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Medicare Administrative Contractors (MACs) have been sending out a variety of “educational” letters to hospitals and physicians of late. The most recent such letters have required that providers submit a corrective action plan, or CAP, to their respective MACs. If you are among the lucky recipients of such a letter, some careful thought is necessary.

In recent years, MACs have sent a number of other letters requesting that recipient take some sort of action. The most common letters have been prompted entirely by data analysis and describe coding or utilization anomalies that MACs identified by comparing providers’ performance to regional or national norms. For example, a letter may have indicated that a particular physician was using an evaluation and management code more frequently than his or her peers. Such a letter generally instructs the hospital or clinic to conduct an internal review to determine whether an overpayment exists, and to take appropriate action based on the findings of the review. These letters have not, however, required any particular action. 

By contrast, the newer letters are demanding a response, with such correspondence typically occurring after a review of documentation. After determining that a review has identified some sort of irregularity, such as admissions the MAC believes should have been recorded as outpatient encounters, contractors are demanding that the recipient submit the aforementioned CAPs.    

It is important to remember that communication with a MAC is the functional equivalent of talking with a police officer. As television crime dramas regularly note, any statement you make can and will be used against you in a court of law. Therefore, before submitting any statement or corrective action plan to the MAC, you should ask your legal counsel to review all relevant information. 

One question to consider is whether the MAC actually has the authority to demand a corrective action plan. When an organization fails to meet one of Medicare’s conditions of participation, the organization must submit a plan of correction in order to remain part of the Medicare program. This sort of CAP is established in the Medicare regulations. However, in these recent letters, the MAC has not identified violations of the participation conditions. Instead, again, the letters cite to coding and billing issues. I am not aware of any Medicare instructions regarding the use of corrective action plans required in the context of coding or billing. Therefore, I do not believe that MACs have the authority to require CAPs of providers. 

From a practical perspective, however, it is advisable for providers to preserve good working relationships with their MACs. Therefore, there is a compelling argument to provide some sort of response (that response, however, may not always be in the form of a CAP).

Determining the best response will depend entirely on the unique facts and circumstances involved in each case. If you are convinced that your actions were incorrect and that there is absolutely no argument that could defend them, it may even be appropriate to acknowledge it and submit a CAP. However, in most cases, making such a concession – which may be referred to better as a “confession” – is not in your best interests. In fact, if you plan to appeal the MAC’s decision, you have to be particularly careful that nothing you say undermines your standing.

When you disagree with the MAC’s assessment, the best approach may be offering a modified “corrective action plan” that explains why you believe that the MAC’s decision is incorrect, explaining further that you plan to appeal the decision. The letter can explain that if the appeals process determines that your practice acted inappropriately, you will make changes – but in the meantime, because you believe your actions were appropriate, you will not be making immediate changes.

Even in cases in which you choose to acknowledge that improvements are possible, careful choice of words is important. Any CAP need not discuss past practices at all; it can and should focus exclusively on the future. This approach will permit you to avoid specific characterizations of what has happened. General statements such as “We will educate our coders and physicians about the coding rules” are useful in a CAP, because they can allay a MAC’s concerns without exacerbating any potential liability. It should go without saying, however, that failure to complete any of the actions promised in a CAP has the potential to generate new, additional liability. The government may argue that your CAP constitutes a certification, and that failure to follow through on promises made in the CAP exposes you to False Claims Act liability.

The bottom line is that you won’t be able to keep anything you say in your CAP under your hat, so make certain to review these matters with your counsel.

About the Author

David Glaser is a shareholder in Fredrikson & Byron’s Health Law Group and helped establish its Health Care Fraud & Compliance Group. David helps healthcare entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes.

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David M. Glaser, Esq.

David M. Glaser is a shareholder in Fredrikson & Byron's Health Law Group. David assists clinics, hospitals, and other health care entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David's goal is to explain the government's enforcement position, and to analyze whether this position is supported by the law or represents government overreaching. David is a member of the RACmonitor editorial board and is a popular guest on Monitor Mondays.

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