To all California urologists and CUA members:

For the moment, WE HAVE WON AND THE RAC DEMANDS ARE BEING ADJUSTED. What follows represents an enormous amount of work and time but was begun late last Tuesday night at the eleventh hour when it looked like we were not going to get any relief despite our efforts with NHIC in California and CMS in Washington. At the time, I was preparing you for the appeals process necessary to avoid repaying many thousands of dollars demanded for care provided in 2002 and 2003. I am delighted to report that late yesterday afternoon, I made another attempt to resolve the situation with NHIC and finally met with success.

The senior most executives at NHIC, our California Medicare carrier have agreed to a mass adjustment of all RAC claims that were closed out (payment made) 4 or more years before the date of the earliest demand letter from PRG Schultz. Since the vast bulk of those letters were received at least sometime in July, 2007 that means that for each claim where payment was made by the end of June 2003, nothing further needs to be done. The demand letters asking that you pay or appeal are being dropped and you will be notified. However, if any of the demands were for issues that occurred or dragged on into July 2003 or later, you are still subject to repayment or withholds. Therefore, it is very important that you check your records to be certain when the service claim was finalized.

If you have outstanding issues, I have provided background information on where this program came from, how it is authorized and what arguments we believe will be useful in filing an appeal. You will still have to consider your own unique circumstances in order to decide on whether an appeal is appropriate. If you have special circumstances that I have not addressed or feel you have been the subject of an error, please contact us so we can continue to advocate on your behalf.

We have established excellent lines of communication with our state carrier and CMS executives in Washington. We have also appreciated the help of the CMA, AMA (both their administrative and legal staff) in addition to the AUA (especially Rick Rutherford in Practice Management), AACU and others in this effort. Please understand that some of what follows was written before we were notified today of a very favorable settlement.

Jeffrey Kaufman MD, FACS
CUA representative to NHIC Carrier Advisory Committee

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BACKGROUND INFORMATION

Many of you have received notices from PRG Schultz, California's CMS Recovery Audit Contractor (RAC) regarding Lupron injections given to Medicare patients in 2002-2003. The RAC contractor was given payment information from Medicare to look for mistaken or incorrect payments on a contingency basis; they keep a large percentage of every dollar collected. Thus they are incentivized to push the envelope asking for payment wherever they think they might be successful. The published Statement of Work regulating their performance allows them to identify under- or overpayments up to "4 years past the date of the initial determination on the claim. Any overpayment or underpayment inadvertently identified by the RAC after this timeframe shall be set aside". The rules also require that the physician should have been aware that payments made were incorrect or not due. In fact, the demand letters include a statement indicating that it was your responsibility "for being aware of correct claim filing procedures" indicating that you "billed and/or received payment for services you should have known you were not entitled to." They conclude "therefore you are not without fault and are responsible for repaying the overpayment amount." We disagree with these statements.

At the time of the payments in question, the existing NHIC coverage policy (LMRP L9933) had been published 10-15-01 but implementation was under ongoing discussion since there was no commonly agreed basis as to which medications (or procedures) should be considered in calculating the least costly alternative. It now seems that the RAC has retroactively decided that payment should have been made based on the average wholesale price of Zoladex so that any overpayments made for Lurpon injections are subject to demands for repayment. Urologists and others have received letters asking for repayment of many thousands or tens of thousands of dollars based on this re-pricing. I have personally spoken with senior representatives from NHIC and CMS in this regard and although they are willing to concede certain points, none have so far agreed to issue a formal determination or delay the RAC demands on this point alone. We are also working with the assistance of legal representation from CMA and AMA in this regard but no resolution has yet been reached.

The law authorizing this activity provides the recipient of these letters one of several options. You can make repayment by check or arrange a payment schedule, you can appeal their decision (either after making payment up to 120 days following the demand letter or in advance of making payment) or allow NHIC, the state Medicare carrier, to withhold the amount from future payments until full re-payment is reached. If you do not make arrangements to pay by the due date on your letter, interest will accrue at 12.375% per annum. However, payment is not due during the interval that a first level appeal is pending. If you choose to delay payment pending such an appeal and are successful, the demand will be withdrawn and no money owed. However, if the appeal is unsuccessful, interest will be charged beginning on the 31st day after the payment was originally due. If payment is made before the appeal is heard and you are successful, CMS will owe back your money plus interest at the same 12.375% rate. It is your decision as to how to respond to these demand letters.

However, we believe that the RAC is mistaken in their determination and demands and have faith that an appeal would be successful. Urologists in other states have been successful combating similar demands and we are optimistic that we shall too, even though the law authorizing the RAC is somewhat different from that governing the state carriers. If you decide to file an appeal, the following will be useful in structuring your arguments.

1. First and foremost, it is our opinion that the RAC has exceeded their authority extending their reach back beyond the time interval allowed to them. Most physicians have received demands for care provided throughout 2002 up to mid 2003. However, the Statement of Work for the Recovery Audit Contractors Participating in the Demonstration (Non-Medicare Secondary Payer) NO. 40700NMSPB, page 5, clearly states under section B, Non-MSP Overpayments/Underpayments EXCLUDED from this Statement of Work: The RAC may NOT attempt to identify overpayments/underpayments arising from any of the following:

"Claims where the Medicare regulations indicate that the Medicare program does not have the authority to reopen claims: The RAC shall not attempt to identify any overpayment or underpayment more than 4 years past the date of the initial determination made on the claim. Any overpayment or underpayment inadvertently identified by the RAC after this timeframe shall be set aside. The RAC shall take no further action on these claims except to indicate the appropriate status code on the RAC Database."

Since the date the vast majority of these claims were paid was from 2002 through mid 2003, letters of demand from the RAC dated in July 2007 are clearly beyond the authorized interval and as such, are not valid.

It is very important that you determine the date of your RAC demand letters and refer to the date payment was made on the claims in question. While one could argue that the calendar should run from the date of service, Melanie Coombs, CMS senior technical advisor, Division of Analysis and Evaluation and project director for the RAC demonstration has indicated that she will only consider the date of payment in determining the "date of the initial determination". If payment was delayed for some reason that placed it within the authority of the RAC, you should consider the cause for such delay and include it with your appeal.

2. The second basis for an appeal refers to the RAC's argument that doctors are responsible for knowing the policies governing their billing and reimbursement and adhere to those policies even if the contractor makes an error. The truth is that urologists in 2002 through mid 2003 were clear on the fact that payment received for Lupron injections was in compliance with the LMRP and stated policy of NHIC at the time. Although the 2001 policy referred to Lupron and Zoladex, it also referred to Viadur, Trelstar and the generic term "GNRH" et al. At that time, the medical directors and urology community held numerous discussions about which agents should be considered in calculating the least costly and which were truly "alternatives". There was even discussion at the time as to whether a bilateral orchidectomy would be considered an alternative which would have set the least costly basis quite low. At the time, Trelstar was unavailable and therefore finally considered not to be a legitimate "alternative" even though it is listed on the policy title. Viadur pricing was based on a 12 month implant rather than a 1, 3 or 4 month injection. Even today, there is controversy and widely differing opinion among different Medicare carriers as to whether to walk across the 1/12 cost of an implant when considering costs of 1,3,4 or 6 month injections and decisions vary across the country. In 2002 and 2003, no final decision had been reached in that regard in California. In fact, I personally had faxed NHIC at that time a query regarding what we should consider proper payment including several of my own EOBs. We were instructed that the NHIC payment was correct and to do nothing until further notice (they later implemented the least costly alternative policy by recoding submitted charges for Lupron as Zoladex injections and then making payment for that code). It is true that we are responsible for understanding the state's Medicare carrier's policies but we were diligent in investigating whether payments were correct and we were assured that they were. There was no misunderstanding on our part, no fraud, no passive acceptance of payments we knew (or could have known) were incorrect and no attempt to mislead the carrier. In view of our efforts, no reasonable person could conclude that we "billed and/or received payment for services (we) should have known (we) were not entitled to." If the carrier itself and their learned medical directors in repeated consultation with California's urology representatives believed that payments were being made correctly, how could any individual urologist at the time have thought otherwise?

3. The third argument refers to the type of coding review performed by the contractor (an automated audit). Page 11 of the Statement of Work explains the distinction between an Automated Coverage/Coding Review and a Complex Coverage/Coding Review. The former shall be used "only in situations where there is certainty that the service is not covered or incorrectly coded, was a duplicate payment or other claims related overpayment." It goes on to state that the codes appropriate for an automated audit (which may be done by computer) are "never considered reasonable and necessary for people with" the pertinent condition. However, if there is any chance that the service might have been provided and charged for properly, the contractor is obligated to perform a Complex Audit, which by definition requires that records be requested and then reviewed by a human. The regulations make it very clear that such a human Complex Review is necessary even if the policy "states that the service is rarely considered reasonable and necessary for people with condition X"-to require a complex audit, it's only necessary that the service might be required even under unusual circumstances. It adds that a "Complex medical review is used in situations where there is a high probability (but not certainty) that the service is not covered and copies of medical records will be needed to provide support for the overpayment".

The LMRP in effect during 2002-2003 allowed for payment of a drug more expensive than the least costly alternative "if the higher priced medication is medically necessary and reasonable for an individual beneficiary, in contrast to the lower priced medication." It required that "the medical necessity for the higher priced medication must be established for each injection billed." Therefore, there were situations were it was proper to bill for the higher priced medication and receive payment for it. However, without a human review of the medical records, there would be no way for PRG Schultz to know that. Thus, the situations involved here regarding least costly alternative payment for LHRH agonists given for prostate cancer clearly fail the test that would allow an automated review and virtually by definition, meet the criteria for a Complex Coverage/Coding Review. Since the RAC contractor only performed an automated audit, their conclusions are invalid. They are not authorized to demand payback for charges in this matter without performing the complex audit to determine whether the chart notes support the higher priced medication. Thus, their efforts to recoup payments made for Lupron should be denied until such time that each case has had the pertinent records reviewed. It is not sufficient that this issue be brought up on appeal for each and every case (in other words, it is irrelevant whether any particular case in question had information in the records to support the more expensive drug). The process itself was violated when PRG Schultz undertook mass demands for repayment based on automated audits when they should have spent the time and energy to review the records individually before deciding that they do or do not support Lupron instead of Zoladex. Having chosen an incorrect process, the entire effort should be overturned and dismissed.

Demanding that the contractor back up and review each medical record (complex review) further impacts the timeliness issue. Since a physician has up to 45 days to provide requested records in an audit, and since PRG Schultz is not authorized to go back further than 4 years from their demand letter date to seek repayment, even if they mailed letters today demanding records, they would be unlikely prepared to seek recoupment for treatment paid earlier than mid October 2003. The published Statement of Work does not seem to provide any flexibility on this point.

If you choose to appeal RAC demands for recoupment, do not bring up arguments about whether the Least Costly Alternative policy is proper, fair or legal. These arguments have been vigorously fought and upheld at many levels in the past. It will only weaken your position to go back over that ground and detract from stronger arguments. Do not argue that you personally were unaware of published Medicare policies. It is your responsibility to know the policies that govern the Medicare program and we as a urologic association were aware (and were firmly instructed that the payments were correct). Do not argue that the income in question went to a partner who has retired or is no longer associated with this billing number or group. CMS is not sympathetic and has offered the opinion that such events are a business problem doctors should have foreseen when structuring their partnerships.

If you appeal the demand for repayment, be certain that all issues are addressed. There are many individual errors made by the RAC such as retroactively refusing payment for the injection code itself, repricing payment for a 4 month Lupron injection as a 3 month Zoladex depot or requesting payment of trivial amounts of interest (as little as 68 cents on one EOB). Review your own EOBs and demand letters carefully as you write your appeal. If you have difficulty with this, please contact the California Urologic Association or Richard Rutherford, Practice Management, AUA.

Please communicate with the CUA on any future issues brought up by the RAC or CMS contractors so that we may help investigate or assist as needed. California's urologists are only as strong as our associations. Future challenges may necessitate legal support, a costly undertaking. However, working together, we will meet and overcome any threats to our ability to continue to provide the highest quality care possible to our patients.

Jeffrey Kaufman MD, FACS
CUA representative to NHIC Carrier Advisory Committee