Guest Post: Feds Turn Corner in ICD Investigation; Hospital Liability Divided into Categories

Editor’s Note: The following article is reprinted with permission from Report on Medicare Compliance, an independent publication not affiliated with hospitals, government agencies, consultants or associations and published by Atlantic Information Services, Inc. 

The Department of Justice is apparently about to take a big step forward in its national false claims investigation of Medicare billing for implantable cardiac defibrillator (ICD) procedures. After a year of debating the medical-necessity parameters of ICD implants, DOJ now has a blueprint for determining hospital liability, according to attorneys familiar with the case. Some ICD cases will be home free, while others will be the subject of repayment plus interest or triple damages, they say.

“There has been a breakthrough,” one attorney says.

As a result, DOJ will soon send letters to hospitals with instructions for resolving their potential ICD overpayments. Hospitals will be asked to self-audit ICD procedures using an audit tool the federal government developed in collaboration with defense counsel and Navigant Consulting, attorneys say. After the audits are completed, hospitals will report back to DOJ, which will spot check their findings. Then settlement talks presumably will begin, the attorneys say.

“They want to move forward and close these cases that have been pending for close to two years,” says another attorney. The U.S. Attorney’s Office for the Southern District of Florida, which is spearheading the case, had no comment.

The investigation of ICDs, which are small electronic devices that shock the heart back to a normal rhythm, focuses on hospital claims that ran afoul of Medicare’s national coverage decision (NCD 20.4). Initially, DOJ took the position that noncompliant billing for ICD implantation is within the realm of the False Claims Act, but it paused to consider that perhaps medical necessity in this area is not always black and white. “There will be cases that literally or technically are outside of the NCD but the government will not be demanding a repayment because there are just some scenarios that clearly were not contemplated by the authors of the NCD,” one attorney says.

The NCD for ICDs describes nine categories — “covered indications” — that trigger Medicare payment (RMC 10/31/11, p. 1). They are divided into indications for primary prevention, which means the patient did not experience prior episodes of an irregular heartbeat but is still at elevated risk for sudden death due to cardiac arrest, and secondary prevention, which means the patient had prior episodes of an irregular heartbeat.

Only the indications for primary prevention — three through nine — have “timing requirements.” Medicare won’t pay for a patient’s ICD implant within 40 days of an acute myocardial infarction (MI) or within three months of a coronary artery bypass graft (CABG) or percutaneous transluminal coronary angioplasty (PTCA). For example, Medicare covers ICDs for patients with non-ischemic dilated cardiomyopathy and for patients with coronary artery disease with a documented prior MI, as long as acute MI didn’t occur in the previous 40 days. The idea is to first give patients time to recover from the heart attack to determine whether the patient really is at elevated risk for cardiac arrest.

Hospitals May Not Be as Vulnerable

If hospitals billed Medicare for ICD procedures, they may be at risk in the national false claims enforcement action. But they may not take as big a hit as was feared when DOJ first sent out subpoenas and civil investigative demands, lawyers say. “There are some different categories where the hospitals and doctors have good things to say about the medical necessity of the decision to implant. And the government has now acknowledged the decision to implant and no demand for money will be made in those cases,” one attorney says.

Some categories of ICD cases that are not NCD compliant won’t face any repayment, one attorney says. For example, a patient may need a pacemaker or a pacemaker replacement or the surgeon recommends a pacemaker ICD combination. Although the cardiac patient may clearly be entitled to the pacemaker, a recent acute myocardial infarction places him outside the reach of the ICD because of the timing requirement. “Some scenarios were clearly not contemplated by the authors of the NCD,” he says. For that reason, DOJ is expected to let these cases off the hook, the attorney says.

Timing Requirement Can Be a Problem

But it doesn’t look like the government will go easy when hospitals billed in violation of the timing requirement in other circumstances, the attorney says. For example, some patients are “previously qualified.” They are entitled to ICDs under the NCD’s primary indicators but subsequently have an acute MI, CABG or PTCA while deciding whether to proceed or waiting to schedule surgery. That essentially restarts the clock on Medicare coverage for their ICD surgery — 40 days from their MI or 90 days from their CABG/ PTCA. “There had been hope that DOJ would include that as a category with zero damages, but rumor is those cases will not be included in the zero-damages category,” the attorney says. “They will be treated in a category for which the government will seek some form of payment.”

The attorney doesn’t think that makes much sense. If patients were qualified on Jan. 1 but had an intervening event, such as an acute MI, there’s no reason to think they will be in better shape during the 40-day waiting period.

ICDs Also a Focus of Compliance Review

ICD noncompliance also recently made its first appearance in a Medicare compliance review, although it was the outpatient version and the DOJ investigation targets inpatient ICDs. Still, the NCD applies, and the HHS Office of Inspector General determined that Tampa General Hospital incorrectly billed Medicare for one outpatient surgery “because the beneficiary had a PTCA within 3 months of the ICD implantation,” OIG stated, resulting in a $25,583 overpayment.

Tampa General Hospital has edits in place to ensure ICD claims are screened before submission. That job falls to the Medical Bill Audit Department, which consists primarily of clinicians, say Ron Peterson, chief compliance officer, and Stephen Harris, director of reimbursement. “The edit is like a marker. It identifies these cases so they are reviewed,” Harris tells RMC. “We still have to write them off from time to time because they don’t meet criteria.” At the same time, the hospital and its physicians are taking more time to evaluate the medical necessity of the procedure before it’s performed, Harris says. The ICD investigation has “raised the bar on the criteria before a device can be implanted.” And for its part, the government has become more aware that this is not black and white. “Treatment of patients is so dynamic and doesn’t always fit into a regulation. You will see this evolve.”

Generally, to avoid claims denials or false claims for ICDs and similar procedures, it’s a good idea for hospitals to study relevant NCD and local coverage decisions, the attorney says. “There is a large but not infinite number of NCDs in the NCD manual, and it would be a good move for hospitals to figure out which apply to them and make sure they are trained and knowledgeable about them,” the attorney says.

If hospitals decide to bill for an ICD or other procedure outside the scope of the NCD, “do it in a transparent way that puts the Medicare administrative contractor on full notice,” he says. “There are some good arguments that something outside the NCD is still covered by Medicare and you have to bill it to preserve your appeal argument, but you have to do it in a transparent way.” Or don’t charge for it. He emphasizes that the NCD applies to professional services as well, so if the procedure isn’t covered, physicians can’t bill for it either.

(Copyright © 2012 by Atlantic Information Services, Inc. All rights reserved.)

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