CMS Pub. 100-08, ch. pim83exhibits, § 7.4.1

Results, and Request Repayment of Overpayments

(Rev.)

The following is a list of the claims denied as a result of the review:

A. Beneficiary Name: John Smith

1. HI Claim Number: 000-00-0000 A

2. Service Dates: 12/08/96 - 12/08/96

3. Services Denied and Dates: Magnetic Resonance Imaging (MRI) 12/08/96

4. Reason for Denial: MRIs are not considered medically reasonable and necessary for

the diagnosis of xxxx (§1879 denial).

5. Why You Are Responsible: We find that you knew or should have known that

payment would not be made for such items or services under Part A, and you are not without

fault in accordance with §1870 of the Social Security Act. You knew or should have known that

the services were not medically reasonable and necessary because you were notified in a

Provider Bulletin. The Bulletin dated April 1, 1996, outlined Local Medical Review Policy

which indicated that MRIs were not covered for the diagnosis of xxxx. Therefore, you are

responsible for paying the overpayment amount.

6. Overpayment: $900.00

B. Beneficiary Name: Mary Smith

1. HI Claim Number: 000-00-0000 B

2. Service Dates: 01/01/97 - 01/31/97

3. Services Denied and Dates: Physical Therapy evaluation and re-evaluation on

01/03/97 and 01/26/97

4. Reason for Denial: The two Physical Therapy visits are not medically reasonable and

necessary because the medical documentation shows that the patient was ambulatory and had no

functional problems which would have required a physical therapy evaluation or re-evaluation

(§1879 denial).

5. Why You Are Responsible: We find that you knew or should have known that

payment would not be made for such items or services under Part A, and you are not without

fault in accordance with §1870 of the Social Security Act. In a letter dated 10/30/96, you were

notified that such therapy evaluation and re-evaluation were not considered medically reasonable

and necessary. Therefore, you are responsible for the overpayment.

6. Overpayment: $200.00

Exhibit 8 – Victimized Provider Process Letter Templates

(Rev. 943; Issued: 02-21-20; Effective: 03-24-20; Implementation: 03-24- 20)

Letter 1: Send to the Medicare Provider/Supplier when you begin your evaluation of the

potential identity theft.

[Date]

Dear [Name of Medicare Provider/Supplier]:

VPP Case #

This letter serves notice that CMS has received your complaint alleging that your identity has

been stolen or compromised and that you have suffered unwarranted Medicare related financial

liabilities as a result.

The Victimized Provider Project (VPP) was established by the Centers for Medicare & Medicaid

Services (CMS) for the purpose of assisting Medicare providers/suppliers who have been victims

of identity theft, and who have consequently suffered liabilities in the form of unwarranted

Medicare related financial obligations to the Federal government (e.g., overpayment

determinations). CMS, in coordination with its Program Integrity Contractors, conducts an

extensive investigation of the allegation; reviews any documentation submitted by the provider

regarding the theft (including actions taken to report the theft and to prevent additional loss);

evaluates any associated financial liabilities or overpayments; and then makes a final decision

regarding the case.

Where evidence compellingly demonstrates that the Medicare provider/supplier is a victim of

identity theft, the Medicare provider/supplier shall be released from financial liability

specifically associated with specific overpayment(s) associated with the fraudulent claims at

issue. Where insufficient evidence exists to release a Medicare provider/supplier from financial

liability, the Medicare provider/supplier shall still have the right to appeal any overpayments and

any related claim determinations through Medicare’s established appeals process, and/or to

provide any additional evidence, as appropriate, to seek a new VPP decision.

CMS is in the process of investigating your complaint and reviewing the materials you have

submitted. CMS or its Program Integrity Contractors may be contacting you for further

information, and you may be asked to sign an attestation, under penalty of perjury, regarding the

circumstances of the identity theft. CMS will strive to make a decision no later than 60 days

from the date of receipt of your complete attestation and documentation package.

[Name of UPIC] is the Program Integrity Contractor that will be gathering evidence related to

your case. Your Point of Contact (POC) is:

[Name and Contact Information]

If you have any additional information that you believe will be helpful to your case, please

provide it to the POC. Please note that CMS and the Program Integrity Contractors are assisted

best in these investigations and decisions if Medicare providers/suppliers supply the most

comprehensive evidence up-front in order to make the investigative and review process as

efficient, effective, and informed as possible. The Program Integrity Contractor will conduct an

investigation based on evidence received, as well as through other evidence known to it or

otherwise obtained, and will present its findings to CMS for a final decision. The Program

Integrity Contractor will notify you of CMS’s decision in writing.

Please note that the potential release from financial liability for fraudulent claims submitted in

your name is restricted solely to those claims, and that the release from financial liability shall

not attach to claims that are not the subject of this investigation. Further, the VPP is only for

providers who have suffered actual financial harm as a result of identity theft; it is not for

Medicare providers/suppliers whose identities may have been stolen, but who have incurred no

Medicare financial liability. If you believe that you have been a victim of identity theft, but you

have not suffered consequent financial liability, please contact [Name of Contractor] to report the

theft and provide as much information as possible to assist CMS to prevent further misuse.

Sincerely,

[Program Integrity Contractor Manager Name and Title]

[Office/Organization]

Letter 2: Send to the Medicare Provider/Supplier if CMS decided that identity theft has

likely occurred and overpayment collection should stop.

[Insert Date]

[Insert identifying information regarding specific overpayment(s) and affected claims]

Dear [Name of Medicare Provider/Supplier]:

VPP Case #

As we previously informed you, the Victimized Provider Project (VPP) was established by the

Centers for Medicare & Medicaid Services (CMS) for the purpose of assisting Medicare

providers/suppliers who have been victims of identity theft, and who have consequently suffered

liabilities in the form of unwarranted Medicare related financial obligations to the Federal

government (e.g., overpayment determinations). This letter serves notice that CMS has

completed its VPP investigation of your identity theft complaint and has decided that sufficient

information exists to confirm identity theft and to relieve you of certain debt(s). CMS has made

a decision that you should not be held liable for the following overpayment(s) (describe dollar

amount(s) and timeframe(s) of claims at issue). Therefore, pursuant to Chapter 4 of the

Medicare Financial Management Manual (IOM Publication 100-06), the Medicare

Administrative Contractor (MAC) shall stop its collection efforts upon receipt of CMS’

notification. Specifically, the MAC shall:

1. Update its systems, as appropriate, to reflect rescission of the overpayment;

2. Refund any recoupment made against you on the specified overpayment(s) and/or

affected claims;

3. Stop the recoupment against you on the specified overpayment(s) and/or affected

claims;

4. Discontinue sending demand letters to you on the specified overpayment(s) and/or

affected claims;

5. Not refer any specified overpayment(s) and/or affected claims to the Department of

Treasury for collection;

6. Recall all specified overpayment(s) and/or affected claims on the debt/s referred to the

Department of Treasury.

Please note that the foregoing is solely limited to the specified overpayment(s) and/or affected

claims, and shall not apply to claims or overpayments that were not the subject of this case. If

you have any questions, please contact:

[Point of Contact at UPIC and Contact Information]

Sincerely,

[Program Integrity Contractor Manager Name and Title]

[Office/Organization]

Letter 3: Send to the Medicare Provider/Supplier if CMS informs you that it is unable to

determine that identity theft has occurred and overpayment notice with appeal rights has

already been issued.

[Insert Date]

[Identifying Information Regarding Overpayment(s) and Affected Claims]

Dear [Name of Medicare Provider/Suppliers]:

VPP Case # ________________________

As we previously informed you, the Victimized Provider Project (VPP) was established by the

Centers for Medicare & Medicaid Services (CMS) for the purpose of assisting Medicare

providers/suppliers who have been victims of identity theft, and who have consequently suffered

liabilities in the form of unwarranted Medicare related financial obligations to the Federal

government (e.g., overpayment determinations). This letter serves notice that CMS has

completed its VPP investigation of your identity theft allegation with regard to the identified

overpayment(s) and/or affected claims, and has decided that insufficient information exists at

this time to support a finding of identity theft.

Please be advised that this decision does not affect your appeal rights. You were previously

afforded appeal rights in your notice of overpayment, and we refer you to your previously issued

overpayment determination notice for guidance on such appeal rights.

Sincerely,

[Program Integrity Contractor Manager Name and Title]

[Office/Organization]

Exhibit 9 - Projection Methodologies and Instructions for Reviews of Home Health

Agencies for Claims Not Paid Under PPS

(Rev.)

Preamble – These methodologies shall be used in conjunction with the instructions found in

Chapter 3, §3.10 – Use of Statistical Sampling for Overpayment Estimation.

A. Reimbursement Methods for Home Health Agencies (HHAs)

Based on the findings from the statistical sampling for overpayment estimation, the Fiscal

Intermediary (FI)/Regional Home Health Intermediary (RHHI) will project by discipline to the

universe from which the sample was drawn to derive an overpayment amount. They determine

the sample universe by discipline (e.g., skilled nursing, physical therapy) for a specified time

frame within a single cost reporting period. They determine the reimbursement method for the

service(s) reviewed as shown below to ascertain the appropriate projection methodology to be

used.

The HHAs are reimbursed as follows:

• Discipline: Patient Services--Reimbursed By Cost Per Visit

• Skilled Nursing;

• Physical Therapy;

• Occupational Therapy;

• Speech Pathology;

• Medical Social Services; and

• Home Health Aide Service

• Other Patient Services - Reimbursed By Lower of Costs or Charges

• Cost of Medical Supplies;

• Cost of Drugs

Note that the reimbursement methodology for HHA's was changed by the BBA for cost report

periods beginning on or after October 1, 1997.

B. Procedures for Disciplines 1 through 6, which are reimbursed by cost per visit:

The following procedures apply to disciplines 1 through 6, which are reimbursed by cost per

visit:

• The sample may be chosen from a frame including claims with a particular or many

disciplines;

• For each discipline, MR determines the total number of visits and number of visits denied

by re-adjudication;

• The lower limit of a one-sided 90% confidence interval for the proportion of services to

be denied is to be used in computing overpayments. If use of the one-side 90%

confidence interval results in a zero or negative, or presents other problems, see the

guidance in Chapter 3, § 3.10.1.5 – Consultation with a Statistical Expert; Chapter 3,

§3.10.1.6 – Use of Other Sampling Methodologies; and Chapter 3, §3.10.5.1 – The Point

Estimate on alternative scientific methodologies that may be employed for estimating the

overpayment and consultation with a statistical expert.

• Multiply the proportion obtained above by the total number of Medicare visits in the

frame. This will determine the projected total number of visits to be denied for the period

and the adjusted Medicare visits;

• If the adjustment occurs prior to the submission of the cost report, the projected denied

visits will be multiplied by the provider's interim payment rate per visit to determine the

overpayment amount by discipline subject to collection. The FI/RHHI will proceed to

collect the overpayment amount based on discussion with the provider regarding

repayment options;

• Upon submission of the cost report, total visits on the cost report will not change. The

cost per visit computation will remain the same. Only the Medicare visits and the total

cost of Medicare services will be reduced. The charges that are applicable to these

adjusted costs must also be determined. Both of these adjusted totals are needed to settle

the cost report. For cost report periods beginning prior to 10/1/97, HHA cost reports are

settled on the lesser of reasonable cost or customary charges. Under the BBA, for cost

report periods beginning on or after 10/1/97, the methodology for settling HHA cost

reports has changed. Medical Review staff must complete worksheets 1-7 and notify

Audit and Reimbursement staff of all necessary adjustments so that the amount can

properly be reflected in the cost report.

Worksheets 1 through 7 may be accessed by clicking on the links below:

Worksheet 1: Home Health Agency (HHA) Calculation of Medical Review Audit Adjustment,

Form HHA/Audit-1

Worksheet 2: Home Health Agency (HHA) Calculation of Charges Applicable to

Adjusted/Denied Visits, Form HHA/Audit-2

Worksheet 3: Home Health Agency (HHA) Medical Review Sampling Results, Form HHA/MR-

1, page 1

Worksheet 4: Home Health Agency (HHA)Medical Review Sampling Results, Form HHA/MR-

1, page 2

Worksheet 5: Home Health Agency (HHA)Medical Review Sampling Results, Form HHA/MR-

1, page 3

Worksheet 6: Home Health Agency (HHA) Summary of Results Medical Review Sampling -

Form HHA/MR-2

Worksheet 7: Home Health Agency (HHA) Summary of Results of Medical Review - Form

HHA/MR-3

C. Procedures for Other Patient Services

The following procedures apply to other patient services:

• The sample may be chosen from a frame including claims with a particular or many

revenue centers;

• For each revenue center, MR determines the total charges and the charges in the sample

denied by re-adjudication;

• Determine the ratio of denied Medicare charges to the total Medicare charges in the

sample and the 90 percent confidence interval for the ratio. The estimated proportion is a

ratio estimate and therefore requires a formula for the standard error appropriate to ratio

estimation;

• The lower bound of the confidence interval for the proportion of charges to be denied is

to be used in computing overpayments. If the lower bound is zero or negative, there is no

overpayment;

• Multiply the proportion obtained above by the total Medicare charges in the period under

review and compute the projected total denied charges;

• Apply the ratio of cost to charges to the revised charges to determine approved costs;

• This results in the amount of denied dollars and constitutes the amount subject to

adjustment;

• If the adjustment occurs prior to the submission of the cost report, the FI/RHHI will

proceed to collect the overpayment amount based on discussion with the provider

regarding repayment options; and

• Upon submission of the cost report, as in the case for disciplines 1 through 6, medical

review staff must complete worksheets 1 - 7 identified in §5.3.7B above, and provide

audit and reimbursement staff with the information necessary to adjust the cost report and

to initiate overpayment collection procedures.

D. Coordination Between Medical Review and Audit and Reimbursement Staff

To preserve the integrity of Provider Statistical and Reimbursement Report (PS&R) data relative

to paid claims and shared systems data relative to denied claims, and to ensure proper settlement

of costs on provider cost reports, certain principles must be used when projecting overpayments

to a universe with HHAs. Communication between the FI/RHHI's medical review and audit and

reimbursement units is essential. These two units must be careful to follow the procedures listed

below:

• The same data must be used when the projection is made as was used when the sample

was selected;

• Projections on denied HHA services must be made for each discipline and revenue

center, as instructed above;

• When notifying the provider of the review results for cost reimbursed services, MR must

explain that the stated overpayment amount represents an interim payment

adjustment. Indicate that subsequent adjustments may be made at cost report settlement

to reflect final settled costs;

• Information from the completed Worksheets 1 - 7 identified in §5.3.7B above, must be

routed to the FI/RHHI's audit and reimbursement staff. In addition to the actual and

projected overpayment amounts, the information must provide the number of denied

services (actual denied services plus projected denied services) for each discipline and the

amounts of denied charges (actual denied amounts plus projected denied amounts) for

supplies and drugs; and

• Upon completion of the review, furnish the audit and reimbursement staff with the

information listed in PIM Chapter 3 §5.3.1.

The audit and reimbursement staff will:

• Determine the actual overpayment to be recovered for cost based services based on the

denied services, units and charges, and the provider's allowed costs;

• Use the information on denied services to ensure accurate settlement of the cost report

and/or any adjustments to interim rates that may be necessary as a result of MR findings.

Audit adjustments will be made to PS&R statistics on the cost report to decrease

Medicare visits, increase other visits (total visits remain unchanged) and to adjust

Medicare charges, as necessary; and

• In the event that a cost report has been settled, determine the impact and the actions to be

taken. In most cases, it is expected that cost reports will not have been settled or even

filed.

Exhibit 10 - Projection Methodologies and Instructions for Reviews of Skilled

Nursing Facilities (SNFs) for Claims not Paid Under PPS

(Rev.)

Preamble – These methodologies shall be used in conjunction with the instructions found in

Chapter 3, §3.10 – Use of Statistical Sampling for Overpayment Estimation.

A. Projecting From a Sample to a Universe on SNF Claims

Based on the findings from the statistical sampling for overpayment estimation, the FI will

project by ancillary cost center, to the universe from which the sample was drawn to derive an

overpayment amount. They determine the sample universe by ancillary service for a specified

time frame within a single cost reporting period.

Ancillary Service Cost Centers reimbursed by Lower of Costs or Charges are:

• Radiology;

• Laboratory;

• IV Therapy;

• Oxygen Therapy;

• Physical Therapy;

• Occupational Therapy;

• Speech Pathology;

• Electrocardiology;

• Medical Supplies;

• Drugs Charged; and

• Other

NOTE: Effective July 1, 1998, SNF services will be reimbursed in accordance with the

provisions in the BBA.

The following procedures should be used to determine the sample universe by ancillary service

for a specified time frame within a single cost reporting period:

• The sample may be chosen from a frame including claims with a particular or many

revenue centers;

• For each revenue center, determine the total charges and the charges in the sample denied

by re-adjudication;

• The lower limit of a one-sided 90% confidence interval for the proportion of charges to

be denied is to be used in computing overpayments. If use of the one-side 90%

confidence interval results in a zero or negative, or presents other problems, see the

guidance in Chapter 3, Sections 3.10.1.5, 3.10.1.6, and 3.10.5.1 on alternative scientific

methodologies that may be employed for estimating the overpayment and consultation

with a statistical expert;

• Multiply the proportion obtained above by the total Medicare charges in the period under

review and compute the projected total denied charges;

• Apply the ratio of cost to charges to the revised charges to determine approved costs;

• This results in the amount of denied dollars and constitutes the amount subject to

adjustment;

• If adjustment occurs prior to the submission of the cost report, the FI shall proceed to

collect the overpayment amount based on discussion with the provider regarding

repayment options; and

• Upon submission of the cost report, Medical Review staff will complete Worksheets 8 -

17, and provide the Audit and Reimbursement staff with the information necessary to

adjust the cost report and to initiate overpayment collection procedures.

Worksheets 8 through 17 may be viewed by double clicking on the name (link) below:

Worksheet 8: Skilled Nursing Facility (SNF) Calculation of Medical Review Audit Adjustment -

Form SNF/MR-1, page 1

Worksheet 9: Skilled Nursing Facility (SNF) Medical Review Sampling Results - Form

SNF/MR-1, page 1

Worksheet 10: Skilled Nursing Facility (SNF) Medical Review Sampling Results - Form

SNF/MR-1, page 2

Worksheet 11: Skilled Nursing Facility (SNF) Medical Review Sampling Results - Form

SNF/MR-1, page 3

Worksheet 12: Skilled Nursing Facility (SNF) Medical Review Sampling Results - Form

SNF/MR-1, page 4

Worksheet 13: Skilled Nursing Facility (SNF) Medical Review Sampling Results - Form

SNF/MR-1, page 5

Worksheet 14: Skilled Nursing Facility (SNF) Medical Review Sampling Results - Form

SNF/MR-1, page 6

Worksheet 15: Skilled Nursing Facility (SNF) Medical Review Sampling Results - Form

SNF/MR-1, page 7

Worksheet 16: Skilled Nursing Facility (SNF) Summary of Results of Medical Review Sampling

- Form SNF/MR-2

Worksheet 17: Skilled Nursing Facility (SNF) Summary of Results of Medical Review - Form

SNF/MR-3

B. Coordination Between Medical Review and Audit and Reimbursement Staff

To preserve the integrity of the PS&R data relative to paid claims and shared systems data

relative to denied claims, and to ensure proper settlement of costs on provider cost reports,

certain principles must be used when projecting overpayments to a universe with

SNFs. Communication between the FI/RHHI's medical review and audit and reimbursement

units is essential. These two units must be careful to follow the procedures listed below:

• The same data must be used when the projection is made as was used when the sample

was selected;

• Projections for denied SNF services must be made by each individual ancillary cost

center, as instructed above;

• Denied charges must be segregated between Part A and Part B as the SNF Medicare cost

report is set up to apportion costs and make separate settlements for Part A and Part B;

• When notifying the provider of the review results, MR must explain that the stated

overpayment amount represents an interim payment adjustment. They indicate that

subsequent adjustments may be made at cost settlement to reflect final settled costs;

• Information from the completed worksheets 8 - 17 (PIM chapter 3, §5.3.8 above), must

be routed to the FI's audit and reimbursement staff. In addition to the actual and

projected overpayment amounts, the information must provide the amount of denied

charges (actual denied plus projected denied amounts); and

• Upon completion of the review, MR furnishes the audit and reimbursement staff with the

information listed in PIM chapter 3 §5.3D.

The audit and reimbursement staff will:

• Determine the actual overpayment to be recovered based on the denied charges; and

• In the event that a cost report has been settled, they determine the impact and the actions

to be taken. It is expected that, in most cases, cost reports will not have been settled or

even filed.

Exhibit 11 - Projection Methodologies and Instructions for Reviews of

Comprehensive Outpatient Rehabilitation Facilities (CORFS) for Claims Not Paid

Under PPS

(Rev.)

Preamble – These methodologies shall be used in conjunction with the instructions found in

Chapter 3, §3.10 – Use of Statistical Sampling for Overpayment Estimation.

A. Projecting From a Sample to a Universe on CORF Claims

Based on the findings from the statistical sampling for overpayment estimation, the FI will

project by ancillary cost center to the universe from which the sample was drawn to derive an

overpayment amount. They determine the sample universe by ancillary service for a specified

time frame within a single cost reporting period. When making this determination, the following

should be used:

• Ancillary Service Cost Centers that are reimbursed by reasonable costs are:

• Skilled Nursing Care;

• Physical Therapy;

• Speech Pathology;

• Occupational Therapy;

• Respiratory Therapy;

• Medical Social Services;

• Psychological Services;

• Prosthetic and Orthotic Devices;

• Drugs and Biologicals;

• Supplies Charged to Patients;

• DME - Sold; and

• DME - Rented.

The following procedures should be used to determine the sample universe by ancillary service

for a specified time frame within a single cost reporting period:

• The sample may be chosen from a frame including claims with a particular or many

revenue centers;

• For each revenue center, MR determines the total charges and the charges in the sample

denied by re-adjudication;

• The lower limit of a one-sided 90% confidence interval for the proportion of charges to

be denied is to be used in computing overpayments. If use of the one-side 90%

confidence interval results in a zero or negative, or presents other problems, see the

guidance in Chapter 3, Sections 3.10.1.5, 3.10.1.6, and 3.10.5.1 on alternative scientific

methodologies that may be employed for estimating the overpayment and consultation

with a statistical expert;

• Multiply the proportion obtained above by the total Medicare charges in the period under

review and compute the projected total denied charges;

• Apply the ratio of cost to charges to the revised charges to determine approved costs;

• This results in the amount of denied dollars and constitutes the amount subject to

adjustment;

• If adjustment occurs prior to the submission of the costs report, the FI shall proceed to

collect the overpayment amount based on discussion with the provider regarding

repayment options; and

• Upon submission of the cost report, medical review staff will complete Worksheets 24 -

30, then provide audit and reimbursement staff with the information necessary to adjust

the cost report and to initiate overpayment collection procedures.

Worksheets 24 through 30 may be viewed by double clicking on the name (link) below:

Worksheet 24: Comprehensive Outpatient Rehabilitation Facility (CORF) Calculation of

Medical Review Audit Adjustment - Form CORF/Audit-1

Worksheet 25: Comprehensive Outpatient Rehabilitation Facility (CORF) Medical Review

Sampling Results - Form CORF/MR-1, page 1

Worksheet 26: Comprehensive Outpatient Rehabilitation Facility (CORF) Medical Review

Sampling Results - Form CORF/MR-1, page 2

Worksheet 27: Comprehensive Outpatient Rehabilitation Facility (CORF) Medical Review

Sampling Results - Form CORF/MR-1, page 3

Worksheet 28: Comprehensive Outpatient Rehabilitation Facility (CORF) Medical Review

Sampling Results - Form CORF/MR-1, page 4

Worksheet 29: Comprehensive Outpatient Rehabilitation Facility (CORF) Summary of Results

of Medical Review Sampling - Form CORF/MR-2

Worksheet 30: Comprehensive Outpatient Rehabilitation Facility (CORF) Summary of Results

of Medical Review - Form CORF/MR-3

B. Coordination Between Medical Review and Audit and Reimbursement Staff

To preserve the integrity of the PS&R data relative to paid claims and shared systems data

relative to denied claims, and to ensure proper settlement of costs on provider cost reports,

certain principles must be used when projecting overpayments to a universe with

CORFs. Communication between the FI/RHHI's medical review and audit and reimbursement

units is essential. These two units must be careful to follow the procedures listed below:

• The same data must be used when the projection is made as was used when the sample

was selected;

• Projections for denied CORF services must be made by each individual ancillary cost

center, as instructed above;

• When notifying the provider of the review results, MR must explain that the stated

overpayment amount represents an interim payment adjustment. Indicate that subsequent

adjustments may be made at cost settlement to reflect final settled costs;

• Information from the completed worksheets 24 - 30 in PIM chapter 3, §5.3.9A, must be

routed to the FI's audit and reimbursement staff. In addition to the actual and projected

overpayment amounts, the information must provide the amount of denied charges

(actual denied plus projected denied amounts); and

• Upon completion of the review, furnish the Audit and Reimbursement staff with the

information listed in PIM chapter 3 §5.3D.

The audit and reimbursement staff will:

• Determine the actual cost report overpayment to be recovered based on the denied

charges; and

• In the event that a cost report has been settled, they determine the impact and the actions

to be taken. In most cases, it is expected that cost reports will not have been settled or

even filed.

Exhibit 12 - Projection Methodologies and Instructions for Reviews of Community

Mental Health Centers (CMHCs) for Claims not Paid Under PPS - (Rev.)

Preamble – These methodologies shall be used in conjunction with the instructions found in

Chapter 3, §3.10 – Use of Statistical Sampling for Overpayment Estimation.

A. Projecting From a Sample to a Universe on CMHC Claims

Based on the findings from the statistical sampling for overpayment estimation, the FI will

project by ancillary cost center to the universe from which the sample was drawn to derive an

overpayment amount. Determine the sample universe by ancillary service for a specified time

frame within a single cost reporting period.

When making this determination, the following should be used:

Ancillary service cost centers that are reimbursed by lower of costs or charges are:

• Drugs and Biologicals

• Occupational Therapy

• Individualized Activity Therapy

• Psychiatric/Psychological Services

• Individual Therapy

• Group Therapy

• Family Counseling

• Diagnostic Services

• Patient Training and Education

The following procedures should be used to determine the sample universe by ancillary service

for a specified time frame within a single cost reporting period.

• The sample may be chosen from a frame including claims with a particular or many

revenue centers;

• For each revenue center, determine the total charges and the charges in the sample denied

by re-adjudication;

• The lower limit of a one-sided 90% confidence interval for the proportion of services to

be denied is to be used in computing overpayments. If use of the one-side 90%

confidence interval results in a zero or negative, or presents other problems, see the

guidance in [Chapter 3, Sections 14.1.5, 14.1.6, and 14.5.1] on alternative scientific

methodologies that may be employed for estimating the overpayment and consultation

with a statistical expert;

• Multiply the proportion obtained above by the total Medicare charges in the period under

review and compute the projected total denied charges;

• Apply the ratio of cost to charges to the revised charges to determine approved costs;

• This results in the amount of denied dollars and constitutes the amount subject to

adjustment;

• If adjustment occurs prior to the submission of the cost report, the FI shall proceed to

collect the overpayment amount based on discussion with the provider regarding

repayment options; and

• Upon submission of the cost report, medical review staff will complete worksheets 18 -

23, then provide audit and reimbursement staff with the information necessary to adjust

the cost report and to initiate overpayment collection procedures.

Worksheets 18 through 23 may be viewed by double clicking on the name (link) below:

Worksheet 18: Community Mental Health Clinic (CMHC) Calculation of Medical Review Audit

Adjustment - Form CMHC/Audit-1

Worksheet 19: Community Mental Health Clinic (CMHC) Medical Review Sampling Results -

Form CMHC/Audit-1, page 1

Worksheet 20: Community Mental Health Clinic (CMHC) Medical Review Sampling Results -

Form CMHC/Audit-1, page 2

Worksheet 21: Community Mental Health Clinic (CMHC) Medical Review Sampling Results -

Form CMHC/Audit-1, page 3

Worksheet 22: Community Mental Health Clinic (CMHC) Summary of Results of Medical

Review Sampling - Form CMHC/MR-2

Worksheet 23: Community Mental Health Clinic (CMHC) Summary of Results of Medical

Review - Form CMHC/MR-3

B. Coordination Between Medical Review and Audit and Reimbursement Staff

To preserve the integrity of the PS&R data relative to paid claims and shared systems data

relative to denied claims, and to ensure proper settlement of costs on provider cost reports,

certain principles must be used when projecting overpayments to a universe with

CMHCs. Communication between the FI/RHHI's medical review and audit and reimbursement

units is essential. These two units must be careful to follow the procedures listed below:

• The same data must be used when the projection is made as was used when the sample

was selected;

• Projections for denied CMHC services must be made by each individual ancillary cost

center, as instructed above;

• When notifying the provider of the review results, MR must explain that the stated

overpayment amount represents an interim payment adjustment. They indicate that

subsequent adjustments may be made at cost settlement to reflect final settled costs; and

• Information from the completed worksheets 18 - 23 in PIM chapter 3, §5.3.10A must be

routed to the FI's audit and reimbursement staff. In addition to the actual and projected

overpayment amounts, the information must provide the amount of denied charges

(actual denied plus projected denied amounts).

The audit and reimbursement staff will:

• Determine the actual overpayment to be recovered based on the denied charges; and

• In the event that a cost report has been settled, they determine the impact and the actions

to be taken. In most cases, it is expected that cost reports will not have been settled or

even filed.

Exhibit 13 - Postpayment CMR Summary Report Format Example

(Rev. 3, 11-22-00)

Identification Section

Provider Provider Number

Address ID No. (SSN or EIN)

If Group, Number of Providers Involved

See attached for names and individual earnings

Specialty Sub-specialty

Repeat providers (years)

Payment and Utilization Section

Payments: Year Assigned $ Unassigned $

Total Number of Beneficiaries:

Average Number of Services Per Beneficiary:

Average Payment Per Beneficiary

Provider on Prepayment Review:

For Which Services/procedures:

For What Period:

Carrier Review Conducted Section

Reason Provider Selected for Comprehensive Medical Review:

Areas on which Comprehensive Medical Review efforts were concentrated:

See attached for all procedures for which provider exceeded established

norms.

Material Reviewed

Claims Sampling Method:

Number of Beneficiaries: Number of Months per Beneficiary:

Computer Printouts (Specify):

Medical Records (Specify):

Other Records (Specify):

Did Medical Staff Review Cases? If so, what percent?

Contacts Made Number of Cases Reviewed Reason

Provider

SNF

Hospital

Beneficiary

Documentation of §1879 of the Act Determinations Section

List the evidence and rationale indicating that the provider knew or should have known that the

services were not medically reasonable and necessary.

Documentation of §1870 of the Act Determinations Section

List the evidence and rationale indicating that the provider was "at fault" in causing the

overpayment and that the provider is liable for the overpayment (i.e., recovery of overpayment

will not be waived).

Exhibit 13.1 - Excluded Providers - (Rev. 3, 11-22-00)

A. Notice to Beneficiaries

To ensure that the notice to the beneficiary indicates the proper reason for denial of payment,

contractors include the following language in the notice:

"We have received a claim for services furnished by _____________ on

______________. Effective _______________, _________________was excluded from

receiving payment for items and services furnished to Medicare beneficiaries. This notice is to

advise that no payment will be made for any items or services furnished by

______________________________ if rendered more than 20 days from the date of this notice."

B. Notice to Others

The Medicare Patient and Program Protection Act of 1987 provides that payment is denied for

any items or services ordered or prescribed by a provider excluded under §§1128 or 1156 of the

Act. It also provides that payment cannot be denied until the supplier of the items and services

has been notified of the exclusion.

If claims are submitted by a laboratory or a DME company for any items or services ordered or

prescribed by a provider excluded under §§1128 or 1156 of the Act, contractors:

• Pay the first claim submitted by the supplier and immediately give notice of the

exclusion; and

• Do not pay the supplier for items or services ordered or prescribed by an excluded

provider if such items or services were ordered or prescribed more than 20 days after the

date of notice to the supplier, or after the effective date of the exclusion, whichever is

later.

To ensure that the notice to the supplier indicates the proper reason for denial of payment,

contractors include the following language in the notice:

"We have received a claim for services ordered or prescribed by __________________________

on _______________. Effective ____________________, _____________________was

excluded from receiving payment for items or services ordered or prescribed for Medicare

beneficiaries. This notice is to advise that no payment will be made for any items or services

ordered or prescribed by ________________ if ordered or prescribed more than 20 days from the

date of this notice."

Exhibit 14 - Contractor Denials 1862(a)(1) of the Act - (Rev. 3, 11-22-00)

The determinations which follow a §1862(a)(1) denial may require a decision if the beneficiary

or provider knew or could have known that a service would not be covered by Medicare because

it would be considered medically unnecessary. The provider is liable if it is determined the

provider knew, or could reasonably have been expected to know, that the items or services

provided were not covered under Medicare. The beneficiary is liable if it is determined the

beneficiary knew, or could reasonably have been expected to know (e.g. utilization review notice

from a SNF) that the items or services provided were not covered under Medicare. However, the

Medicare program accepts liability (i.e., makes payment to a provider even though a non-covered

service is involved) if neither the beneficiary nor the provider knew, or could reasonably be

expected to have known, that the services were not covered. Waiver of liability exists when both

the beneficiary and the provider did not and could not reasonably have been expected to know

that payment would not be made for services.

To find that a beneficiary knew or should have known that a service would not be covered,

written notice from the provider is required or evidence that the beneficiary had received a prior

denial for the same or similar services. To find that a provider had knowledge that a service

would not be covered, actual or constructive notice is acceptable (e.g., carrier bulletin with final

LMRP and effective date). Sufficient notice includes:

• Previous denials for the same service;

• Publication by the contractor in a newsletter or other communication to the provider

community that a service is considered not reasonable and necessary or constitutes custodial

care;

• Knowledge based on experience; and

• Local standards of practice.

14.1 - Section 1879 of the Act Determination- Limitation of Liability - (Rev. 3,

11-22-00)

Section 1879 provides relief for a beneficiary who acted in good faith in accepting services

found to be not reasonable and necessary for the diagnosis or treatment of illness or injury or to

improve the functioning of a malformed body member, or to constitute custodial care. The

provision also applies to denials of home health services beginning July 1, 1987 and ending

September 30, 1989, where the beneficiary is not homebound or does not or did not need skilled

nursing care on an intermittent basis. The provision applies to all carrier determinations on all

assigned claims when claims are denied (prepay or postpay) under §1862(a)(1) of the

Act. Contractors must make an individualized determination for each claim that is denied as not

reasonable and necessary.

A §1879 determination regarding knowledge is part of the framework for determining whether

an actual or potential overpayment exists. If a contractor determines that program payment was

proper because neither the beneficiary nor the provider knew or should have known that the

service was not reasonable and necessary, no overpayment exists. However, if the contractor

determines that either the beneficiary or the provider knew or should have known that a service

was not medically reasonable and necessary, an overpayment exists. Contractors must consider

waiver of recovery of the overpayment under §1870 of the Act.

A. Documentation of §1879 of the Act Determination

The contractor must document the basis for the determination (i.e., rationale), including

appropriate references to contractor newsletters, prior denials, sponsored meetings attended by

the provider, etc., where applicable. Any correspondence going to the beneficiary/provider (i.e.,

demand letters) should include all §1879 determinations as to knowledge of noncoverage, both

favorable and unfavorable. Document the §1879 determination in the CMR summary report.

B. Section 1879 of the Act Determinations and Overpayments

An overpayment would be $0 (zero) for postpayment denials for assigned claims and claims

submitted to an intermediary from a participating provider because a determination was made

that neither the beneficiary nor the provider knew or should have known the services were not

covered. Program payment was appropriate. However, if the beneficiary is found to be liable

under §1879 of the Act, an overpayment to the beneficiary exists and the contractor must make

an §1870 determination.