Corporate Integrity Agreement with the Office of the Inspector General of CMS dated February 14, 2020

Diversicare Healthcare Services, Inc. (Diversicare) hereby enters into this Corporate Integrity Agreement (CIA) with the Office of Inspector General (OIG) of the United States Department of Health and Human Services (HHS) to promote compliance with the statutes, regulations, and written directives of Medicare, Medicaid, and all other Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f)) (Federal health care program requirements). Contemporaneously with this CIA, Diversicare is entering into a Settlement Agreement with the United States.

A.    The period of the compliance obligations assumed by Diversicare under this CIA shall be five years from the effective date of this CIA. The “Effective Date” shall be the date on which the final signatory of this CIA executes this CIA. Each one-year period, beginning with the one-year period following the Effective Date, shall be referred to as a “Reporting Period.”

B.    Sections VII, X, and XI shall expire no later than 120 days after OIG’s receipt of: (1) Diversicare’s final Annual Report or (2) any additional materials submitted by Diversicare pursuant to OIG’s request, whichever is later.

C.    For purposes of this CIA, the term “Covered Persons” includes: (1) all owners who are natural persons (other than shareholders who: (1) have an ownership interest of less than 5% and (2) acquired the ownership interest through public trading), officers, directors, and employees of Diversicare; (2) all contractors, subcontractors, agents, and other persons who furnish patient care items or services or who perform billing or coding functions on behalf of Diversicare, excluding vendors whose sole connection with Diversicare is selling or otherwise providing medical supplies or equipment to Diversicare; and (3) all physicians and other non-physician practitioners who are members of Diversicare’s active medical staff. Notwithstanding the above, the term “Covered Persons” does not include part-time or per diem employees, contractors, subcontractors, agents, and other persons who are not reasonably expected to work more than 160 hours during a Reporting Period, except that any such individuals shall become “Covered Persons” at the point when the work more than 160 hours during a Reporting Period.

Diversicare shall establish and maintain a Compliance Program that includes the following elements:

A.    Compliance Officer and Committee, Board of Directors, and Management Compliance Obligations

1.    Compliance Officer. Within 90 days after the Effective Date, Diversicare shall appoint a Compliance Officer and shall maintain a Compliance Officer for the term of the CIA. The Compliance Officer shall be an employee and a member of senior management of Diversicare, shall report directly to the Chief Executive Officer of Diversicare, and shall not be or be subordinate to the General Counsel or Chief Financial Officer or have any responsibilities that involve acting in any capacity as legal counsel or supervising legal counsel functions for Diversicare. The Compliance Officer shall be responsible for, without limitation:

Any noncompliance job responsibilities of the Compliance Officer shall be limited and must not interfere with the Compliance Officer’s ability to perform the duties outlined in this CIA.

Diversicare shall report to OIG, in writing, any changes in the identity of the Compliance Officer, or any actions or changes that would affect the Compliance Officer’s ability to perform the duties necessary to meet the obligations in this CIA, within five business days after such a change.

2.    Compliance Directors. Within 90 days after the Effective Date, Diversicare shall appoint two individuals to serve as Compliance Directors. Diversicare shall maintain the Compliance Directors for the duration of the CIA. The Compliance Directors shall be responsible for implementing policies, procedures, and practices designed to ensure compliance with the requirements set forth in this CIA and with Federal health care program requirements for their assigned facilities of the Company, and shall monitor the day-to-day compliance activities for their assigned facilities. The Compliance Directors shall report to the Compliance Officer, and shall be members of the Compliance Committee. The Compliance Directors shall make periodic (at least quarterly) written reports regarding compliance matters directly to the Compliance Officer, and shall be authorized to report on such matters directly to the Compliance Committee and the Board of Directors at any time. Diversicare shall report to OIG, in writing, any actions or changes that would affect any Compliance Director’s ability to perform the duties necessary to meet the obligations in this CIA, within 30 days after such a change.

3.    Compliance Committee. Within 90 days after the Effective Date, Diversicare shall appoint a Compliance Committee. The Compliance Committee shall, at a minimum, include the Compliance Officer, Compliance Directors, and other members of senior management necessary to meet the requirements of this CIA (e.g., senior executives of relevant departments, such as billing, clinical, human resources, audit, and operations). The Compliance Officer shall chair the Compliance Committee and the Compliance Committee shall support the Compliance Officer in fulfilling his/her responsibilities (e.g., shall assist in the analysis of Diversicare’s risk areas and shall oversee monitoring of internal and external audits and investigations). The Compliance Committee shall meet at least quarterly. The minutes of the Compliance Committee meetings shall be made available to OIG upon request.

Diversicare shall report to OIG, in writing, any actions or changes that would affect the Compliance Committee’s ability to perform the duties necessary to meet the obligations in this CIA, within 15 business days after such a change.

4.    Board Compliance Obligations. The Board of Diversicare shall be responsible for the review and oversight of matters related to compliance with Federal health care program requirements and the obligations of this CIA. The Board must include independent (i.e., non-employee and non-executive) members.

The Board shall, at a minimum, be responsible for the following:

At minimum, the resolution shall include the following language:

“The Board has made a reasonable inquiry into the operations of Diversicare’s Compliance Program, including the performance of the Compliance Officer and the Compliance Committee. Based on its inquiry and review, the Board has concluded that, to the best of its knowledge, Diversicare has implemented an effective Compliance Program to meet Federal health care program requirements and the obligations of the CIA.”

If the Board is unable to provide such a conclusion in the resolution, the Board shall include in the resolution a written explanation of the reasons why it is unable to provide the conclusion and the steps it is taking to implement an effective Compliance Program at Diversicare.

Diversicare shall report to OIG, in writing, any changes in the composition of the Board, or any actions or changes that would affect the Board’s ability to perform the duties necessary to meet the obligations in this CIA, within 15 business days after such a change.

5.    Management Certifications. In addition to the responsibilities set forth in this CIA for all Covered Persons, certain Diversicare employees (Certifying Employees) are expected to monitor and oversee activities within their areas of authority and shall annually certify that the applicable Diversicare department is in compliance with applicable Federal health care program requirements and the obligations of this CIA. These Certifying Employees shall include, at a minimum, the following: Chief Executive Officer; Chief Financial Officer; Chief Operating Officer; Senior Vice President of Clinical Ops; Senior Vice President of Human Resources; Senior Vice President of Finance; Senior Vice President, Chief Legal Officer; Senior Vice President, Chief Information Officer; Vice President – Revenue Cycle; or equivalent positions. For each Reporting Period, each Certifying Employee shall sign a certification that states:

“I have been trained on and understand the compliance requirements and responsibilities as they relate to [insert name of department], an area under my supervision. My job responsibilities include ensuring compliance with regard to the [insert name of department] with all applicable Federal health care program requirements, obligations of the Corporate Integrity Agreement, and Diversicare policies, and I have taken steps to promote such compliance. To the best of my knowledge, the [insert name of department] of Diversicare is in compliance with all applicable Federal health care program requirements and the obligations of the Corporate Integrity Agreement. I understand that this certification is being provided to and relied upon by the United States.”

If any Certifying Employee is unable to provide such a certification, the Certifying Employee shall provide a written explanation of the reasons why he or she is unable to provide the certification outlined above.

Within 90 days after the Effective Date, Diversicare shall develop and implement a written process for Certifying Employees to follow for the purpose of completing the certification required by this section (e.g., reports that must be reviewed, assessments that must be completed, sub-certifications that must be obtained, etc. prior to the Certifying Employee making the required certification).

Within 90 days after the Effective Date, Diversicare shall develop and implement written policies and procedures regarding the operation of its compliance program, including the compliance program requirements outlined in this CIA and Diversicare’s compliance with Federal health care program requirements (Policies and Procedures). Throughout the term of this CIA, Diversicare shall enforce its Policies and Procedures and shall make compliance with its Policies and Procedures an element of evaluating the performance of all employees. The Policies and Procedures shall be made available to all Covered Persons.

At least annually (and more frequently, if appropriate), Diversicare shall assess and update, as necessary, the Policies and Procedures. Any new or revised Policies and Procedures shall be made available to all Covered Persons.

All Policies and Procedures shall be made available to OIG upon request.

1.     Covered Persons Training. Within 90 days after the Effective Date, Diversicare shall develop a written plan (Training Plan) that outlines the steps Diversicare will take to ensure that all Covered Persons receive at least annual training regarding Diversicare’s CIA requirements and Compliance Program and the applicable Federal health care program requirements, including the requirements of the Anti-Kickback Statute and the Stark Law. The Training Plan shall include information regarding the following: training topics, categories of Covered Persons required to attend each training session, length of the training session(s), schedule for training, and format of the training. Diversicare shall furnish training to its Covered Persons pursuant to the Training Plan during each Reporting Period.

2.    Board Training. In addition to the training described in Section III.C.1, within 90 days after the Effective Date, each member of the Board shall receive training regarding the corporate governance responsibilities of board members and the responsibilities of board members with respect to review and oversight of the Compliance Program. Specifically, the training shall address the unique responsibilities of health care Board members, including the risks, oversight areas, and strategic approaches to conducting oversight of a health care entity. This training may be conducted by an outside compliance expert hired by the Board and should include a discussion of the OIG’s guidance on Board member responsibilities.

New members of the Board shall receive the Board training described above within 30 days after becoming a member or within 90 days after the Effective Date, whichever is later.

3.    Training Records. Diversicare shall make available to OIG, upon request, training materials and records verifying that the training described in Sections III.C.1 and III.C.2 has been provided as required.

D.    Review Procedures

1.    General Description

2.    Claims Review. The IRO shall review claims submitted by Diversicare and reimbursed by the Medicare program, to determine whether the items and services furnished were medically necessary and appropriately documented and whether the claims were correctly coded, submitted and reimbursed (Claims Review) and shall prepare the Claims Review Reports, as outlined in Appendix B to this CIA, which is incorporated by reference.

3.    Independence and Objectivity Certification. The IRO shall include in its report(s) to Diversicare a certification that the IRO has (a) evaluated its professional independence and objectivity with respect to the reviews required under this Section III.D and (b) concluded that it is, in fact, independent and objective, in accordance with the requirements specified in Appendix A to this CIA. The IRO’s certification shall include a summary of all current and prior engagements between Diversicare and the IRO.

E.    Risk Assessment and Internal Review Process

Within 90 days after the Effective Date, Diversicare shall develop and implement a centralized annual risk assessment and internal review process to identify and address risks associated with Diversicare’s participation in the Federal health care programs, including but not limited to the risks associated with the submission of claims for items and services furnished to Medicare and Medicaid program beneficiaries. The Compliance Committee shall be responsible for implementation and oversight of the risk assessment and internal review process. The risk assessment and internal review process shall be conducted at least annually and shall require Diversicare to: (1) identify and prioritize risks, (2) develop internal audit work plans related to the identified risk areas, (3) implement the internal audit work plans, (4) develop corrective action plans in response to the results of any internal audits performed, and (5) track the implementation of the corrective action plans in order to assess the effectiveness of such plans. Diversicare shall maintain the risk assessment and internal review process for the term of the CIA.

F.    Disclosure Program

Within 90 days after the Effective Date, Diversicare shall establish a Disclosure Program that includes a mechanism (e.g., a toll-free compliance telephone line) to enable individuals to disclose, to the Compliance Officer or some other person who is not in the disclosing individual’s chain of command, any identified issues or questions associated with Diversicare’s policies, conduct, practices, or procedures with respect to a Federal health care program believed by the individual to be a potential violation of criminal, civil, or administrative law. Diversicare shall appropriately publicize the existence of the disclosure mechanism (e.g., via periodic e-mails to employees or by posting the information in prominent common areas).

The Disclosure Program shall emphasize a nonretribution, nonretaliation policy and shall include a reporting mechanism for anonymous communications for which appropriate confidentiality shall be maintained. The Disclosure Program also shall include a requirement that all of Diversicare’s Covered Persons shall be expected to report suspected violations of any Federal health care program requirements to the Compliance Officer or other appropriate individual designated by Diversicare. Upon receipt of a disclosure, the Compliance Officer (or designee) shall gather all relevant information from the disclosing individual. The Compliance Officer (or designee) shall make a preliminary, good faith inquiry into the allegations set forth in every disclosure to ensure that he or she has obtained all of the information necessary to determine whether a further review should be conducted. For any disclosure that is sufficiently specific so that it reasonably: (1) permits a determination of the appropriateness of the alleged improper practice; and (2) provides an opportunity for taking corrective action, Diversicare shall conduct an internal review of the allegations set forth in the disclosure and ensure that proper follow-up is conducted.

The Compliance Officer (or designee) shall maintain a disclosure log and shall record all disclosures, whether or not related to a potential violation of criminal, civil, or administrative law related to the Federal health care programs, in the disclosure log within two business days of receipt of the disclosure. The disclosure log shall include a summary of each disclosure received (whether anonymous or not), the individual or department responsible for reviewing the disclosure, the status of the review, and any corrective action taken in response to the review.

G.    Ineligible Persons

1.    Definitions. For purposes of this CIA:

2.    Screening Requirements. Diversicare shall ensure that all prospective and current Covered Persons are not Ineligible Persons, by implementing the following screening requirements.

Nothing in this Section III.G affects Diversicare’s responsibility to refrain from (and liability for) billing Federal health care programs for items or services furnished, ordered, or prescribed by an excluded person. Diversicare understands that items or services furnished, ordered, or prescribed by excluded persons are not payable by Federal health care programs and that Diversicare may be liable for overpayments and/or criminal, civil, and administrative sanctions for employing or contracting with an excluded person regardless of whether Diversicare meets the requirements of Section III.G.

3.    Removal Requirement. If Diversicare has actual notice that a Covered Person has become an Ineligible Person, Diversicare shall remove such Covered Person from responsibility for, or involvement with, Diversicare’s business operations related to the Federal health care program(s) from which such Covered Person has been excluded and shall remove such Covered Person from any position for which the Covered Person’s compensation or the items or services furnished, ordered, or prescribed by the Covered Person are paid in whole or part, directly or indirectly, by any Federal health care program(s) from which the Covered Person has been excluded at least until such time as the Covered Person is reinstated into participation in such Federal health care program(s).

4.    Pending Charges and Proposed Exclusions. If Diversicare has actual notice that a Covered Person is charged with a criminal offense that falls within the scope of 42 U.S.C. §§ 1320a-7(a), 1320a-7(b)(1)-(3), or is proposed for exclusion during the Covered Person’s employment or contract term or during the term of a physician’s or other practitioner’s medical staff privileges, Diversicare shall take all appropriate actions to ensure that the responsibilities of that Covered Person have not and shall not adversely affect the quality of care rendered to any beneficiary or the accuracy of any claims submitted to any Federal health care program.

H.    Notification of Government Investigation or Legal Proceeding

Within 30 days after discovery, Diversicare shall notify OIG, in writing, of any ongoing investigation or legal proceeding known to Diversicare conducted or brought by a governmental entity or its agents involving an allegation that Diversicare has committed a crime or has engaged in fraudulent activities. This notification shall include a description of the allegation, the identity of the investigating or prosecuting agency, and the status of such investigation or legal proceeding. Diversicare also shall provide written notice to OIG within 30 days after the resolution of the matter and a description of the findings and/or results of the investigation or proceeding, if any.

I.    Overpayments

1.    Definition of Overpayment. An “Overpayment” means any funds that Diversicare receives or retains under any Federal health care program to which Diversicare, after applicable reconciliation, is not entitled under such Federal health care program.

2.    Overpayment Policies and Procedures. Within 90 days after the Effective Date, Diversicare shall develop and implement written policies and procedures regarding the identification, quantification, and repayment of Overpayments received from any Federal health care program.

J.    Reportable Events

1.    Definition of Reportable Event. For purposes of this CIA, a “Reportable Event” means anything that involves:

A Reportable Event may be the result of an isolated event or a series of occurrences.

2.    Reporting of Reportable Events. If Diversicare determines (after a reasonable opportunity to conduct an appropriate review or investigation of the allegations) through any means that there is a Reportable Event, Diversicare shall notify OIG, in writing, within 30 days after making the determination that the Reportable Event exists.

3.    Reportable Events under Section III.J.1.a. and III.J.1.b. For Reportable Events under Section III.J.1.a and b, the report to OIG shall include:

If the Reportable Event involves an Overpayment, within 60 days of identification of the Overpayment, Diversicare shall repay the Overpayment, in accordance with the requirements of 42 U.S.C. § 1320a-7k(d) and any applicable regulations and Centers for Medicare and Medicaid Services (CMS) guidance and provide OIG with a copy of the notification and repayment.

4.    Reportable Events under Section III.J.1.c. For Reportable Events under Section III.J.1.c, the report to OIG shall include:

5.    Reportable Events under Section III.J.1.d. For Reportable Events under Section III.J.1.d, the report to OIG shall include documentation of the bankruptcy filing and a description of any Federal health care program requirements implicated.

6.      Reportable Events Involving the Stark Law.  Notwithstanding the reporting requirements outlined above, any Reportable Event that involves solely a probable violation of section 1877 of the Social Security Act, 42 U.S.C. §1395nn (the Stark Law) should be submitted by Diversicare to CMS through the self-referral disclosure protocol (SRDP), with a copy to the OIG. If Diversicare identifies a probable violation of the Stark Law and repays the applicable Overpayment directly to the CMS contractor, then Diversicare is not required by this Section III.J to submit the Reportable Event to CMS through the SRDP.

In the event that, after the Effective Date, Diversicare proposes to (a) sell any or all of its business, business units, or locations (whether through a sale of assets, sale of stock, or other type of transaction) relating to the furnishing of items or services that may be reimbursed by a Federal health care program; or (b) purchase or establish a new business, business unit, or location relating to the furnishing of items or services that may be reimbursed by a Federal health care program, the CIA shall be binding on the purchaser of any business, business unit, or location and any new business, business unit, or location (and all Covered Persons at each new business, business unit, or location) shall be subject to the applicable requirements of this CIA, unless otherwise determined and agreed to in writing by OIG. Diversicare shall give notice of such sale or purchase to OIG within 30 days following the closing of the transaction.

If, in advance of a proposed sale or a proposed purchase, Diversicare wishes to obtain a determination by OIG that the proposed purchaser or the proposed acquisition will not be subject to the requirements of the CIA, Diversicare must notify OIG in writing of the proposed sale or purchase at least 30 days in advance. This notification shall include a description of the business, business unit, or location to be sold or purchased, a brief description of the terms of the transaction and, in the case of a proposed sale, the name and contact information of the prospective purchaser.

A.    Implementation Report

Within 120 days after the Effective Date, Diversicare shall submit a written report to OIG summarizing the status of its implementation of the requirements of this CIA (Implementation Report). The Implementation Report shall, at a minimum, include:

1.    the name, business address, business phone number, and position description of the Compliance Officer required by Section III.A.1, and a summary of other noncompliance job responsibilities the Compliance Officer may have;

2.    the name, address, phone number, and position description of the Compliance Directors required by Section III.A.2, and a summary of other noncompliance job responsibilities the Compliance Directors may have;

3.    the names and positions of the members of the Compliance Committee required by Section III.A.3;

4.    the names of the Board members who are responsible for satisfying the Board compliance obligations described in Section III.A.4;

5.    the names and positions of the Certifying Employees required by Section III.A.5 and a copy of the written process for Certifying Employees to follow in order to complete the certification required by Section III.A.5;

6.    a list of the Policies and Procedures required by Section III.B;

7.    the Training Plan required by Section III.C.1 and a description of the Board training required by Section III.C.2 (including a summary of the topics covered, the length of the training, and when the training was provided);

8.    the following information regarding the IRO(s): (a) identity, address, and phone number; (b) a copy of the engagement letter; (c) information to demonstrate that the IRO has the qualifications outlined in Appendix A to this CIA; and (d) a certification from the IRO regarding its professional independence and objectivity with respect to Diversicare that includes a summary of all current and prior engagements between Diversicare and the IRO;

9.    a description of the risk assessment and internal review process required by Section III.E;

10.    a description of the Disclosure Program required by Section III.F;

11.    a description of the Ineligible Persons screening and removal process required by Section III.G;

12.    a copy of Diversicare’s policies and procedures regarding the identification, quantification and repayment of Overpayments required by Section III.I;

13.    a description of Diversicare’s corporate structure, including identification of any parent and sister companies, subsidiaries, and their respective lines of business;

14.    a list of all of Diversicare’s locations (including locations and mailing addresses), the corresponding name under which each location is doing business, and the location’s Medicare and state Medicaid program provider number and/or supplier number(s); and

15.    the certifications required by Section V.C.

B.    Annual Reports

Diversicare shall submit to OIG a written report on its compliance with the CIA requirements for each of the five Reporting Periods (Annual Report). Each Annual Report shall include, at a minimum, the following information:

1.    any change in the identity, position description, or other noncompliance job responsibilities of the Compliance Officer and Compliance Directors; a current list of the Compliance Committee members, a current list of the Board members who are responsible for satisfying the Board compliance obligations, and a current list of the Certifying Employees, along with the identification of any changes made during the Reporting Period to the Compliance Committee, Board, and Certifying Employees;

2.    a description of any changes to the written process for Certifying Employees to follow in order to complete the certification required by Section III.A.5;

3.    the dates of each report made by the Compliance Officer to the Board (written documentation of such reports shall be made available to OIG upon request);

4.    the Board resolution required by Section III.A.4 and a description of the documents and other materials reviewed by the Board, as well as any additional steps taken, in its oversight of the compliance program and in support of making the resolution;

5.    a copy of the Compliance Program Review Report prepared by the Compliance Expert as required by Section III.A.4;

6.    a list of any new or revised Policies and Procedures developed during the Reporting Period;

7.    a description of any changes to Diversicare’s Training Plan developed pursuant to Section III.C, and a summary of any Board training provided during the Reporting Period;

8.    a complete copy of all reports prepared pursuant to Section III.D and Diversicare’s response to the reports, along with corrective action plan(s) related to any issues raised by the reports, including Diversicare’s determination of whether the CMS overpayment rule requires the repayment of an extrapolated Overpayment (as defined in Appendices B and C);

9.    a certification from the IRO regarding its professional independence and objectivity with respect to Diversicare, including a summary of all current and prior engagements between Diversicare and the IRO;

10.    a description of any changes to the risk assessment and internal review process required by Section III.E, including the reasons for such changes;

11.    a summary of the following components of the risk assessment and internal review process during the Reporting Period: (a) work plans developed, (b) internal audits performed, (c) corrective action plans developed in response to internal audits, and (d) steps taken to track the implementation of the corrective action plans. Copies of any work plans, internal audit reports, and corrective action plans shall be made available to OIG upon request;

12.    a summary of the disclosures in the disclosure log required by Section III.F that relate to Federal health care programs, including at least the following information: (a) a description of the disclosure, (b) the date the disclosure was received, (c) the resolution of the disclosure, and (d) the date the disclosure was resolved (if applicable). The complete disclosure log shall be made available to OIG upon request;

13.    a description of any changes to the Ineligible Persons screening and removal process required by Section III.G, including the reasons for such changes;

14.    a summary describing any ongoing investigation or legal proceeding required to have been reported pursuant to Section III.H. The summary shall include a description of the allegation, the identity of the investigating or prosecuting agency, and the status of such investigation or legal proceeding;

15.    a description of any changes to the Overpayment policies and procedures required by Section III.I, including the reasons for such changes;

16.    a summary of Reportable Events (as defined in Section III.J) identified during the Reporting Period;

17.    a summary of any audits conducted during the applicable Reporting Period by any Medicare or state Medicaid program contractor or any government entity or contractor, involving a review of Federal health care program claims, and Diversicare’s response/corrective action plan (including information regarding any Federal health care program refunds) relating to the audit findings;

18.    a description of all changes to the most recently provided list of Diversicare’s locations as required by Section V.A.14;

19.    a description of any changes to Diversicare’s corporate structure, including any parent and sister companies, subsidiaries, and their respective lines of business; and

20.    the certifications required by Section V.C.

The first Annual Report shall be received by OIG no later than 60 days after the end of the first Reporting Period. Subsequent Annual Reports shall be received by OIG no later than the anniversary date of the due date of the first Annual Report.

C.    Certifications

1.    Certifying Employees. In each Annual Report, Diversicare shall include the certifications of Certifying Employees required by Section III.A.5;

2.    Compliance Officer and Chief Executive Officer. The Implementation Report and each Annual Report shall include a certification by the Compliance Officer and Chief Executive Officer that:

3.    Chief Financial Officer. The first Annual Report shall include a certification by the Chief Financial Officer that, to the best of his or her knowledge, Diversicare has complied with its obligations under the Settlement Agreement: (a) not to resubmit to any Federal health care program payors any previously denied claims related to the Covered Conduct addressed in the Settlement Agreement, and not to appeal any such denials of claims; (b) not to charge to or otherwise seek payment from federal or state payors for unallowable costs (as defined in the Settlement Agreement); and (c) to identify and adjust any past charges or claims for unallowable costs; and (d) he or she understands that the certification is being provided to and relied upon by the United States.

D.    Designation of Information

Diversicare shall clearly identify any portions of its submissions that it believes are trade secrets, or information that is commercial or financial and privileged or confidential, and therefore potentially exempt from disclosure under the Freedom of Information Act (FOIA), 5 U.S.C. § 552. Diversicare shall refrain from identifying any information as exempt from disclosure if that information does not meet the criteria for exemption from disclosure under FOIA.

Unless otherwise stated in writing after the Effective Date, all notifications and reports required under this CIA shall be submitted to the following entities:

OIG:

Administrative and Civil Remedies Branch

Office of Counsel to the Inspector General

Office of Inspector General

U.S. Department of Health and Human Services

Cohen Building, Room 5527

330 Independence Avenue, S.W.

Washington, DC 20201

Telephone: 202 ###-###-####

Facsimile: 202 ###-###-####

Diversicare:

Angie Mulder

Chief Compliance Offier

Diversicare Healthcare Services, Inc.

1621 Galleria Blvd.

Brentwood, TN 37027

Telephone: 615 ###-###-####

Email: ***@***

Unless otherwise specified, all notifications and reports required by this CIA may be made by electronic mail, overnight mail, hand delivery, or other means, provided that there is proof that such notification was received. Upon request by OIG, Diversicare may be required to provide OIG with an additional copy of each notification or report required by this CIA in OIG’s requested format (electronic or paper).

In addition to any other rights OIG may have by statute, regulation, or contract, OIG or its duly authorized representative(s) may conduct interviews, examine and/or request copies of or copy Diversicare’s books, records, and other documents and supporting materials, and conduct on-site reviews of any of Diversicare’s locations, for the purpose of verifying and evaluating: (a) Diversicare’s compliance with the terms of this CIA and (b) Diversicare’s compliance with the requirements of the Federal health care programs. The documentation described above shall be made available by Diversicare to OIG or its duly authorized representative(s) at all reasonable times for inspection, audit, and/or reproduction. Furthermore, for purposes of this provision, OIG or its duly authorized representative(s) may interview any of Diversicare’s owners, employees, contractors, and directors who consent to be interviewed at the individual’s place of business during normal business hours or at such other place and time as may be mutually agreed upon between the individual and OIG. Diversicare shall assist OIG or its duly authorized representative(s) in contacting and arranging interviews with such individuals upon OIG’s request. Diversicare’s owners, employees, contractors, and directors may elect to be interviewed with or without a representative of Diversicare present.

Diversicare shall maintain for inspection all documents and records relating to reimbursement from the Federal health care programs and to compliance with this CIA for six years (or longer if otherwise required by law) from the Effective Date.

Consistent with HHS’s FOIA procedures, set forth in 45 C.F.R. Part 5, OIG shall make a reasonable effort to notify Diversicare prior to any release by OIG of information submitted by Diversicare pursuant to its obligations under this CIA and identified upon submission by Diversicare as trade secrets, or information that is commercial or financial and privileged or confidential, under the FOIA rules. With respect to such releases, Diversicare shall have the rights set forth at 45 C.F.R. § 5.42(a).

X.    BREACH AND DEFAULT PROVISIONS  

Diversicare is expected to fully and timely comply with all of its CIA obligations.

A.    Stipulated Penalties for Failure to Comply with Certain Obligations

As a contractual remedy, Diversicare and OIG hereby agree that failure to comply with certain obligations as set forth in this CIA may lead to the imposition of the following monetary penalties (hereinafter referred to as “Stipulated Penalties”) in accordance with the following provisions.

1.    A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) per obligation for each day Diversicare fails to establish, implement or comply with any of the following obligations as described in Section III:

2.    A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) for each day Diversicare fails to engage and use an IRO, as required by Section III.D, and Appendices A through C.

3.    A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) for each day Diversicare fails to timely submit (a) a complete Implementation Report or Annual Report, (b) a certification to OIG in accordance with the requirements of Section V, or (c) a complete response to any request for information from OIG.

4.    A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date the obligation became due) for each day Diversicare fails to submit any Claims Review Report in accordance with the requirements of Section III.D and Appendices B and C or fails to repay any Overpayment identified by the IRO, as required by Appendices B and C.

5.    A Stipulated Penalty of $1,500 for each day Diversicare fails to grant access as required in Section VII (This Stipulated Penalty shall begin to accrue on the date Diversicare fails to grant access.).

6.    A Stipulated Penalty of $50,000 for each false certification submitted by or on behalf of Diversicare as part of its Implementation Report, any Annual Report, additional documentation to a report (as requested by OIG), or otherwise required by this CIA.

7.    A Stipulated Penalty of $2,500 for each day Diversicare fails to grant the IRO access to all records and personnel necessary to complete the reviews listed in Section III.D, and for each day Diversicare fails to furnish accurate and complete records to the IRO, as required by Section III.D and Appendix A.

8.    A Stipulated Penalty of $1,000 for each day Diversicare fails to comply fully and adequately with any obligation of this CIA. OIG shall provide notice to Diversicare stating the specific grounds for its determination that Diversicare has failed to comply fully and adequately with the CIA obligation(s) at issue and steps Diversicare shall take to comply with the CIA. (This Stipulated Penalty shall begin to accrue 10 business days after the date Diversicare receives this notice from OIG of the failure to comply.) A Stipulated Penalty as described in this Subsection shall not be demanded for any violation for which OIG has sought a Stipulated Penalty under Subsections 1-7 of this Section.

B.    Timely Written Requests for Extensions

Diversicare may, in advance of the due date, submit a timely written request for an extension of time to perform any act or file any notification or report required by this CIA. Notwithstanding any other provision in this Section, if OIG grants the timely written request with respect to an act, notification, or report, Stipulated Penalties for failure to perform the act or file the notification or report shall not begin to accrue until one day after Diversicare fails to meet the revised deadline set by OIG. Notwithstanding any other provision in this Section, if OIG denies such a timely written request, Stipulated Penalties for failure to perform the act or file the notification or report shall not begin to accrue until three business days after Diversicare receives OIG’s written denial of such request or the original due date, whichever is later. A “timely written request” is defined as a request in writing received by OIG at least five business days prior to the date by which any act is due to be performed or any notification or report is due to be filed.

C.    Payment of Stipulated Penalties

1.    Demand Letter. Upon a finding that Diversicare has failed to comply with any of the obligations described in Section X.A and after determining that Stipulated Penalties are appropriate, OIG shall notify Diversicare of: (a) Diversicare’s failure to comply; and (b) OIG’s exercise of its contractual right to demand payment of the Stipulated Penalties. (This notification shall be referred to as the “Demand Letter.”)

2.    Response to Demand Letter. Within 10 business days after the receipt of the Demand Letter, Diversicare shall either: (a) cure the breach to OIG’s satisfaction and pay the applicable Stipulated Penalties or (b) request a hearing before an HHS administrative law judge (ALJ) to dispute OIG’s determination of noncompliance, pursuant to the agreed upon provisions set forth below in Section X.E. In the event Diversicare elects to request an ALJ hearing, the Stipulated Penalties shall continue to accrue until Diversicare cures, to OIG’s satisfaction, the alleged breach in dispute. Failure to respond to the Demand Letter in one of these two manners within the allowed time period shall be considered a material breach of this CIA and shall be grounds for exclusion under Section X.D.

3.    Form of Payment. Payment of the Stipulated Penalties shall be made by electronic funds transfer to an account specified by OIG in the Demand Letter.

4.    Independence from Material Breach Determination. Except as set forth in Section X.D.1.c, these provisions for payment of Stipulated Penalties shall not affect or otherwise set a standard for OIG’s decision that Diversicare has materially breached this CIA, which decision shall be made at OIG’s discretion and shall be governed by the provisions in Section X.D, below.

D.    Exclusion for Material Breach of this CIA

1.    Definition of Material Breach. A material breach of this CIA means:

2.    Notice of Material Breach and Intent to Exclude. The parties agree that a material breach of this CIA by Diversicare constitutes an independent basis for Diversicare’s exclusion from participation in the Federal health care programs. The length of the exclusion shall be in the OIG’s discretion, but not more than five years per material breach. Upon a determination by OIG that Diversicare has materially breached this CIA and that exclusion is the appropriate remedy, OIG shall notify Diversicare of: (a) Diversicare’s material breach; and (b) OIG’s intent to exercise its contractual right to impose exclusion. (This notification shall be referred to as the “Notice of Material Breach and Intent to Exclude.”)

3.    Opportunity to Cure. Diversicare shall have 30 days from the date of receipt of the Notice of Material Breach and Intent to Exclude to demonstrate that:

4.    Exclusion Letter. If, at the conclusion of the 30-day period, Diversicare fails to satisfy the requirements of Section X.D.3, OIG may exclude Diversicare from participation in the Federal health care programs. OIG shall notify Diversicare in writing of its determination to exclude Diversicare. (This letter shall be referred to as the “Exclusion Letter.”) Subject to the Dispute Resolution provisions in Section X.E, below, the exclusion shall go into effect 30 days after the date of Diversicare’s receipt of the Exclusion Letter. The exclusion shall have national effect. Reinstatement to program participation is not automatic. At the end of the period of exclusion, Diversicare may apply for reinstatement by submitting a written request for reinstatement in accordance with the provisions at 42 C.F.R. §§ 1001.3001-.3004.

E.    Dispute Resolution

1.    Review Rights. Upon OIG’s delivery to Diversicare of its Demand Letter or of its Exclusion Letter, and as an agreed-upon contractual remedy for the resolution of disputes arising under this CIA, Diversicare shall be afforded certain review rights comparable to the ones that are provided in 42 U.S.C. § 1320a-7(f) and 42 C.F.R. Part 1005 as if they applied to the Stipulated Penalties or exclusion sought pursuant to this CIA. Specifically, OIG’s determination to demand payment of Stipulated Penalties or to seek exclusion shall be subject to review by an HHS ALJ and, in the event of an appeal, the HHS Departmental Appeals Board (DAB), in a manner consistent with the provisions in 42 C.F.R. § 1005.2-1005.21. Notwithstanding the language in 42 C.F.R. § 1005.2(c), the request for a hearing involving Stipulated Penalties shall be made within 10 days after receipt of the Demand Letter and the request for a hearing involving exclusion shall be made within 25 days after receipt of the Exclusion Letter. The procedures relating to the filing of a request for a hearing can be found at http://www.hhs.gov/dab/divisions/civil/procedures/divisionprocedures.html

2.    Stipulated Penalties Review. Notwithstanding any provision of Title 42 of the United States Code or Title 42 of the Code of Federal Regulations, the only issues in a proceeding for Stipulated Penalties under this CIA shall be: (a) whether Diversicare was in full and timely compliance with the obligations of this CIA for which OIG demands payment; and (b) the period of noncompliance. Diversicare shall have the burden of proving its full and timely compliance and the steps taken to cure the noncompliance, if any. OIG shall not have the right to appeal to the DAB an adverse ALJ decision related to Stipulated Penalties. If the ALJ agrees with OIG with regard to a finding of a breach of this CIA and orders Diversicare to pay Stipulated Penalties, such Stipulated Penalties shall become due and payable 20 days after the ALJ issues such a decision unless Diversicare requests review of the ALJ decision by the DAB. If the ALJ decision is properly appealed to the DAB and the DAB upholds the determination of OIG, the Stipulated Penalties shall become due and payable 20 days after the DAB issues its decision.

3.    Exclusion Review. Notwithstanding any provision of Title 42 of the United States Code or Title 42 of the Code of Federal Regulations, the only issues in a proceeding for exclusion based on a material breach of this CIA shall be whether Diversicare was in material breach of this CIA and, if so, whether:

For purposes of the exclusion herein, exclusion shall take effect only after an ALJ decision favorable to OIG, or, if the ALJ rules for Diversicare, only after a DAB decision in favor of OIG. Diversicare’s election of its contractual right to appeal to the DAB shall not abrogate OIG’s authority to exclude Diversicare upon the issuance of an ALJ’s decision in favor of OIG. If the ALJ sustains the determination of OIG and determines that exclusion is authorized, such exclusion shall take effect 20 days after the ALJ issues such a decision, notwithstanding that Diversicare may request review of the ALJ decision by the DAB. If the DAB finds in favor of OIG after an ALJ decision adverse to OIG, the exclusion shall take effect 20 days after the DAB decision. Diversicare shall waive its right to any notice of such an exclusion if a decision upholding the exclusion is rendered by the ALJ or DAB. If the DAB finds in favor of Diversicare, Diversicare shall be reinstated effective on the date of the original exclusion.

4.    Finality of Decision. The review by an ALJ or DAB provided for above shall not be considered to be an appeal right arising under any statutes or regulations. Consequently, the parties to this CIA agree that the DAB’s decision (or the ALJ’s decision if not appealed) shall be considered final for all purposes under this CIA.

Diversicare and OIG agree as follows:

A.    This CIA shall become final and binding on the date the final signature is obtained on the CIA.

B.    This CIA constitutes the complete agreement between the parties and may not be amended except by written consent of the parties to this CIA.

C.    OIG may agree to a suspension of Diversicare’s obligations under this CIA based on a certification by Diversicare that it is no longer providing health care items or services that will be billed to any Federal health care program and it does not have any ownership or control interest, as defined in 42 U.S.C. §1320a-3, in any entity that bills any Federal health care program. If Diversicare is relieved of its CIA obligations, Diversicare shall be required to notify OIG in writing at least 30 days in advance if Diversicare plans to resume providing health care items or services that are billed to any Federal health care program or to obtain an ownership or control interest in any entity that bills any Federal health care program. At such time, OIG shall evaluate whether the CIA will be reactivated or modified.

D.     All requirements and remedies set forth in this CIA are in addition to and do not affect (1) Diversicare’s responsibility to follow all applicable Federal health care program requirements or (2) the government’s right to impose appropriate remedies for failure to follow applicable Federal health care program requirements.

E.    The undersigned Diversicare signatories represent and warrant that they are authorized to execute this CIA. The undersigned OIG signatories represent that they are signing this CIA in their official capacities and that they are authorized to execute this CIA.

F.    This CIA may be executed in counterparts, each of which constitutes an original and all of which constitute one and the same CIA. Electronically transmitted copies of signatures shall constitute acceptable, binding signatures for purposes of this CIA.

/s/ James R. McKnight, Jr                1/31/2020        

JAMES R. McKNIGHT, JR.                DATE

Chief Executive Officer

Diversicare Healthcare Services, Inc.

/s/ Jeff H. Gibson                        1/31/2020        

JEFF H. GIBSON                        DATE

Bass, Berry & Sims PLC

Counsel for Diversicare

                        

/s/ Lisa M. Re                             2/5/2020        

LISA M. RE                                DATE

Assistant Inspector General for Legal Affairs

Office of Inspector General

U.S. Department of Health and Human Services

/s/ Lisa G.Veigel                            2/14/2020        

LISA G. VEIGEL                            DATE

Senior Counsel

Office of Inspector General

U.S. Department of Health and Human Services

This Appendix contains the requirements relating to the Independent Review

Organization (IRO) required by Section III.D of the CIA.

1.     Diversicare shall engage an IRO that possesses the qualifications set forth

in Paragraph B, below, to perform the responsibilities in Paragraph C, below. The IRO

shall conduct the review in a professionally independent and objective fashion, as set

forth in Paragraph E. Within 30 days after OIG receives the information identified in

Section V.A.8 of the CIA or any additional information submitted by Diversicare in

response to a request by OIG, whichever is later, OIG will notify Diversicare if the IRO

is unacceptable. Absent notification from OIG that the IRO is unacceptable, Diversicare

may continue to engage the IRO.

2.     If Diversicare engages a new IRO during the term of the CIA, that IRO

must also meet the requirements of this Appendix. If a new IRO is engaged, Diversicare

shall submit the information identified in Section V.A.8 of the CIA to OIG within 30

days of engagement of the IRO. Within 30 days after OIG receives this information or

any additional information submitted by Diversicare at the request of OIG, whichever is

later, OIG will notify Diversicare if the IRO is unacceptable. Absent notification from

OIG that the IRO is unacceptable, Diversicare may continue to engage the IRO.

The IRO shall:

1.     assign individuals to conduct the Claims Review who have expertise in the

Medicare and state Medicaid program requirements applicable to the claims being

reviewed;

2.     assign individuals to design and select the Claims Review sample who are

knowledgeable about the appropriate statistical sampling techniques;

3.     assign individuals to conduct the coding review portions of the Claims

Review who have a nationally recognized coding certification and who have maintained

this certification (e.g., completed applicable continuing education requirements);

4.     assign licensed nurses or physicians with relevant education, training and

specialized expertise (or other licensed health care professionals acting within their scope

of practice and specialized expertise) to make the medical necessity determinations

required by the Claims Review; and

5.     have sufficient staff and resources to conduct the reviews required by the

CIA on a timely basis.

The IRO shall:

1.     perform each Claims Review in accordance with the specific requirements

of the CIA;

2.     follow all applicable Medicare and state Medicaid program rules and

reimbursement guidelines in making assessments in the Claims Review;

3.     request clarification from the appropriate authority (e.g., Medicare

contractor), if in doubt of the application of a particular Medicare or state Medicaid

program policy or regulation;

4.     respond to all OIG inquires in a prompt, objective, and factual manner; and

5.     prepare timely, clear, well-written reports that include all the information

required by Appendix B to the CIA.

D.     Diversicare Responsibilities

Diversicare shall ensure that the IRO has access to all records and personnel

necessary to complete the reviews listed in III.D of this CIA and that all records furnished

to the IRO are accurate and complete.

E.    IRO Independence and Objectivity

The IRO must perform the Claims Review in a professionally independent and

objective fashion, as defined in the most recent Government Auditing Standards issued

by the U.S. Government Accountability Office.

F.     IRO Removal/Termination

1.     Diversicare and IRO. If Diversicare terminates its IRO or if the IRO

withdraws from the engagement during the term of the CIA, Diversicare must submit a

notice explaining (a) its reasons for termination of the IRO or (b) the IRO’s reasons for

its withdrawal to OIG, no later than 30 days after termination or withdrawal. Diversicare

must engage a new IRO in accordance with Paragraph A of this Appendix and within 60

days of termination or withdrawal of the IRO.

2.     OIG Removal of IRO. In the event OIG has reason to believe the IRO does

not possess the qualifications described in Paragraph B, is not independent and objective

as set forth in Paragraph E, or has failed to carry out its responsibilities as described in

Paragraph C, OIG shall notify Diversicare in writing regarding OIG’s basis for

determining that the IRO has not met the requirements of this Appendix. Diversicare

shall have 30 days from the date of OIG’s written notice to provide information regarding

the IRO’s qualifications, independence or performance of its responsibilities in order to

resolve the concerns identified by OIG. If, following OIG’s review of any information

provided by Diversicare regarding the IRO, OIG determines that the IRO has not met the

requirements of this Appendix, OIG shall notify Diversicare in writing that Diversicare

shall be required to engage a new IRO in accordance with Paragraph A of this Appendix.

Diversicare must engage a new IRO within 60 days of its receipt of OIG’s written notice.

The final determination as to whether or not to require Diversicare to engage a new IRO

shall be made at the sole discretion of OIG.

A.     Claims Review. The IRO shall perform the Skilled Nursing Facility Claims

Review (Claims Review) annually to cover each of the five Reporting Periods. The

Claims Review shall be conducted at 8% of Diversicare’s facilities or at least 5 facilities,

whichever is greater (“Subject Facilities”), for each Reporting Period. The IRO shall

perform all components of each Claims Review.

1.     Definitions. For the purposes of the Claims Review, the following

definitions shall be used:

received in excess of the amount due and payable under

Medicare program requirements, as determined by the IRO in

connection with the Claims Review performed under this

Appendix B.

Facility during the Reporting Period under review.

Diversicare has received reimbursement from the Medicare

Part A program.

Stays for which at least one Paid Claim was submitted during

the 12-month period covered by the Claims Review.

2.     Selection of Subject Facilities. OIG shall select the Subject Facilities and

provide the identities of those facilities to the IRO at least 30 days before the end of each

Reporting Period. In order to facilitate the OIG’s selection of the Subject Facilities, at

least 90 days prior to the end of the Reporting Period, Diversicare shall furnish to OIG

the most recent Program for Evaluating Payment Patterns Electronic Report (“PEPPER”)

and the following data for each Diversicare facility for the prior calendar year: (1)

geographic location, (2) Federal health care program patient census, (3) Medicare

revenues, (4) average patient lengths of stay, and (5) other data determined by the OIG in

its discretion.

3.     Claims Review Sample. The IRO shall randomly select and review a

sample of 30 Patient Stays in the Population at each Subject Facility (each selection of

Patient Stays at a Subject Facility shall be referred to as a “Claims Review Sample”).

The IRO shall review the Patient Stay and all Paid Claims associated with each selected

Patient Stay. The Patient Stay and associated Paid Claims shall be reviewed based on the

supporting documentation available at Diversicare’s office or under Diversicare’s control,

and applicable Medicare program requirements and practice guidelines endorsed by the

American Physical Therapy Association, the American Occupational Therapy

Association, and the American Speech-Language-Hearing Association to determine

whether the items and services furnished were (a) medically necessary and reasonable,

(b) appropriate and sufficient to meet the needs of a patient in the assigned Case-Mix

Groups, (c) appropriately documented, and (d) whether the associated Paid Claims were

correctly coded, submitted, and reimbursed. The IRO’s review shall include a review of

the following:

non-therapy ancillary services

c.     comprehensive assessments to determine the individual needs of the

patient;

d.    comprehensive care planning;

f.     provision of rehabilitation therapy services that are medically

necessary and reasonable given the patient’s condition to improve,

maintain, or slow deterioration of the patient’s condition, or restore

his or her prior levels of function;

g.     discharge planning; and

h.     whether the information in the Minimum Data Set (MDS) associated

with a Patient Stay that affects reimbursement is supported by the

medical record.

For each Paid Claim associated with a Patient Stay in the Claims Review Sample

that results in an Overpayment, the IRO shall review the system(s) and process(es) that

generated the Paid Claim and identify any problems or weaknesses that may have

resulted in the identified Overpayments. The IRO shall provide its observations and

recommendations on suggested improvements to the system(s) and process(es) that

generated the Paid Claim.

5.     Other Requirements.

a.     Supplemental Materials. The IRO shall request all documentation

and materials required for its review of each Paid Claims associated

with each Patient Stay selected as part of the Claims Review Sample

and Diversicare shall furnish such documentation and materials for

each Paid Claim associated with each Patient Stay selected as part of

the Claims Review Sample to the IRO prior to the IRO initiating its

review of a specific Patient Stay in the Claims Review Sample. If

the IRO accepts any supplemental documentation or materials from

Diversicare after the IRO has completed its initial review of a Patient

Stay selected as part of the Claims Review Samples (Supplemental

Materials), the IRO shall identify in the Claims Review Report the

Supplemental Materials, the date the Supplemental Materials were

accepted, and the relative weight the IRO gave to the Supplemental

Materials in its review. In addition, the IRO shall include a narrative

in the Claims Review Report describing the process by which the

Supplemental Materials were accepted and the IRO’s reasons for

accepting the Supplemental Materials.

b.     Paid Claims without Supporting Documentation. Any Paid Claim

for which Diversicare cannot produce documentation shall be

considered an error and the total reimbursement received by

Diversicare for such Paid Claim shall be deemed an Overpayment.

Replacement sampling for Paid Claims with missing documentation

is not permitted.

c.     Use of First Samples Drawn. For the purposes of the Claims Review

Sample discussed in this Appendix, the first set of Patient Stays

selected for the Subject Facility shall be used (i.e., it is not

permissible to generate more than one list of random samples and

then select one for use with a Claims Review Sample).

6.     Repayment of Identified Overpayments. Diversicare shall repay within 60

days any Overpayment(s) identified by the IRO in the Claims Review Sample, in

accordance with the requirements of 42 U.S.C. § 1320a-7k(d) and 42 C.F.R. § 401.301-

305 (and any applicable CMS guidance) (the “CMS overpayment rule”). If Diversicare

determines that the CMS overpayment rule requires that an extrapolated Overpayment be

repaid for any of the Subject Facilities, Diversicare shall repay that amount at the mean

point estimate as calculated by the IRO. Diversicare shall make available to OIG all

documentation that reflects the refund of the Overpayment(s) to the payor. OIG, in its

sole discretion, may refer the findings of the Claims Review (and any related work

papers) received from Diversicare to the appropriate Medicare contractor for appropriate

follow up by the payor.

B.     Claims Review Report. The IRO shall prepare a Claims Review Report as

described in this Appendix for each Claims Review performed. The following

information shall be included in the Claims Review Report for each Claims Review

Sample.

1. Claims Review Methodology.

a.     Review Population. A description of the Population subject to the

Claims Review.

b.     Review Objective. A clear statement of the objective intended to be

achieved by the Claims Review.

c.     Source of Data. A description of (1) the process used to identify the

Patient Stays in the Population and (2) the specific documentation

and other information sources relied upon by the IRO when

performing the Claims Review (e.g., patient medical records,

Diversicare policies and procedures; Medicare carrier or

intermediary manual or bulletins (including issue and date); practice

guidelines endorsed by the American Physical Therapy Association,

the American Occupational Therapy Association, and the American

Speech-Language-Hearing Association; and other policies,

regulations, or directives).

d.     Review Protocol. A narrative description of how the Claims Review

was conducted and what was evaluated.

e.     Supplemental Materials. A description of any Supplemental

Materials as required by A.5.a., above.

2.     Statistical Sampling Documentation.

a.     A copy of the printout of the random numbers generated by the

“Random Numbers” function of the statistical sampling software

used by the IRO.

b.     A description or identification of the statistical sampling software

package used by the IRO.

3.     Claims Review Findings.

a.     Narrative Results.

i.     A description of Diversicare’s billing and coding system(s),

including the identification, by position description, of the

personnel involved in the coding and billing.

ii.     A description of the controls in place at Diversicare to ensure

that all items and services billed to Medicare Part A are

medically necessary and reasonable, appropriate and

sufficient to meet the needs of a patient in the assigned Case

Mix Groups, and appropriately documented.

iii.     A narrative explanation of the IRO’s findings and supporting

rationale (including reasons for errors, patterns noted, etc.)

regarding the Claims Review, including the results of the

Claims Review Sample and the IRO’s findings regarding

items A.3.a-h above.

b.     Quantitative Results.

i.     Total number and percentage of instances in which the IRO                determined that the coding of the Paid Claims submitted by

Diversicare differed from what should have been the correct

coding and in which such difference resulted in an

Overpayment to Diversicare.

ii.     Total number and percentage of instances in which the IRO

determined that a Paid Claim was not appropriately

documented and in which such documentation errors resulted

in an Overpayment to Diversicare.

iii.     Total number and percentage of instances in which the IRO

determined that a Paid Claim was for items or services that

were not medically necessary and resulted in an Overpayment

to Diversicare.

iv.     Total number and percentage of instances in which the IRO

determined that a Paid Claim was for items and services that

were not appropriate and sufficient to meet the needs of a

patient in the assigned Case Mix Groups and resulted in an

Overpayment to Diversicare.

v.     Total dollar amount of all Overpayments in the Claims

Review Sample.

vi.     Total dollar amount of Paid Claims in the Claims Review

Sample.

vii.     Error Rate in the Claims Review Sample. The Error Rate

shall be calculated by dividing the Overpayment in Claims

Review Sample by the total dollar amount associated with the

Paid Claims in the Claims Review Sample.

viii.     An estimate of the Overpayment in the Population at the

mean point estimate.

ix.     A spreadsheet of the Claims Review results for each Subject

Facility that includes the following information for each

selected Patient Stay and the associated Paid Claims: the

Federal health care program billed; beneficiary health

insurance claim number, dates of service, code submitted

(e.g., PDPM or RUG code), code reimbursed, allowed

amount by payor, correct code (as determined by the IRO),

correct allowed amount (as determined by the IRO), dollar

difference between allowed amount reimbursed by payor and

the correct allowed amount.

c.     Recommendations. The IRO’s report shall include any

recommendations for improvements to Diversicare’s billing and

coding system or to Diversicare’s controls for ensuring that all items

and services billed to Medicare Part A are medically necessary and

reasonable, appropriate and sufficient to meet the needs of a patient

in the assigned Case Mix Groups, and appropriately documented,

based on the findings of the Claims Review.

4.     Credentials. The names and credentials of the individuals who: (1)

designed the statistical sampling procedures and the review methodology utilized for the

Claims Review and (2) performed the Claims Review.