GOVERNMENTAL INCONSISTENCIES SUGGEST A DEFENSE AGAINST MEDICARE AUDIT PROBLEMS
It has long been known that Medicare does not like to “disclose” certain facts and details about its policies to service providers. This typically includes audit triggers, numbers of allowed visits to nursing homes, how many submissions of various procedures are allowed within a time frame, etc. Sometimes this information is obtained by journalists who serve podiatry publications through “unofficial” sources. Naturally it is subject to frequent changes, and old information is frequently unreliable. The real reason according to Medicare is for cost containment. They don’t want to permit providers to “play” the numbers to increase their income, thereby raising Medicare costs.
Yet, there are Draconian penalties for those whose billings are “out of the Medicare norms,” whatever they are at the time. Those penalties include everything from coerced repayment of funds and huge financial penalties through retroactive calculation, to exclusion from the Medicare program, loss of license and even jail. The emotional toll on all providers, especially those who go to nursing homes is enormous, whether or not they have faced an audit. For those who receive the dreaded (although eventually expected) audit letter, they expect to be redefined into a truly new American Governmental concept: the “proto-criminal. “
This policy is NOT characteristic of other financial relationships we have with government. Here is a brief list of exceptions. I’m sure you can think of more to add yourself, but I want to try to keep this article fairly short.
- US and State Tax Code: Although the statutes of tax code are very complex, it is assumed by Government that taxpayers will attempt to take part in all possible LEGAL methods to reduce their taxes. You do it all the time. You probably write off many items you use for your business, if not all. If you operate a home based business, you can quite legally write off even more. In fact, legitimate home businesses allow so many potential opportunities for tax savings that it is not surprising that many people who work for others start their own computer based or multilevel marketing efforts. Often their stunning, personal tax savings eclipse financial earnings. Although there are certain time restrictions for profitability of these “home” businesses, these legislated tax breaks are perfectly legal and don’t necessarily lead to audits. If you have ever wondered why some families switch between MLM businesses like frogs on lily pads, it is to take full advantage of those tax laws. No secrets here.
- When one door closes, often another opens. When Government and managed care started closing income windows for healthcare providers, some others opened. For some the Medicare Certified Surgical Center became a viable option. There are still a number of healthcare providers who own and successfully operate these facilities. Although some re-bundling of services and fees has occurred throughout the industry, certain procedures still pay very well and continue to be a powerful income source. Congress has provided a series of rules, called “Safe Harbors” that pretty well define what can and cannot be done with ASC’s as well as other inter-provider relationships. No secrets here.
- There is a complete system for allowing individuals and employees to build their retirements through delay of tax payments. Typically these programs prohibit early withdrawal of funds, but when used to their best capability, they present remarkable opportunities to save for retirement. Those rules are clearly defined. No secrets here.
- Deductibility of certain insurance premiums is a complete range of government benefits. Through their persistent lobbying and paying- off of Congress, the Insurance industry has created artificial bargains for their clients that exist nowhere else. A perfect example is the fact that life insurance benefits are not taxable as ordinary income. Is this an accident? No way. The insurance industry paid off Congress. The rules there are defined clearly in both tax code and insurance regulations. No secrets here.
- An absolutely stunning example of a government benefit is one the insurance industry negotiated for those families that want to preserve their elderly parents’ incomes from nursing home expenses. These programs allow skilled nursing facility residents to purchase irrevocable annuities that shield financial resources from all three potential drains: State and Federal Government, and nursing homes! It is not surprising that government does not “advertise” this program. Even some insurance agents are not familiar with it. It represents one of the most amazing loopholes in elder policy that I have ever seen. I will admit that government does tend to keep it a secret, although it is perfectly legal. There are certain restrictions on the total resources that can be transferred to the annuity, but savings of several hundred thousand dollars can be secured by the elders’ estate to be eventually distributed to their heirs! Part of the financial obligation for support of the nursing home resident is shifted to state and Federal Government--welfare. If both elder husband and wife are still living, those savings can be multiplied even more. One might argue that this program is immoral since it shifts the expense burden away from people who can afford it and forces Government to pay and nursing homes to reduce their income. All your elderly parents need to do to take advantage of the program is consult an insurance company that sells these annuities. If your parent(s) are demented and you have power of attorney you can do it for them.
Of course there are more examples. These only scratch the surface. We all have many financial relationships with Government, whether we are aware of them or not. WHEN GOVERNMENT MAKES DEMANDS ON US TO FOLLOW THEIR RULES, THEY HAVE AN OBLIGATION TO INFORM US AS WELL AS POSSIBLE WHAT THOSE RULES ARE. Although I am not an attorney, I have read that even the U.S. Supreme Court regards that concept as a basic constitutional right. There are exceptions, most particularly national security issues, when government agents might be threatened by disclosure. But these do NOT apply in any way to Medicare regulations. It is logical for Secret Service to hold their policies non-disclosed. We all want our President and their families’ safe. We all applaud secrecy when fighting terrorism.
A DEFENSE AGAINST MEDICARE AUDIT
During an audit request, a certain number of charts is demanded and then reviewed for discrepancies, inadequate chart notes and documentation, “over- billing,” unbundling of services, and excessive numbers of expensive procedures. When those are found, Government then extrapolates the penalties, usually financial. They can be enormous. YET THE REAL PARAMETERS OF THOSE ISSUES IS NOT DISCLOSED TO SERVICE PROVIDERS AHEAD OF TIME. Perhaps it is impossible to completely disclose them. But should there be an attempt made? Yes. Perhaps a series of so-called “Safe Harbors” could be described that will tell us that if we stay within those borders, we will be “reasonably” safe. What about examples of chart notes that the Government tells you are OK? Our tax code routinely defines how some of their constructs should be written. Why shouldn’t Medicare? It is true that some providers might use this information to raise their income. Perhaps that is not appropriate, since after all, patient care is the goal of Medicare, not raising provider income. Yet, all healthcare providers who are in the trenches know that healthcare is not black and white. There are reasonable disagreements between providers who argue about the appropriateness of certain medical care alternatives. Is Government right and are you always wrong? Your resources available to fight the government will always be a mismatch. When fabricating our legal system our Founding Fathers were very much aware of that imbalance. The fall in the value of Bill Gate’s Microsoft Stock after Government sued Microsoft even proved that!
HEALTHCARE ATTORNEYS, WHAT ARE YOU DOING FOR YOUR AUDIT CLIENTS?
Government wants it both ways. Yet in almost all other financial relationships, government gives us full disclosure. Most of us recognize that “ignorance of the law is not a defense.” Yet, the U.S. Supreme Court has invalidated a number of them due to “lack of clarity.” Have you used this serious issue in their defense? Why not?
Michael M. Rosenblatt
San Jose, CA