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Meet the New Laws, Same as the Old Laws: Overpayment Recoupment Update

 

Published:

November 13, 2024
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Healthcare 

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Hospice & Palliative Care 
 
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Hospices that have been audited have to decide how to address any alleged overpayment identified by the auditor, whether through a voluntary repayment, recoupment, or applying for an extended repayment schedule. CMS recently identified updates to the Medicare Financial Management Manual relating to these options. In this episode, Husch Blackwell’s Meg Pekarske and Bryan Nowicki discuss those updates which, practically speaking, do not significantly change the existing options.

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This transcript has been auto generated

00;00;05;01 - 00;00;30;27

Meg Pekarske

Hello and welcome to Hospice Insights: The Law and Beyond where we connect you to what matters in the ever changing world of hospice and palliative care. Meet the New Laws, Same as the Old Laws: Overpayment Recoupment Update. Bryan, old is new again. Is that what we're trying to say with this title? Like nothing changes. But they call it who?

00;00;31;06 - 00;00;56;21

Bryan Nowicki

Well, that's the puzzle here. This is kind of an update and alert, but kind of going through what they have said and what they're proposing for manual revisions. It's the rules that you and I have worked with for years and years. So I don't think it's it's new information. I think they're finally updating some of their manuals to reflect what has been the case for quite a long time.

00;00;57;11 - 00;01;23;10

Meg Pekarske

So and just a plug for this podcast is brought to you by someone reached out to us with a question about this. And then we said, Oh, that would be a great podcast idea because someone reached out and said, Oh, have you seen this transmitter? And we had. And so then we thought, Well, geez, if one person has that question, probably other people have that question.

00;01;23;10 - 00;01;57;28

Meg Pekarske

So, Bryan, let's get into the nuts and bolts here about what we're talking about. So this m01 matters. And there is a transmittal to write, Bryan, about how when you have these post payment review audits, how overpayments are collect did and and specifically about this whole interest thing. Right? So that's what we're talking about. So this isn't when you have prepayment, right?

00;01;57;28 - 00;02;20;01

Meg Pekarske

Because you don't have any interest. I haven't paid you, but this is when we're dealing with post pay review audit. So, you know, true smirks what we call CPI audits you picks that's when you know everything we're talking about right now becomes part of the conversation, right, Bryan?

00;02;20;18 - 00;02;44;23

Bryan Nowicki

That's right. And I think for those of you who have been through audits, like what you've mentioned, Meg, as a standard part of that process, with the few exceptions, is you get a demand letter from your back or Meadow Ends CDs, and those demand letters lay out some of the options that are identified also in these this MLA matters and the change request or manual updates that they provided.

00;02;44;23 - 00;03;00;16

Bryan Nowicki

So that's where it's familiar territory for you and me. And it kind of provides a little bit more detail about and reiterates what those options are. What do you do when you get this notice that you, oh, 5000 or 500,000 or 5 million to the government?

00;03;01;00 - 00;03;34;02

Meg Pekarske

Exactly. And so the options they give you with the demand letter are you can voluntarily repay, you can allow recoupment, which means they'll take 100% from your billings till they recoup that. And that will begin on the 41st day. From the demand letter, you can apply for an extended repayment plan. And so I guess there is this opting for immediate recoupment.

00;03;34;14 - 00;03;36;13

Meg Pekarske

I don't know whoever does that.

00;03;36;21 - 00;03;49;29

Bryan Nowicki

Well, actually, I talking with the client going through these options, that one seemed attractive to them. The difference between immediate recoupment and involuntary recoupment is a month worth of interest.

00;03;50;02 - 00;03;51;02

Meg Pekarske

True. True. Yeah.

00;03;51;04 - 00;04;05;15

Bryan Nowicki

Because you have involuntary recoupment, they don't recoup until day 41. They tag you with that first month of interest on day 31 immediate recoupment they start recouping before any interest accrues.

00;04;05;15 - 00;04;32;09

Meg Pekarske

But interesting about where you are in your billing cycle though. Like, you know, depending on how things come up, like if there's nothing to recoup because everything you got paid advance like I wonder if you asked for immediate recoupment but there's nothing to recoup. Does that end up leaving you in the involuntary pocket? But we won't go down that rabbit hole.

00;04;32;09 - 00;04;59;07

Meg Pekarske

But anyway, these are the options that are laid out in this letter. That's a very it's all boilerplate kind of stuff. And this is what's in this transmittal and it's not new stuff. But but I think that where the math comes in and we all know that I am bad at math. So any math question I go to Bryan, which doesn't say much, but, you know.

00;04;59;16 - 00;05;26;05

Meg Pekarske

Yes. So is this whole calculation of interest. Right. So if you allow them to recoup, so this involuntary recoupment and you said like if they're going to start the 41st day, so you're going to have what's called 935 interest, which the rate varies, but it's always usually double digits like and 12%.

00;05;26;05 - 00;05;32;05

Bryan Nowicki

It's currently 12.375%. I think they change it quarterly as needed.

00;05;32;20 - 00;05;52;29

Meg Pekarske

So really high. So you're going to get charge that interest, that's $5 billion, you're going to get charge 12.375 interest. Now that assumes that your billings are enough that they could take that all in one fell swoop, because obviously if you don't build enough bonds, then that could take several months. So they are going to have several months of interest.

00;05;53;23 - 00;06;31;05

Meg Pekarske

But the point is, if you allow them to recoup and you get charge interest, then if you end up winning at ALJ claims they have to pay you trust. So if you just pay by check, right Bryan you don't get that interest back. So if you that the first option voluntary repayment which is what we call paying by check if you do that so you don't get charged any interest, then essentially you don't get interest back even at ALJ if you win claims.

00;06;31;17 - 00;06;58;07

Bryan Nowicki

Yeah, that's right. And, and these materials make clear that that's the case and that's always been the case at well, I shouldn't say always. I think that's been the case since 2003. And you'll see these these documents make reference to that 2003 act, which changed things. And so 21 years later, they finally get into updating their manuals. But but you're right, voluntary repayment, immediate recoupment.

00;06;59;15 - 00;07;24;06

Bryan Nowicki

You subject the way you said about your billing. You don't pay the government interest, but the government doesn't pay you interest if you end up winning some of those claims and get refunds during the appeal process, including at the ALJ, the the involuntary recoupment, where you kind of sacrifice in a month of interest and this is where the math comes out.

00;07;24;15 - 00;07;53;01

Bryan Nowicki

Your sacrifice, that month of interest, but what you can receive if you win at the ALJ or later, meaning the Medicare appeals counselor federal court is you get interest back from the government if you win claims and it is, as you've described it, what they call this 935 interest. That is the interest currently at 12.375%. So you pay that on day 31 four for that overpayment.

00;07;53;21 - 00;08;11;19

Bryan Nowicki

So you're out a bit then and you just hope to recover and win more claims at the ALJ level months or potentially a year or so down the road that it all makes financial sense. And you kind of do the math to figure out what are your odds of really making this into a beneficial arrangement with that high interest rate?

00;08;11;28 - 00;08;17;28

Meg Pekarske

Yeah, well, and I think that's the true person who should be doing the math. Here is your CFO.

00;08;18;19 - 00;08;21;11

Bryan Nowicki

Because. Not you. Not me. Right?

00;08;21;18 - 00;09;03;17

Meg Pekarske

Because essentially this is a hard calculation for me and taxes you, Bryan. But ultimate like for CFOs I'm sure like this is like a no brainer. You do some formula or something and you figure out if it's all the stuff. Because I do think what we still see is that you get the vast majority of your movement at ALJ, so where you're going to win the most amount and therefore likely to be able to get paid the most amount of interest would be at ALJ because again, if you pay by check, they're going to sit on your money for, you know, they're going to have it.

00;09;03;17 - 00;09;25;18

Meg Pekarske

They're going to have governments arguably going to collect interest on that money and make money off of that. You don't have it. And so you won't get the present value of that money back. When you get refunds after ALJ, you're going to get whatever that value of that money was when you paid it, which could be, you know, two years or 18 months ago.

00;09;25;23 - 00;09;53;18

Bryan Nowicki

Yeah. So an example that might illustrate this. I mean, you have $100,000 overpayment. You want to hold on to this opportunity, get interest back. So you let day 31 go by, they're going to get 12% interest on you. You break that down for one month. It's about what would it be? One month would be 1%. So $1,000 on day 31 gets added to that.

00;09;53;18 - 00;10;17;07

Bryan Nowicki

But then you give but then the government takes it back. And let's say it's nine months later when you get a favorable decision from the ALJ. Well, nine more months is interest at that rate of $1,000 a month or $9,000. And if you win everything at the ALJ, you'll get 100,000 plus 9000 back. And now it's not ever that beat.

00;10;17;07 - 00;10;39;17

Bryan Nowicki

I mean, sometimes it is, but we do get a number of fully favorable rulings. But but, you know, you're sometimes in the middle there where maybe it makes sense, maybe it doesn't. And a big consideration is when you allow recoupment. I mean, they shut off the Medicare payment faucet until all that money is recouped for $5,000, maybe not a big deal.

00;10;39;24 - 00;10;51;02

Bryan Nowicki

We're we're working with clients where it's 32 million, 5 million, you know, 48 million. That's something that they just can't allow that to happen and play this interest game.

00;10;51;02 - 00;11;25;16

Meg Pekarske

Yeah, exactly. I mean, I think most commonly where we're having the conversation where it's doable are these CPI audits that we talked about, which is the long length of stay reviews that while they're retained does the record review seems is really behind those center for program integrity because those you know, they might come back $1,000,000 and people might have enough money to to essentially allow recoupment for that saga to be able to make payroll and do all that stuff.

00;11;25;17 - 00;11;54;05

Meg Pekarske

And so, you know, there there is so as you say, this is not an option for everyone. But if you do want to be real savvy and play the numbers game, which I think to your point, Bryan, it's also and we really try to focus clients on this too, is what is your strength assessment on these cases? We call it the red, yellow, green red isn't not eligible.

00;11;54;05 - 00;12;24;19

Meg Pekarske

It's just like what our stronger we, you know, stronger or weaker cases. And I think doing that out of the gates and sometimes, you know clients you know, it's hard to get there if their physicians are going to be the expert witness to get them to put pen to paper on that. But I think it's really helpful for management leadership to understand, you know, what am I rolling the dice on here?

00;12;24;19 - 00;12;49;01

Meg Pekarske

And this is yet another reason, like if I'm trying to think about playing the interest game here, you know, I want to know what's the likelihood of success and where are we likely to have that success? And and so I think, you know, none of this is guaranteed. Like, you know, we win cases that are more challenging all the time and we lose cases that are sometimes strong.

00;12;49;01 - 00;13;22;28

Meg Pekarske

You know, I mean, it's it's it's somewhat of a crapshoot. But I think putting heads together and you and I do a lot of training on audit response. It's not just a finance issue. It's like working with your clinical team, right? You need interdict, supply an area approach in audits for lots of different reasons. And here's yet another one where, you know what multiple people contribute to here is important because it shouldn't just be finance making this in a vacuum.

00;13;23;11 - 00;13;26;03

Meg Pekarske

You need to know what is the strength of the underlying claims.

00;13;27;00 - 00;13;54;11

Bryan Nowicki

That's exactly right. And that's the other layer of math that goes into this and how you're kind of gambling on yourself or, you know, gambling or I guess recognizing you have vulnerabilities and not playing this interest game. If you don't have confidence, you're going to win at the ALJ. Maybe it's a high risk appeal and you don't want to go into a high risk appeal paying interest upfront because you don't have confidence you're going to ever win that back.

00;13;54;11 - 00;14;23;09

Bryan Nowicki

But it still makes sense to appeal it and it could be make sense to do that for a number of reasons, including relating to the 60 day repayment rule and other issues that we've talked about. So, so yeah, I mean, it's a lot of things to think about. This is a very complex area and I often I don't know why I apologize to clients for the complexity of this, but but, you know, you can only get interest in this one particular way of the five different options or whatever that exist.

00;14;23;17 - 00;14;54;07

Bryan Nowicki

What sense does that make? It's it's hard to figure why this is. And just to be clear, we've only been talking about the options where you're giving money back to the government early on is the other option is you halt recoupment and you hold on to your money. So we haven't really talked about this, but these new alerts don't really address that other than to say interest is going to accrue on, you know, so we'll have links or attachments will include in what do we call these the episode notes, are there some term for that?

00;14;55;06 - 00;15;20;07

Bryan Nowicki

But we'll have the the MLA and Matters alert, we'll have the change request so everybody could look up the proposed changes to the Medicare Financial Management Manual. And they do have some calculation examples. So if your CFO is a true math nerd out there, you can better run through some of those examples that are a lot of different scenarios that will help you do those kinds of calculations.

00;15;20;25 - 00;15;52;23

Meg Pekarske

Yeah, well, I think maybe I I'm always, you know, a stickler for I should be able to explain complex things simply, right. If you really understand it. And it's like I can't tell you how many times I've explained this to clients and it's still, I don't think, necessarily intuitive. And, you know, it takes a while for clients to wrap their head around this because usually, you know, this is a conversation we talk about at the record request stage to just plant the seed.

00;15;52;23 - 00;16;35;23

Meg Pekarske

Because I always talk about what's the runway like. I think it's really important when you get these audits for, you know, the leadership team to understand worst case scenario, one is one is money going to likely become do well and are you going to when your most money and then you know thinking through how you might want to make this repayment and like do you want to help recoup bad I mean and I think planting that seed early is helpful so people can doodle on this because then when you do get the results back and the demand ladder, you're not having this conversation sort of for the first time and hopefully, you know, in the

00;16;35;23 - 00;17;02;07

Meg Pekarske

meantime, people have evaluated their finances and stuff. So so bottom line is this isn't new. It remains as complex as it sort of always was. I think, you know, the person who reached out to us was scratching their head because it is sort of confusing and because it was never written down in the same way, I think, you know, people thought that there was.

00;17;02;15 - 00;17;23;20

Meg Pekarske

Oh, wow, what's changed? I had to read it several times, Bryan, because I was like, What am I missing? And then I was like, Well, I have to have Bryan read this because like, am I missing something? Is my middle aged brain like getting like, am I reading? I'm missing like a keyword. And then you.

00;17;23;20 - 00;17;28;04

Bryan Nowicki

Me and my old aide brain came in and it's wisdom that I have.

00;17;28;15 - 00;17;45;23

Meg Pekarske

Exactly. And you said, no, this is essentially nothing new, but it makes it seem like it's new. So anyway, probably though new to many listeners who if you haven't had to deal with this before, this might be sort of news to you.

00;17;46;06 - 00;18;08;25

Bryan Nowicki

Yeah. And you know, we've had to explain this to clients and know what we have materials to help explain it to clients. I think because they're there, including more language in the manual, there's more information out there for hospices providers to look at, to and read to try to get a better sense of this. And again, those examples I think are going to be helpful.

00;18;09;23 - 00;18;15;28

Bryan Nowicki

But but yeah, this is really putting into writing practices that have been around ever since I've been doing this work.

00;18;16;10 - 00;18;58;10

Meg Pekarske

Well, and and maybe the last thing I'll add, because when you and I were prepping for this, we talked about this is because we've been doing this work a long time, is trying to get your interest back on the back end. So like you end up paying a and you're trying to or you know, you've allowed them to recoup and and so you want your money back now I one it's been difficult I mean now it's it's been a lot of years but like really difficult sometimes to get them to like recalculate and get your interest back and your place in it.

00;18;58;22 - 00;19;24;12

Meg Pekarske

And I think, Bryan, you mentioned in our prep session about like they need to pay you back your money, but is it within 30 days and then if they're not paying you back your money like you get interest not at this higher level. A lower level interest because it is sometimes I feel like they've dragged their feet and issuing more to people.

00;19;24;22 - 00;19;50;09

Bryan Nowicki

Yeah. And there and there hasn't been much for us to go on. So I think that's kind of a bright spot here. Meg is this, this gives information and you read it. Most of it seems to be directives towards the CMS contractors about what to do, when to do it, how to do it. And in our experience, you can't just sit back and expect this is going to happen.

00;19;50;24 - 00;20;16;01

Bryan Nowicki

And that was before these came out. I don't think that's necessarily going to change just because these are in writing now. I think you still got to monitor the contractors, making sure that they're making the right calculations and they are timely. And this these additions to this manual are going to allow you and Meg allow you and I to to kind of go back and hold their contractors feet to the fire if they don't follow these requirements.

00;20;16;24 - 00;20;54;26

Meg Pekarske

Yeah, exactly. Because I feel like in years past has been just sort of begging and being a nuisance to say issue my money back. But now, you know, there's this we can point to something. So yeah, health care is a complicated business, right? So I just went to a legal education session on the enrollment changes, which, you know, validating because it wasn't like, Oh, I didn't know this stuff, but you're just like had the layers of complexity, all the things that the health care providers have to do.

00;20;54;26 - 00;21;24;02

Meg Pekarske

And again, hospice in particular, as we've highlighted on other podcast, are really an area of focus for a lot of enrollment changes too. So, you know, it does take a village and you need a lot of people because there's just a lot of complexity and and running a health care business these days. So anyway, we're always here to help.

00;21;24;02 - 00;21;52;00

Meg Pekarske

And again, thank you for the person reaching out and putting in this, asking the question. So as always, if you have feedback on the podcast or ideas for a podcast episode, you know, please reach out to me. We'd love to hear from you. And, and we take that feedback seriously and we'll do a podcast person just reached out to us, I think yesterday and here we are already.

00;21;52;04 - 00;22;03;21

Bryan Nowicki

We just we swung into action. We are that that's how responsive we are. We are we have our pulse on the hospice community. We have our finger on the pulse of the hospice care.

00;22;03;26 - 00;22;12;28

Meg Pekarske

So it's all about pulse, right? Right. Yeah. So awesome. Until next time, Bryan, thank you.

00;22;12;29 - 00;22;20;00

Bryan Nowicki

Yep. Thanks, Meg.

00;22;20;00 - 00;22;35;13

Meg Pekarske

Well that’s it for today's episode of Hospice Insights: The Law and Beyond. Thank you for joining the conversation. To subscribe to our podcast, visit our website at huschblackwell.com or sign up wherever you get your podcasts. Until next time, may the wind be at your back.

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