Lawyer Advises on Risk Of Prostate Biopsy Audits

All labs could face federal audits for failing to comply with new rules on prostate biopsies

CEO SUMMARY: For labs currently processing prostate biopsy cases with five or more cores and for those pathologists interpreting those cases, there is a lack of clarity about new Medicare policies. As one example, risk of an audit is significant because of recent guidance issued by one Medicare contractor. Another source of risk for labs and physicians is the new policy for prostate biopsy claims in the National Correct Coding Initiative (NCCI) manual that became effective on January 1, 2012.

LABORATORIES AND PHYSICIAN PRACTICES billing Medicare Part B for prostate biopsy cases that have more than five cores face a new level of audit exposure, according to an attorney for a national law firm.

Any lab in Medicare jurisdictions J1 (California, Hawaii, and Nevada) or J11 (North Carolina, South Carolina, Virginia, and West Virginia) could be subject to audits and recoupment, including a RAC audit, if they have not changed their billing procedures since August 7. “That’s the date the Medicare contractor for these two jurisdictions issued new guidelines on billing for prostate biopsies, although it is important to note that the Palmetto GBA notice recites an effective date of January 2012,” said Jane Pine Wood, an attorney with the national law firm McDonald Hopkins.

Palmetto GBA is the Medicare contractor for labs in J1 and J11. “These new guidelines represent a major change,” stated Wood, who warned that “the new guidelines raise a number of serious questions, in addition to audit risk.

“In particular, labs and physician practices in the seven states of Medicare regions J1 and J11 also may be at risk for filing false claims under the federal False Claims Act,” added Wood. “There are substantial civil penalties for any provider found guilty of violating the False Claims Act.”

But what may be a surprise is Wood’s concern that every lab and physician practice that bills Medicare Part B for prostate biopsies—regardless of location—could be at risk. “That’s because the Palmetto ruling follows edits made to the CMS National Correct Coding Initiative (NCCI) manual that were effective on January 1, 2012,” she explained. “These edits set out new require- ments for how providers should bill the Medicare Part B program for prostate biop- sies. Palmetto’s August 7 policy change was based on those guidelines.”

New Prostate Biopsy Policy

When it issued its guidelines on August 7, Palmetto wrote that the reference for its new policy was “NCCI Policy Manual for Medicare Services, effective January 1, 2012, Chapter 10-CPT codes 80000-89999, I. Anatomic Pathology (Cytopathology and Surgical Pathology), 10-HCPCS codes G0416-G0419.”

At that time, Palmetto also stated, “Providers who have submitted more than four CPT codes 88305 services for prostate biopsies for dates of service on and after January 1, 2012, may be at risk for overpayment collection.”

“The question every provider now asks—regardless of jurisdiction—is whether the NCCI manual is binding,” noted Wood said. “As lawyers who advise clients on this issue, we believe it is potentially binding, although in this case, there are some concerns about whether the edits were properly issued, as there was no formal rulemaking involved.

NCCI policy Questions

“In fact, we have heard that NCCI was asked if its new edit is binding or do the individual Medicare contractors have the discretion to adopt or not adopt the guidelines, as Palmetto did on August 7,” she continued. “We understand that the answer from NCCI—which has not been confirmed—was that all providers and Medicare contractors are bound by the NCCI manual. Further, any failure to comply could be addressed in a post-payment audit. In other words, providers who do not comply could be subject to a federal audit.

“We are telling clients in the Palmetto jurisdictions that the Medicare position is clear with the published Palmetto guidance,” emphasized Wood. “In J1 and J11, providers must bill according to the guidelines that Palmetto published on August 7.” (Policy at http://tinyurl.com/ck8mwk7.)

Another issue is how the Medicare program will handle prostate biopsy claims that providers submitted after the January 1, 2102, date when the NCCI manual became effective. “There is uncertainty about what providers should do for claims filed between January 1 and August 7,” she added.

“On the one hand, we don’t want to tell clients to stop billing the usual CPT codes because there continues to be lobbying and uncertainty about whether CMS may reverse the NCCI edits,” she noted. “On the other hand, if providers continue to bill the way they have been, then they have a potential exposure. They should be fully aware of this exposure.

“We are in uncertain territory—particularly about how providers should bill for prostate biopsies since January 1,” added Wood. “For that reason, we do not have blanket advice for clients.

“I can discuss each situation individually if a client calls me,” she stated. “However, I can’t give a statement that applies to all providers because each provider’s situation and risk tolerance is different.

“There is another difficult question to answer,” continued Wood. “Given that the NCCI manual applies to every jurisdiction, how should providers in the jurisdictions outside of J1 and J11 bill for a prostate biopsy case that has five or more cores?

“We were recently asked this question by a client that is outside of the Palmetto jurisdictions,” she said. “The answer we gave to that provider was that, if it continued to bill this year as it had last year for prostate biopsies, it could be subject to action by a federal Recovery Audit Contractor (RAC) or other federal auditor—although no one is certain whether this risk is significant or not.”

Wood commented that it is common for pathology practices and labs to take a conservative approach in their billing for a service when policies are unclear and the primary risk is of an audit, but not exposure to charges of filing false claims. “In circumstances where a lab may believe that it has audit exposure, it may set aside some money in a fund to cover that exposure,” she noted.

Setting Funds Aside

“This concern applies to providers within the Palmetto jurisdictions and outside of J1 and J11,” Wood added. “Some providers may believe it is prudent to put some funds aside—not because I think Palmetto will audit labs, but because a RAC auditor certainly could do so. Every provider should be aware of the potential of a RAC audit.

“In this situation, a RAC auditor could audit how a provider billed for each prostate biopsy that had five or more cores, going back to January 1, 2012. What could be easier?” she asked. “The RAC audit issue is worrisome. Even though the NCCI edit is poorly worded, the NCCI manual outlines how providers should bill. All a RAC auditor would need is the NCCI manual and Medicare data on prostate biopsy claims paid since January 1.

“Were a RAC or other auditor to assess an overpayment, the provider could argue that neither NCCI nor Palmetto went through the appropriate rule-making processes when implementing these changes,” Wood advised. “Further, providers could argue that CMS hasn’t issued guidance about how to comply with the new rule.

“CMS also faces a related issue,” commented Wood. “The NCCI manual tells labs to use the G code when submitting five or more prostate biopsies. But in so doing, NCCI is changing a definition of how the G codes have traditionally been used.

“In the context of prostate biopsy procedures, G codes have been used for saturation biopsies,” she observed. “However, now NCCI and Palmetto are saying that G codes should be used for prostate biopsies, regardless of biopsy technique.

“In response to this development, observers point out that such a change should have been done through the rule- making process,” said Wood. “That process would give CMS time to publish a proposed rule and allow providers to comment. Then CMS could set a date to issue the rule so that providers could prepare for it.”

Much Uncertainty Exists about New Policies

ONE REASON PROVIDERS ARE UNCERTAIN about how to bill for five or more prostate biopsies is that neither Palmetto GBA nor the Centers for Medicare & Medicaid Services (CMS) have issued more detailed guidance on how to comply with recent policy changes.

Anatomic pathologists and lab managers have a long list of questions. For example, how do they comply with the policy issued on August 7 by Palmetto, but that is retroactive to January 1? Should they refile claims filed since January 1 or hope they don’t get audited?

“Multiple organizations have asked for guidance from CMS and from Palmetto,” stated Jane Pine Wood of the national law firm McDonald Hopkins. “To my knowledge, no further guidance was received.

“Ongoing discussions about how to answer these questions may be taking place within CMS,” she noted. “The only positive we can take from the lack of more public guidance is that it supports the idea that CMS does not have a definitive position on the issue.

“Providers that are outside of Palmetto’s jurisdictions J1 and J11 may argue that they can continue to bill for prostate biopsies in the same way as they have in the past because CMS does not have a definitive position, although there are no guarantees that any such argument would prevail in a Medicare challenge,” speculated Wood. “In addition, the guidance from NCCI is confusing and was done without following the proper rule-making procedures.

“The trouble with these arguments is that they are not iron-clad,” said Wood. “Providers could make these arguments and still be liable for a federal audit and repayment penalties. Providers could also be liable for false claims.

“The important point here is that providers should understand that, if they continue to bill Medicare Part B for prostate biopsies as they have in the past, they may have to repay the money,” declared Wood. “At the same time, it is true that—at this moment— there is not clarity in how the new NCCI policy is to be followed, along with how CMS intends to monitor compliance with it.”

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