this brings is that the lower income, less educated people, they often need more help to get on Medicare Advantage, and to take advantage of the benefits that are there, and to understand the consequences of going on Medicare Advantage, which often means, unlike traditional Medicare, narrower networks and a lot more providers that are not in the narrow network of the particular MA plan.

This can come as a surprise and a shock and distress to patients. The plans have had really to gear up, build out services that cost more for the plans, are more involved on a day-to-day basis with the potential MA plan participants. We can talk about this a little later, but one consequence that we are seeing is a much greater amount of what is referred to as churn in the industry. That is people coming on a particular MA plan and then not liking it or feeling that they were misled as to the benefits they were going to get and moving to another plan. This creates some significant compliance issues for the plans and also, financial issues going forward.

Jana Kolarik

Valerie, speaking of sort of the differences there, can you give us just a little bit of background about how the reimbursement from Medicare Advantage works versus traditional Medicare?

Valerie Rock

Yes, absolutely. Traditional Medicare is paid on fee for service. We’ve had our normal patterns as we bill out Current Procedural Technology (CPT) and HCPCS codes that we’re then paid based on our procedures. We do a service, we’re paid on that service. Whereas Medicare Advantage is actually paid by CMS. This is how the money flows is from CMS to the Medicare Advantage plans and then to the providers. When Medicare is determining how to pay Medicare Advantage, they’re based on a risk methodology that has a lot of constructs within it, but it’s really rooted in the complexity of the diagnoses for each patient. Each patient or member of that plan then has a per member per month rate that is based on the prior year’s diagnosis construct. That equates to Hierarchical Condition Categories (HCC), which is a hierarchical condition code that then has a score. That score then along with the demographic information for that patient and patient satisfaction with that patient and other constructs to the calculation are then created into that per member per month payment. That underlying theme then is where the risk tends to be is in these diagnoses, and how the providers are selecting them.

Jana Kolarik

That sort of leads nicely into some of the common issues that we’ve been seeing more recently related to enforcement and there really seems to have been a focus on the risk adjustment issue. The thing that plays into the money, right, the dollars that are being spent by the federal programs. Mike, can you give us a little bit of background on the focus of the government enforcement related to risk adjustment? Can you give us a little bit of that insight?

Mike Tuteur

Sure. It’s a very complicated area, but I’ll try and do it at the highest level. The fact is, and again, I’m really simplifying, but if a patient comes on Medicare Advantage, the plan gets a certain slug of money from the government for that patient as just another patient coming on, and that’s added to the premium payment that the government makes every month to that particular plan. As Valerie indicated, what Medicare Advantage attempts to do in dealing with issues of sicker patients and higher risk patients is to allow for the scoring of that patient through the doctor’s diagnoses of what that patient’s conditions are and what sort of treatments they’re going to have to have. That standard number, standard amount is adjusted by a factor that is taking into account the higher risk for a particular patient. The challenge is that the plan is looking at a particular patient in a snapshot.

As soon as they join the plan, of course, they don’t have any risk scores. As I said, the plan gets a standard amount of premium. It’s therefore very much in the plan’s interest to get the patient into a doctor’s office to do a health risk assessment (which has now come under scrutiny by OIG), and to get the person’s risk score calculated and then used to receive more money. The difference is significant. A fully risk scored patient can often yield as much as three times the amount of premium money as a standard patient. Clearly, that’s a pretty important distinction for the plan. Now, one issue that has come up and is being litigated by the government against a whole bunch of plans is what happens if the risk score that was done when the patient came into the doctor that day, it turns out that that patient actually had more serious conditions or for that matter, less serious conditions.

Is it possible to do a retrospective chart review to more accurately picture that patient based on the conditions that really end up being the ones that turned out to be. Just to use an example: a patient comes in with chest pain. At first it’s thought to just be an abdominal matter, but no, it turns out to be a much more serious heart condition. The coding that was done when the patient came into the ER was for the less significant condition, but it turns out that they actually had a more significant condition and is it permissible to change the code? This is a major issue, again, with a whole bunch of plans and the Department of Justice: Is it permissible to go back into those charts, look at what the medical records showed, and then revise the risk score based on the actual conditions? If it is permissible to do that, to increase the scores because it turns out the patient was sicker than first thought, is it also required, as the government now says, that the plan must also go in and code for less serious conditions as well?

The person came into the emergency room, the thought is that the patient has an MI or a stroke, and that’s ruled out and it turns out to be something less significant. Is it incumbent upon the plans to lower the risk adjustment?

Those cases are pending right now in various district courts and circuit courts around the country, and it’s going to make a major financial difference to the plans, the extent to which this retrospective chart review is permissible. If it is permissible, does it have to go in both directions and to what extent and how does that compare, as the plans say, to traditional Medicare where the auditing process would not require both the up and the down in the same way that it’s being done in Medicare Advantage?

Risk adjustment is a key issue in the world of Medicare Advantage, and we anticipate that these cases are going to make their way through the circuit courts and frankly, there’s a good chance, given the dollars that are at stake, that at some point there will be a Supreme Court review of how you do risk adjustment appropriately.

Jana Kolarik

Valerie, I know just listening to what Mike’s saying, and we had talked a little bit about this before, but it seems like the payment issue with regard to risk adjustment is butting up against how coding has happened historically. You would diagnose a patient a particular way based on the visit, and that could happen even in the hospital context, the initial diagnosis of that patient followed that patient, even though you may find out more serious things as the patient had their inpatient stay, et cetera. How are some of those billing rules kind of pushing up against this? I mean, it seems to be a problem. Is this a problem?

Valerie Rock

Well, what we tend to see is that physicians are not really good at capturing these diagnoses because of the difficulty in actually capturing them and the underlying diagnoses, they’re not exactly sure when to code them or they don’t capture them. Part of the problem is just the capture rate and the capture quality through the systems because Electronic Health Record Systems (EHRs) sometimes make it more difficult to select the code. You’re using a system to pull up, like you do a search engine, you have a code that you’re looking for, it may not give you exactly the right code that you’re looking for, and so you may miss the specificity that you need to capture the HCC because you can have unspecified codes that do not capture an HCC and specified codes that do capture it. You may have stage four cancer versus just a kind of an unspecified cancer, and that would be whether an HCC has picked up or not.

If we’re having issues in capturing the diagnoses, then it makes sense that a payer would then, because they’re having to submit these diagnoses, their  tranche, to the government, that they’re going to look at it and say, “Well, maybe we’ve under coded.”  There’s things that we’ve seen in the data where a patient will have an amputation in one year and not in the next year. Clearly, the amputation is still there, we just haven’t picked up the diagnosis. I think that part of that is saying, “Well, we have an under coding, so we need to capture that,” but to Mike’s point, do we need a balance of that? Are we showing that we’re trying to capture the accuracy of the patient population versus specifying only in one area or only one risk area that’s going to be beneficial for the plan that may skew the payments higher than the balance if you had it all together right.

Mike Tuteur

Jana and Valerie, I mean, I think one of the things, maybe we should also just remind the audience, is that the traditional Medicare system is often referred to as a pay and chase system, and the payments are made after post-diagnosis, post-treatment. The system was created and the coverage determinations and all of these things were created with an eye towards a system in which post-service payments are made, and if they’re reviewed, they’re audited later. Then if it turns out that the coding and billing were wrong, there’s some kind of a recoupment or an overpayment. It’s all this kind of retrospective review. But Medicare Advantage is all done on a prospective basis. We can talk a little bit about prior authorizations and managed care, but the notion is that it’s managed care and that it is you’re thinking about the patient pre-service because you’re scoring them and you’re getting a slug of premium based on their conditions.

One of the things that I think is fundamental or a fundamental hinge point in all of this is that so much of the Medicare system, including the coverage determinations and other things are based on the traditional Medicare system, and they are then applied without a whole lot of thought to the Medicare Advantage system, which as Valerie indicated at the beginning of this podcast, is going to be the dominant system within just a matter of a few years. Many of the idiosyncrasies and kind of missteps, if you will, that I think we see in the compliance and investigations world, they arise in some ways because of the application of traditional Medicare concepts to this managed care system. That doesn’t always work so well, but the government determinedly moves forward as if the same structures can easily be applied to a system that’s really 180 degrees from the other one.

Jana Kolarik

Excellent, excellent point. Kind of digging a little bit deeper on the diagnosis codes and how things are the focus and the concerns by the government. If you have diagnoses that are listed, right, primary, secondary, et cetera, but there’s no treatment for those diagnoses or if you have, I know that HRA that the plans will go out to really try to gather more information on really what’s happening with these patients and what their health conditions may be. They [the plans] may have more information than is coming through from a claims perspective or from a care perspective. What happens then? Does that become, I mean, from your perspective, is that treated as somewhat suspect? Is that just par for the course because the information that’s being sussed out by the plans in some ways can be just more detailed? What are your thoughts on that?

Valerie Rock

I think you mentioned the health risk assessments and as HRAs are done, they kind of create the building blocks of the structure of how you’re going to manage that patient. To Mike’s point, if we think of it differently, how do we need to manage this patient? Here are all the diagnoses that may be relevant to this patient, but if there’s no treatment after that, if there’s no interaction with those diagnoses after that, if they aren’t even picked up on any other claim, then they are in question on were they actually managed? If they weren’t managed, then they’re not going to be picked up or they shouldn’t have been picked up, if that makes sense from an HCC perspective. That’s where those adjustments on the backend can happen and is what auditors are looking for is, is there documentation in the rest of the record showing that yes, this is a chronic issue that’s being managed and yes, this is an acute problem that came up during the year.

I think if we can get to a point where the payers are showing that kind of management of those diagnoses, that they’re coordinating that management  with providers, making sure that everybody’s managing those diagnoses, then that’s really getting in front of it and making sure it’s coordinated and the patient’s taken care of. I think that’s the intent of it, but we get lost in the details of what we’re capturing.

Mike Tuteur

I think that there’s sort of two points that I would make that kind of go in both directions. One is that from the plans’ perspective, and especially to go back to the demographics I was talking about earlier, where patients are less educated and less well off and can’t take time off. What they see is the patient who comes on Medicare Advantage and who has, let’s just use an example. They have COPD, they’ve got heart failure, they’ve got a bunch of conditions, they’ve got diabetes, all of which ought to be captured as soon as they show up and included in the risk score because that patient is high risk. What actually happens frequently is that the patient goes on MA but doesn’t have the time or doesn’t have the connections or doesn’t have the wherewithal to get to a doctor right away or to have that Health Risk Assessment (HRA) done.

They have to work to make a living and all of that. The first thing that happens to them is nine months in that first year, that patient collapses with all of the health-related sequelae from the conditions that I just described and ends up in the ER and then in intensive care, for which the payer obviously must pay. The payer looks at that and says, “Now wait a minute, I never had a chance to get this patient risk adjusted. The patient should have been risk adjusted. The patient has all sorts of risks, but what’s really happened is I’ve gotten a relatively small standard premium payment for the patient, and if I’d only known about these risks, we could have tried to manage this patient and avoided the catastrophe, but that was the first time that we ultimately found out about what this patient had.” That’s a problem that the payers see acutely, especially given the level of churn — because if the patient is new every year, the same thing can happen every year to a different plan.

They’re very concerned about this and want to be able to manage that patient, but it’s not always possible, and it’s becoming increasingly difficult, again, with a broader, less well-educated patient population. It’s not the fault of the patients. They’re trying to make ends meet, and so they don’t just go to a doctor to get a physical exam, they don’t have time for that. That’s the problem on one end. On the other hand, and this is kind of where the disconnect is, OIG is sure, it appears, that the whole HRA process is just kind of one level below fraud. They’ve issued a report, in fact this year, in just this last month in July, in which they purport to say that HRA overstate the risks of the patients. The way that they did that was to look after the fact to see whether those patients ultimately are shown to have the conditions that are noted on the HRA.

Here you’ve got the payers saying, we’re just trying to identify the risks so that we can (a) manage them, and (b) that we’re getting paid appropriately for the kinds of conditions and events that may occur to this sick patient. Meanwhile, OIG is saying that’s a lot of balderdash; what they’re really doing on the HRA is trying to get a basis for risk adjusting upward just to make more money, and that when we audit these patients, they actually don’t seem to have those conditions. The middle ground of those positions, which nobody really wants to acknowledge, is that if the patients don’t allow themselves to be managed for good reasons but don’t get managed, yeah, the conditions aren’t going to show up until the catastrophe, but that’s going to mean that if they did get an HRA, it’s also possible that those conditions will go unmanaged for an extended period of time because the patient is not willing or able, or there are not enough providers out there to provide the treatment and code appropriately and identify the risks. This is just one of a number of government versus payer butting heads that really needs to get resolved.

Jana Kolarik

What’s the solution? I mean, is it outreach from the plans to the providers to ensure that they understand everything that was noted in the HRA? I’m trying to figure out, it just seems like there’s some barriers here to real transparency and really getting the patients the care they need and frankly, the payments where they need to be for the patient’s chronic condition. What do you guys think?

Valerie Rock

Yeah, I think if you think of it as you’ve got your managed care payer and then you’ve got your primary care physician and they’re supposed to be somewhat of the hub of that total care. Then if the primary care physician, if the plan is going out and doing an HRA, then they notify that primary care physician of all the things that are going on. That primary care physician needs to then manage all of those diagnoses and make sure that they’re being handled, even if they’re being referred out to other specialists. If the population health model is utilized within this payer model, then I think we can coordinate care and do all of the things that we’re supposed to do. I think that’s what the intent even is on the fee for service side and where you see chronic care management and principal care management being paid for now, that is just a precursor to this model that is intended for these primary care physicians to really manage these diagnoses and to really push out these patients and really capture them, get them in, even go out to them.

There are concepts that are in the new final rule regarding health equity and behavioral health and things like that that are really saying, let’s go outside of the bounds of just having the patient come in. Let’s make sure we’re going to them and giving the easiest way for you to access the care, and that may take additional services and additional means in order to do that.

Mike Tuteur

Yeah, and I think actually, what I’m seeing is that plans are compelled in the competitive world in which they live, to spend significant sums on helping people get through the plan enrollment process; or the plans have to contract with service providers to reach out to patients and make sure that they’re taking advantage of the plan benefits that they have, that they understand the plan benefits that they have. More handholding, more management as Valerie indicates, in order to try to keep people healthier. That is ultimately the goal. There’s a lot of skepticism about this in the community, but the payers, it’s really in their interests to have happy patients. The reason for that, as we’ve talked about already, is that from an economics point of view, the best thing that a MA plan can do is to have somebody come on board, get them risk adjusted, and then never leave the plan until they pass away – hopefully, 10 or 15 or 20 years afterwards.

That is a model in which, if they are providing extra services in this way and keeping the patient happy, the premium dollars continue to flow and the amount of transient work that needs to be done when a new patient comes on is, of course, no longer needed. It’s a real advantage to the plans to keep patient continuity. So what we see is a lot more services being provided at the plan level, at the payer level, to try to make sure that their participants are happy and that they’re going to stay. I think that’s a good thing. I mean, that is very much the model. It’s good for the enrollee, it’s good for the plan, it’s good for brokers, it’s good for everybody, and it’s good for providers too because they have consistency with payers and with the patients not having to jump network to network.

Jana Kolarik

Dealing with some of the awkward attachment of traditional Medicare concepts to Medicare Advantage. In the past, and probably, I don’t know, five years ago it was in dealing with regulatory or billing issues for MA plans, it wasn’t a given that you would look to traditional Medicare guidance. We’ve mentioned the national coverage determinations or (NCDs) or the local coverage determinations or (LCDs) when you were dealing with Medicare Advantage because at least a while ago, it was just treated as a different payment program with different coverage really being applicable to it. That has changed as I understand it. Mike, because I know you’ve gotten a little bit into this, and Valerie, I welcome your thoughts on this as well, how is the focus in the Medicare Advantage space on Medicare NCDs and LCDs as guidance for the MA plans changed more recently?

Mike Tuteur

Yeah, it’s changed dramatically this year because the final rule is going to say that it is an absolute requirement that the NCDs and the LCDs, specifically the LCDs, which had in the past not carried the same weight as the NCDs, they are to be followed. The ability of a plan to try to manage care by, for example, step therapies that would first try one thing and then something that was more expensive, if that wasn’t called out in the NCD or LCD, it is now under the final rule, that treatment, that final treatment, the expensive one, if it’s a covered service, there’s no ability on the part of the plan any more to deny it. I think where the rubber hits the road – it’s the same problem in all of managed care, but it’s going to be a bigger problem given the size of Medicare Advantage – is that managed care is by definition managed, including through utilization management, which one hopes at least is evidence-based and that there is an effort to see whether particular utilization of an expensive service is where it ought to be.

Of course, utilization management is the thing that in some respects, patients hate the absolute most. The examples that are out there are many, where a patient ss advised to have a treatment by a particular physician, but then the plan – the faceless plan – says, sorry, that’s not a covered service. Or you have to do this other thing first. And then the plan denies the prior authorization for that claim. That happened to all of us, I know, and it’s very, very frustrating when it does. At the same time, the managed care plans would say, but that’s what you asked us to do under Medicare Part C, we’re supposed to not just pay and chase, we’re supposed to manage care and work with professionals on getting the best care at the right price to the patients. OIG has clearly taken a position this year, again, in the final rule, that prior authorizations are deemed a barrier to care or have been, in their view, found to be a barrier to care, that patients are not getting the care that they should get under the NCDs and LCDs.

And as a result, OIG has strongly recommended that prior authorizations, that whole regime, be reviewed by CMS and the oversight of it strengthened. This is a real compliance issue, I think, for some of our clients and some of our listeners about how to oversee that. Speaking from experience in cases that I have, the NCDs and the LCDs, again, especially the LCDs, are written to make sense in the world of pay and chase post-service payment, and they’re often not written in a way that gives the plan the ability to decide in the first instance whether that treatment should or shouldn’t be given. It’s just the language isn’t there for, they’re not guidelines based in the way that we would expect evidence-based guidelines to work. Once again, we’ve got butting heads between the plans and the government in some respects because of the incommensurability between what is being used coming out of traditional Medicare and then being applied to this managed care system.

Jana Kolarik

Valerie, is there a different view of why the government has taken this up from a prior authorization and sort of really looked at the NCDs and LCDs as being a threshold of care?

Valerie Rock

I think it’s easier to look to that guidance, though that guidance doesn’t cover everything. I think that should be known. The NCDs and LCDs don’t address all codes or all services, but for those that they do, they’re typically behind technology. They are not cutting edge. It takes a while to get them created and agreed to. They have to go through a comment period, LCDs do, and so it tends to have a lag, in other words. There may be compliance issues that come about because people are on the front end of technology and they’re doing something different than what the LCD states, so there’s a rub there. For commercial payers, we have not generally utilized these LCDs though. We’ve said, “Well, this might be a basis,” and they often referencing clinical literature that would support the reason why they’re giving some certain kind of standard of care, if you will, that we usually have to follow in order to be considered medically necessary.

We’ll look to those, but we may say, “Well, now this is done differently, and so maybe a payer is looking at it differently.” You’ll see trends for private payers to start allowing things more quickly than Medicare does. If Medicare is going to be the driver of even commercial statutes within the Medicare Advantage plan, it’s likely to creep over into our commercial plans as well because they’re going to want a continuity there. At the same time, it may cause issues. If we only have eventually 40% of our Medicare patients that are within a population that is truly different from the Medicare Advantage population, will those LCDs and NCDs really be impactful to this other population? Will they even mean the same thing? The reason why we have local coverage determinations is based on regional needs. You cannot apply that to a national standard.

It’ll be interesting to watch how this shifts and changes, and they may even have to create a third party that has a clinical determination for these, because if you have majority within the commercial payers, the question is are you really meeting the needs of those patients that are under the Medicare Advantage plan?

Mike Tuteur

CMS would say that they’re trying to do that. There is this effort to say that if there is no guideline, if there’s no NCD or LCD, then the plans can look this kind of majoritarian point that you’re making, Valerie, that there is a guideline out there that is well-accepted and they can turn to that instead. One hopes in a sense that that’s the way it goes, because national coverage determinations, just by virtue of the way that they are created, they lag behind technology and the latest developments pretty significantly. They’re notice-and-comment rulemaking in the end. Fundamentally, that’s what they are, and that takes a long time to complete. I think we saw this recently, and I’m not sure it’s the best model, but with the drugs for Alzheimer’s, which the FDA approved in sort of an odd way, but said that it could be used and the cost for the plans was going to be just an enormous amount of money, but there’s this FDA approval, what does that mean?

Some people said, “Well, we really ought to get an NCD out there to deal with the appropriate criteria for this drug,” but in the meantime, the plans said the drug is so expensive that if we give it to every early Alzheimer’s patients, essentially the treasury is going to disappear. It demonstrated that the system doesn’t really have safety valves. I mean, what ended up happening is the plans ultimately decided that they weren’t going to pay for it. Medicare took a position on it, but not through an NCD. It probably ended up in the right place, but it was a mess, and it suggests that we ought to figure out a better way to do this.

Jana Kolarik

Query whether applying and now overlaying things that are very traditional Medicare-based, very fee for service-based concepts onto what was intended to be a different program, isn’t sort of making that much like, and sort of burdened by, some of the processes that I think were intended, frankly, the absence of those processes were intended, to make Medicare Advantage more nimble, able to be more innovative in what they’re covering and what they’re caring for. You guys’ thoughts on that? I mean, is that a bit of what’s happening now?

Valerie Rock

Well, one thing I’d say though is that when you look at when a provider is being challenged on something that’s related to an LCD, it’s often overturned at the administrative law judge level because it doesn’t hold any weight, because the physician’s prerogative is to take care of that patient, and if you can produce the reason why you have medical necessity to do something, then that service should be paid. I think it’ll be interesting to see how much weight these LCDs carry on the Medicare Advantage side because they shouldn’t hold any more weight than they do on the fee for service side.

Jana Kolarik

What really should plans and, frankly, providers be doing? Do providers need to be taking all these, do they need to educate themselves up? Do they need to have an expert in-house that can be educating them not only obviously on proper diagnosis coding and what to do there, or have a coding expert that’s sort of in the wings to review all of their stuff based on what we talked about with regard to the risk adjustment issue? But also now, to sort of educate them up or make sure that they understand what the expectation is related to LCDs and what’s going to end up being covered? I mean, fundamentally, that isn’t something that I think anybody wanted providers being worried about, but rather, as you said Valerie, just a second ago, they should be focusing on patient care and what is in the end medically necessary or what makes sense for that patient. My question is really what are providers and plans to do with new applications?

Valerie Rock

Yeah, so I would say from a provider perspective that educating them on how to capture those diagnoses, how to document those diagnoses and what is expected from them. The challenge is, they’re frustrated already about E/M guidelines and all the changes that have occurred and having to utilize an EHR, and they’re understaffed, and they don’t have enough nurses and they have so much going on that they don’t have time. We heard it yesterday on a training, “I don’t have time to use the most specified diagnosis.” It is a challenge across the board to even get the physicians to do this. If you have a nurse like a clinical auditor that’s capturing diagnoses based on the documentation and helping the physician understand what needs to be documented in order to capture that, as long as the physician’s documenting those diagnoses and then it’s captured on the backend by a coder, that’s fine, but we don’t want to have people inserting diagnoses that are not really documented and capturing them that way. That’s leads to the challenge  along the way, it tends to run in the wrong direction as it’s applied.

Mike Tuteur

Yeah, I guess, I don’t mean to be a downer, but I think one of the real challenges that we are going to have to address at some point is that I think from the plan’s perspective, while Medicare Advantage is a growth opportunity, and so they’re very keen on providing more benefits and dental and vision and a grocery card and all sorts of things to try to increase the number of patients that they have, they feel very squeezed in terms of all of the requirements and the amount of premium and the example that I gave about the patient who collapses in the emergency room. They feel that they’re on a very, very tight margin. Meanwhile, the government appears to have the view that actually the payers are making bank on Medicare Advantage and that there’s lots of money sloshing around because the Medicare Advantage plans are misusing patient management, like with prior authorizations, risk adjustment, upward scores and so forth, to increase the amount of money that they’re going to get from the government, and that there really needs to be a much tighter regime.

I’m not quite sure where this immovable object is going to meet this irresistible force, but so long as the two viewpoints are out there, that’s the way for trouble. All one has to do is to look at the OIG reports that came out just this year. They certainly think they’re right about the excess profits. I think we’re going to have problems, and I think compliance is going to be key, and there’s going to be a lot of work for compliance officers because the government is going to be looking for that extra money that they think is there, and the plans are going to be saying, “We did this by the book, and as it is, we’re scraping to get some profit out of this.”

I do think that well-run compliance programs in which risks are identified, prioritized, and addressed from a False Claims Act perspective is key. It really is the elephant in the room. There’s just so much government money being expended, and the relators are out there and so forth. The answer to that is to prioritize your risks and address them in a way that shows that, at least in good faith, the plan believes that this is a way that is appropriate and consistent with the regulations. Good relationships between compliance and legal and the business, I think, are absolutely essential, including a lot of communication between the three.

Jana Kolarik

Yeah, and that sort of segues nicely into a final thought of how can Foley and PYA be helpful to plans and providers in providing some of that expertise based on the knowledge base I think that we have and that PYA has then also, some of the experiences that  Mike, you and Valerie are running into frequently now. Tell us how you see, and Mike, you’ve touched on it, but how can Foley and PYA be useful or helpful in that?

Valerie Rock

From a PYA perspective, we can provide education to providers directly to providers on ICD-10 coding and documentation. We can assist in a RADV audits, like a mock audit for a RADV audit that is for the payers specifically. Sometimes small plans will come to us looking for a RADV mock audit to see how they look. We can also help from an operations and compliance perspective to make sure that the model is helping capture all of those diagnoses and the risk and quality measures, et cetera.

Mike Tuteur

Yeah, and one of the things we love to do is to partner up with organizations like PYA. I think that the mock RADV audit is a terrific idea and we’ve worked with you and some others to do that and maybe to do it under privilege, which is that this is directed by the general counsel’s office to see what would happen if we did get an audit. That then is performed with work by the law firm and in coordination with the general counsel’s office. That way, we can have a candid meeting internally as to where we find the risks to be popping up. Clearly, we’ve had a fair amount of experience with a number of payers on the issues of the day, and I think we’re pretty cognizant of the way that OIG and DOJ looks at these issues.

Clearly, one of the things we try to do is when a False Claims Act case is brought, we do everything we possibly can to persuade the government that this is not the case they want to intervene on. While nobody wants to have to deal with relators, it’s a whole lot easier dealing with relators’ counsel in a normal civil litigation than it is when you’ve got a full-blown government investigation and grand jury subpoenas and OIG subpoenas and so forth. We’ve worked very hard with our clients to try to deal with those important data points.

Prospectively, the combination of having an experienced law firm working with a well-experienced consulting firm in coordination with the general counsel’s office and the compliance department can, I think, do wonders in identifying what are the risks that we have and how can we prioritize them, and how can we get to them now before a relator or the government comes calling?

Jana Kolarik

I think that’s an excellent final note. I want to thank you, Valerie, for participating in the podcast today. Mike, thank you so much. Really appreciate both of you and your insights into this very hot topic. Thanks guys.