Rickard & Associates Health Law Blog

Feds Plan to Crackdown on Kickbacks Involving Consulting Fees

2009-03-04T09:22:00.004-05:00

An article from the New York Times on March 3, 2009 discusses statements by federal prosecutors that they plan to crack down on physicians who receive consulting fees from drug companies or device manufacturers.

Lewis Morris, the Chief Inspector of the OIG for HHS stated that "what we need to do is make examples of a couple of doctors so that their colleagues see that this isn't worth it."

Not all consulting agreements are illegal. It is possible to draft agreements in a manner that would meet the safe harbors contained in the anti-kickback statute. If you would like our assistance with reviewing or drafting compliant agreements, or if you need compliance policies addressing this issue please contact us.

To read the full story click here.

HIPAA Violation Costs CVS Pharmacy $2.5 Million

2009-02-18T13:27:00.004-05:00

According to a press release today on HHS.gov, the CVS Pharmacy chain paid $2.5 million and entered into a corrective action plan to settle HIPAA violations discovered during an investigation conducted by the Office of Civil Rights (OCR) of HHS and the FTC.

The OCR and FTC reported that some of the chain's stores were disposing of protected health information in trash dumpsters that were accessible to the public.

To read the full press release including links to the corrective action plan and resolution agreement, please click here.

For information on drafting HIPAA compliant policies and procedures for disposal of protected health information, please contact us.

FEMA Issues Fact Sheet on Ambulance Reimbursement

2009-02-17T17:14:00.004-05:00

In January, FEMA released a fact sheet on ambulance reimbursement for disaster response.

The fact sheet reiterates the importance for private for-profit ambulance services to enter into MOUs with state or local government entities in order to receive reimbursement, since these entities cannot receive reimbursement directly from FEMA. The fact sheet reaffirms, however, that for-profit ambulance companies can receive funds indirectly through contracts with state or local entities.

The fact sheet further states that ambulance companies can be reimbursed for the costs of activation and staging, if part of a state or regional evacuation plan.

Rickard & Associates, P.C.'s attorneys are nationally known for our work in drafting disaster planning documents. If you need assistance in this area, please contact us.

You may read the FEMA fact sheet in its entirety on the American Ambulance Association's website: http://www.the-aaa.org/capitol_hill/FINAL%20DAP9580.104%20Ambulance%20Fact%20Sheet%20Signed.pdf

Lori-Ann Rickard Quoted in Article Regarding Restrictive Covenants

2009-02-03T12:33:00.003-05:00

Lori-Ann Rickard was recently quoted in Image, a national publication for radiology professionals, on the topic of restrictive covenants.
As discussed in the article, restrictive covenants are becoming more prevalent in provider contracts and providers should carefully consider the ramifications before signing these agreements. If you need advice regarding restrictive covenants in Michigan, please contact Rickard & Associates.
To read the full article in Image, please click here.

OIG Report Could Increase Review of Financial Interests in Clinical Trials

2009-01-17T14:50:00.004-05:00

A recent report issued by the OIG calls into question the adequacy of the FDA's oversight of financial interests of clinical investigators.
The OIG recommends that the FDA should ensure that sponsors submit complete financial information for all clinical investigators, ensure that reviewers consistently review financial information and take action in response to the disclosed financial interests, and require sponsors to submit financial information for clinical investigators as part of the pretrial process.

To read the full report and recommendations, as well as the FDA's response, please click here.

Revised Family and Medical Leave Act Rules Take Effect January 16, 2009

2009-01-15T10:57:00.012-05:00

The final rule published by the Department of Labor on November 17, 2008 will take effect on January 16, 2008.

The rule creates two new leave entitlements for military families, including:

(1) Military Caregiver Leave - which will allow eligible family members of covered service members to take up to 26 work weeks of leave in a 12 month period to care for a covered service member with a serious injury or illness incurred in the line of duty. In addition to extending the normal leave from 12 to 26 work weeks, this new provision broadens the definition of family members who are permitted to take leave to include "next of kin".

(2) Qualifying Exigency Leave - which will allow family members of the National Guard or Reserves to take time off to manage their affairs when the family member is called to active duty, including time off for: short notice deployment, military events and related activities, childcare and school activities, financial and legal arrangements, counseling, rest and recuperation, post-deployment activities and additional activities agreed to by employer and employee.

In addition to these new categories of leave for military families, the Final Rule clarifies many provisions of the regulations and incorporates recent court rulings. A few of the changes are as follows:

(1) Light duty - an employee who voluntarily takes a light duty position while eligible for FMLA leave retains the right to restoration for the full 12 month FMLA leave year.

(2) Waiver of rights - FMLA rights may be waived retrospectively (e.g., to settle a lawsuit), but not prospectively.

(3) Substitution of paid time off - if an employee wants to use other forms of paid time off during a family medical leave (e.g., vacation or sick time) the employer may impose restrictions that are applicable to all employees (e.g., vacation may only be taken during certain time periods).

(4) Perfect attendance awards - Employers can deny "perfect attendance" awards to employees who are on FMLA so long as employees on other types of leave are treated the same.

(5) Employee notice - Absent unusual circumstances, employees must follow the employer's usual and customary call-in procedures to report FMLA absences.

(6) Medical Certification/Contact with health care providers - only certain employer representatives may contact a health care provider regarding an employee's FMLA request. The employee's direct supervisor may not make such contact.

(7) Fitness for Duty - Employers may require fitness for duty examinations even when employees are just on intermittent leave if there are reasonable job safety concerns. Also the the employer may require that the fitness for duty certification specifically address the essential functions of the employer's job.

(8) Tracking leave in increments - FMLA leave must be tracked in increments no greater than the shortest period of time the employer uses for other types of leave. For example, an employer's policy may say that sick leave can only be taken in increments of one hour and could also require FMLA to be taken in one hour increments.

For more information on the new regulations, as well as revised forms and notice poster, go to the Department of Labor's FMLA Final Rule compliance page here.

Effective January 1: Revised Medicare Beneficiary Signature Regulations

2009-01-13T10:57:00.002-05:00

The newly revised Medicare Beneficiary Signature requirements as published in the 2009 Medicare Physician Fee Schedule became effective January 1.

The revisions should ease some of the burden on ambulance suppliers by providing for the following:

1. The alternative method of fulfilling the rule by obtaining a signature from transporting personnel and documentation from the receiving facility has been extended to nonemergency transports.

2. The word "facility" has been added so that the alternative method of compliance can be used for any authorized facility (e.g., SNF) rather than just hospitals.

3. HHS clarified that the signature on the "claim form" does not actually mean the form that will be submitted for payment, but can be any form that contains adequate notice to the beneficiary or authorized individual who is signing that the purpose of the form is for the provider to submit the claim to Medicare for payment for the services.

To read the actual text of the Medicare Physician Fee Schedule, please click here. (Note that pages 136-139 of the document are applicable to the final signature requirements.)

OIG Advisory Opinion 08-23: County Can Pay Residents' Cost-Sharing Amounts for EMS Transport

2009-01-12T20:18:00.005-05:00

On December 19, 2008, the OIG issued Advisory Opinion 08-23. This opinion was requested by a county which provides EMS transportation through its Fire Department. The county seeks to pay cost sharing amounts for its residents through the use of tax revenue. In other words, it would accept any insurance or Medicare payments as payment in full for EMS transportation to hospitals.
In issuing this favorable opinion, the OIG first noted the overarching concern of waiver of co-payments. Then the OIG noted that Section 50.3.1 of Chapter 16 of the CMS Benefit Policy Manual does allow a government facility to limit residents' charges to insurance or Medicare payments. The OIG thus noted that the arrangement would be permissible to the extent that it was only applicable to bona fide residents.
The OIG went on to note that the exception in the Medicare Benefit Policy Manual does not apply to private ambulance providers who transport a county's patients. In other words, a county cannot require a private ambulance provider to waive out of pocket cost sharing as a condition for getting its business.
However, the OIG further noted that the county could reimburse the private company for the cost-sharing amounts, including lump sum or periodic payments, if the payments are reasonably calculated to cover the unexpected uncollected cost-sharing amounts.
To read the full opinion, please click here.

Eight Southeastern Michigan Home Health Owners and Employees Indicted in Kickback Scheme

2008-12-20T23:35:00.005-05:00

According to a recent article in Crain's Detroit Business News, eight owners and employees of home health agencies in Southeast Michigan have been charged with participating in an illegal kickback scheme involving payment for referrals of Medicare beneficiaries. The agencies are accused of paying $250 per referral to a Continuing Senior Care Inc., a company that allegedly recruited senior citizens by telephone.

The full story can be read here.

Rickard & Associates Attorney Amy Fehn Quoted in RAC Article

2008-12-18T11:48:00.002-05:00

Rickard & Associates attorney Amy Fehn was quoted in an article on the upcoming RAC audits in the November 17, 2008 publication of Medicare Compliance Alert. Ms. Fehn stressed the importance of conducting self audits in order to be prepared for the upcoming audits. To read the full article, please click here.

Survey Predicts Escalation of Primary Care Physician Shortage

2008-12-16T13:39:00.002-05:00

According to a recent survey by the Physicians' Foundations, 49% of primary care physicians say that they plan on quitting or reducing their patient load within the next three years. This, coupled with an existing shortage and the government's attempts to reform health care by providing primary care access to more patients, is likely to create a significant shortage of primary care physicians in the near future.

To read the full press release and download the survey, click here.

OIG Advisory Opinion 08-22: Bona Fide Employee Relationships Do Not Violate the Anti-Kickback Statute

2008-12-16T12:30:00.004-05:00

On December 15, 2008, the OIG posted Advisory Opinion 08-22, dealing with the part-time employment of physicians by a hospital to perform endoscopy services. The physicians at issue also had their own private practice through which they referred patients to the hospital.

The OIG discussed the employee safe harbor of the anti-kickback statute and determined that the arrangement would not violate the anti-kickback statute so long as the employees were bona fide employees pursuant to the IRS definition.

However, the OIG noted that the arrangement would also need to be analyzed under the Stark regulations, including the fair market value requirements.

To read the full text of the opinion, click here.

NCHS Survey Shows Nearly 40% of Physicians Use EMR

2008-12-15T21:53:00.003-05:00

According to a recent survey conducted by the National Center for Health Statistics (NCHS), 38.4% of office based physicians use full or partial EMR systems (not including billing). This number is up from 29.2% in 2006. Only 20.4% used a system described as "minimally functional" including such items as: orders for prescriptions and tests, viewing laboratory or imaging results and clinical notes. This number is up from 12.4% in 2006. Only 4% described their system as "fully functional" and 17% described their system as "basic". To read a summary of the study, click here.

RAC Audit Program on Hold for Several Months

2008-12-11T14:46:00.003-05:00

According to an article in the Report on Medicare Compliance, the RAC audits will be placed on hold for several months as CMS deals with protests from certain vendors who weren't chosen. The chosen vendors have been issued a "stop-work order" until the GAO makes a determination on the protests.
Experts say that although the RAC program may be delayed for several months, there is no hope that it will be completely abandoned. Providers should use this brief reprieve to get organized and prepared for RAC medical record requests.
To read a reprint of the article on the Medicare RAC Summit website, please click here.

OIG Advisory Opinion 08-21: Another Favorable Opinion on Gainsharing Related to Cardiac Catheterization

2008-12-09T15:13:00.007-05:00

On December 8, 2008, the OIG posted Advisory Opinion 08-21, dealing with a proposed gainsharing arrangement between a hospital and radiologist and cardiologists who perform cardiac catheterization services.

The opinion is very similar to Advisory Opinion 08-15, which we blogged about here.

Under the proposed arrangement, the hospital identified 27 specific cost savings opportunities which were reviewed for medical appropriateness and recommended to the radiology and cardiology groups. The recommendations fell into three categories: product standardization, "use as needed" devices, and product substitutions.

The hospital proposed to pay each group 50% of the savings achieved by that group by implementing the applicable recommendations.

Although the OIG found that the recommendations would potentially implicate the Civil Monetary Penalties provision by inducing physicians to reduce or limit services to Medicare beneficiaries, the safeguards were sufficient to avoid sanctions. Specifically, the following safeguards were deemed relevant:

The cost savings actions and their resultant savings are transparent and able to be scrutinized by the public.

There is credible medical support for the recommendations.
Amounts paid under the arrangement do not take into account the patient's insurance and the savings are not disproportionately obtained from federal health care program beneficiaries.
Historical and clinical measures were used to establish baseline thresholds beyond which no further savings can be achieved.
Individual physicians still will have the same selection of devices and supplies available if they want to use them.
Written disclosure of the arrangement will be provided to patients.
Financial incentives were reasonably limited in duration and amount.
The groups distribute profits per capita, limiting the ability of any one physician to achieve a disproportionate cost savings.

The OIG also noted that the arrangement would implicate the anti-kickback statute if the requisite intent to induce referrals was present, but found the following safeguards to be sufficient:

The ability to participate in the arrangement is limited to physicians already on staff.
The structure of the arrangement eliminates the risk that the arrangement could be used to reward surgeons or others who refer patients to the two groups.
The actions that could generate cost savings are specifically set out, the program is limited in duration and is reasonable in amount taking into account the actions required of the physicians.

To read the full text of the opinion, please click here.

Effective January 1, 2009 Additional Entities May Bill for Telehealth Services

2008-12-03T19:53:00.003-05:00

Effective January 1, 2009, the following types of entities will be able to receive Medicare payment as the originating site for payment of telehealth services:

Hospital based or CAH based renal dialysis centers (not independent dialysis facilities)
Skilled Nursing Facilities
Community Mental Health Centers (CMHCs)

The originating site facility fee is a separately billable Part B payment outside of other payment methodologies. The fee is updated annually via the physician fee schedule. In order to receive the fee there must be the use of an interactive audio and video telecommunications system and the patient must be present.

For more information on billing for telehealth services provided at these additional sites, see MedLearn Matters Article MM6215.

Joint Commission Publishes Report on "Hospital of the Future"

2008-12-03T19:26:00.003-05:00

On November 20, 2008, the Joint Commission issued a report titled Health Care at the Crossroads: guiding Principles for the Development of the Hospital of the Future". The report is the work of an expert panel consisting of hospital executives, clinical leaders, and experts in the fields of technology, patient safety, hospital design and health care economics.

The report focuses on the following five areas:

Economic viability - e.g., increasing efficiency and addressing need for health care for all individuals
Technology adoption - e.g., focusing on decreasing labor and supporting patient centered care beyond the hospital
Patient-centered care - e.g., eliminating disparities among classes and addressing barriers to family and patient engagement such as language barriers
Staffing - e.g., overcoming shortage
Hospital design - e.g., environmentally friendly and reduce infection risks

To read the Joint Commission's press release, please click here. To read the full report, click here.

OIG Advisory Opinion 08-20: Favorable Opinion Regarding Consignment Closets and DMEPOS Personnel on Site at Hospital

2008-12-01T12:29:00.004-05:00

On November 26, 2008, the OIG posted Advisory Opinion 08-20 which deals with a proposed arrangement whereby suppliers of DMEPOS would (1) place an inventory of DMEPOS in a consignment closet at certain hospitals and (2) have licensed personnel on-call or on-site at hospitals to train home bound patients on the use of the equipment.
The OIG looked at both components of the proposed arrangement and concluded that neither would violate the anti-kickback statute because:

Patients will be given a choice of suppliers, including those outside of the hospital.
Although the consignment closets will be provided at no cost to the suppliers, as will the use of phone systems and desk by the DMEPOS personnel, there will be no referrals flowing from the suppliers to the hospital (the remuneration and referrals flow the same way).
The DMEPOS personnel will have no contact with patients until the patients choose the supplier as their DMEPOS supplier.
The DMEPOS personnel will not provide any services to the hospital that are the responsibility of the hospital, such as discharge planning or case management (their only role will be to educate patients in accordance with CMS Quality Standards for DMEPOS)

To read the full text of the opinion, please click here.

Lori-Ann Rickard Quoted in AMA Publication on Legal Issues Impacting EMRs

2008-12-01T12:18:00.004-05:00

Lori-Ann Rickard was recently quoted in the AMA online publication, amednews.com, on the issue of the legality of EMRs. Ms. Rickard discussed the need to use free text entry personalize the EMR entry to the patient. To read the full text of the article, please click here.

White Paper on Health Care Reform Posted by Chairman of Senate Commission on Finance

2008-11-14T14:30:00.002-05:00

Senate Finance Committee Chairman, Max Baucus (D-Mont) posted a white paper on his website outlining a call to action for health care reform. The plan focuses on three areas: (1) Increased Access; (2) Health Care Delivery Reform and (3) Health Care Financing Reform.

The following is a summary of some of the key elements of the plan:

Increased Access

Mandate individuals to maintain health care coverage (possibly enforced through the IRS)
Employers offer 125 plans for employees to purchase premiums with pre-tax dollars
Tax credits for certain small employers
Health Care Exchange - insurance companies would be invited to join the exchange so that companies and individuals could shop around for coverage. If insurers participate they could not vary rates based on health conditions.
Include a public plan option - similar to Medicare, but could be purchased by anyone
Pass federal laws prohibiting insurance companies from denying coverage based on pre-existing conditions
Medicare buy-in for persons ages 55-64
Phase out waiting period for disabled individuals to begin getting Medicare
Establish national minimum for Medicaid eligibility
Help states pay for increased CHIP benefits
Additional funding for Native American and Alaska Natives insurance
Programs available for preventative care

Health Care Delivery Reform

Strengthen role of primary care providers and chronic care management
Comprehensive care management services
Encourage use of quality incentives, including gainsharing
Reduce payment rates for hospitals with high readmission rates
Bundled payment initiatives for global billing of all physician and hospital services for certain conditions or events
Infrastructure investment including comparative effectiveness research, encouraging rapid adoption of health care IT (including financial incentives, assistance and promotion of information sharing)
Increase number of caregivers - programs such as loan assistance and forgiveness programs for caregivers willing to practice in underserved areas

Health Care Financing Reform

Decrease fraud, waste and abuse
Increase transparency
Medical malpractice reform
Increase participation of private insurers in the Medicare programs
Expanding home and community based long term care
Tax incentives for health care coverage

To view the full white paper, please click here.

OIG Advisory Opinion 08-19: OIG Approves "Per Lead/Per Call" Advertising Arrangement

2008-11-12T21:44:00.004-05:00

In OIG Advisory Opinion 08-19, the OIG addressed a proposed arrangement whereby an internet advertising service would direct potential patients seeking chiropractic services to chiropractors in the patients' geographic area. The Advertiser would be paid based on the number of calls or emails forwarded from patients as a result of the advertising service. The OIG noted that such "per lead" reimbursement can be problematic as it relates to volume or value of patient referrals, but the following facts made the proposed arrangement low risk:
1. The advertiser is not a health care provider or supplier, nor is it affiliated with the health care industry. This differentiates the advertiser from so called "white coat marketers" who influence patients because of their role in the health care industry.
2. The advertising would not target Federal health care beneficiaries, but instead would be available to the public as a whole.
3. The fees paid by the chiropractors would only be tied to "leads" not whether the individual actually becomes a patient, or has any certain services performed.
4. The advertiser will not steer patinets to particular chiropractors.

To read the full text of the opinion, please click here.

OIG Advisory Opinion No. 08-18: Favorable Opinion Related to Payment by County of Co-Pays for Residents' EMS Transports

2008-11-12T21:33:00.005-05:00

In OIG Advisory Opinion 08-18, the OIG approved an arrangement whereby a medical center based ambulance provider agreed not to charge residents of a certain county for typical cost-sharing amounts. Instead the medical center agreed to accept payment from the county out of a fund derived from tax revenue.
The OIG reiterated its concerns about waiver of Medicare cost-sharing amounts, but noted that in this situation, the amounts paid by the county approximated the residents' uncollected cost-sharing amounts and, therefore, did not constitute prohibited remuneration under the Anti-kickback statute.

To read the full opinion, please click here.

OIG Advisory Opinion No. 08-17: Approval of Patient Assistance Program

2008-11-03T11:33:00.000-05:00

On October 21, 2008, the OIG posted Advisory Opinion 08-17 regarding a proposal by a non-profit foundation to provide financial assistance to needy patients with a specific illness to help pay for drug treatment for this particular illness (the illness was redacted from the opinion).

The proposed arrangement would involve a non-profit tax exempt "Parent Organization" that owns a tax-exempt "Foundation" which would operate the patient assistance program with the help of the Parent Organization's affiliate, a "Pharmacy".

The Pharmacy would participate in certain non-discretionary tasks such as eligibility determinations and program administration.

Participating patients would receive a benefit card to use at the pharmacy of his or her choice and the patient's pharmacy would contact the Foundation for payment of cost-sharing amounts, or the patient could submit costs to the foundation and receive a grant.

The OIG determined that the payments to patients would not violate the anti-kickback statute or the Civil Monetary Penalties for offering remuneration to beneficiaries or referral sources because of the following safeguards:

No donor or affiliate exerts direct or indirect control over the Foundation or its program - the Foundation remains independent.
The Foundation will award assistance in a manner that severs any link between donors and beneficiaries: Financial eligibility will be made on objective criteria; Applications will be considered on a first come/first served basis; Patients will have a treatment regimen already in place before participating; Patients will be free to change providers, suppliers, products or insurance plans and no referrals will be made to providers, suppliers, products or plans.
Assistance will be awarded regardless of any donor's interest or any applicant's choice of product, provider, supplier or plan.
Assistance will be based on reasonable, verifiable and uniform measures of financial need.
The Foundation will not provide donors with any information that will allow donors to correlate use of their product with frequency or amount of donations.
The Pharmacy's role will be limited to administrative functions and will be entirely independent of its other business operations, including a separate staff for the Foundation's program, separate books and records, and compensation that is fair market value. Also, the Pharmacy will not be involved in solicitation of donations from potential health care industry donors.
The Foundation's assistance for patients will expand rather than restrict freedom of choice.

To read the full text of the opinion, please click here.

Is Greater Focus on HIPAA Security Enforcement on the Horizon?

2008-11-02T15:02:00.003-05:00

The OIG recently posted a report on its website, wherein it reviewed CMS's oversight and enforcement of the HIPAA Security Rule. The OIG determined that CMS's current complaint driven process was not providing adequate oversight and enforcement of the HIPAA Security Rule. The OIG recommended implementation of policies and procedures for compliance reviews of covered entities. CMS disagreed with the OIG's findings, pointing out that it has focused on education and technical assistance, rather than just compliance review. However, CMS did point out that it contracted with PriceWaterhouseCoopers in 2007 to provide onsite reviews of certain hospitals. To read the OIG's summary of the report click here. The full report can be accessed here.

2009 OIG Work Plan Targets E&M During Global Surgery, "Incident To" Services, Independent Therapists, IDTFs and More

2008-10-29T11:01:00.010-04:00

Compliance officers of health care providers' offices should review the OIG 2009 Work Plan to determine whether any of the areas targeted by the OIG are potential risk areas for their practice. Some of the areas that the OIG intends to focus on this year include:

Place of service errors: The OIG will be looking at physician services in ASCs and hospitals to ensure that the services are not billed using an office place of service code.
E&M during global surgery periods: The OIG will be looking at whether E&M services are being improperly billed during the global surgery period (which should be part of the global surgery fee).
Fee schedule practice expenses: The OIG will be looking at the practice expense component of the Medicare Physician Fee Schedule to determine whether it is an accurate reflection of actual expenses by certain physician specialty groups.
Outpatient physical therapy provided by independent therapists: The OIG will be looking at outpatient physical therapy provided by independent therapists with a high utilization rate to determine whether the claims are reasonable, medically necessary and properly documented.
"Incident to" services provided by nonphysician providers: The OIG will be examining the qualifications of nonphysician staff that provide "incident to" services and determining whether the qualifications are consistent with professionally recognized standards of care.
Sleep studies/polysomnography: The OIG will be examining the possible reasons for the increase in utilization of such studies and reviewing appropriateness.
Long-distance physician claims: The OIG will be examining claims where the patient lives a significant distance from the provider and the service requires a face-to-face visit, to ensure that such face-to-face examinations are being performed.
Review of geographic areas with high concentrations of Independent Diagnostic Testing Facilities (IDTFs): Based on a 2006 review that found numerous problems with IDTFs the OIG intends to examine service profiles, provider profiles, beneficiary profiles and billing patterns in areas with a high concentration of these facilities.
Review of geographic areas with high ultrasound utilization rates: The OIG will be examining service profiles, provider profiles, and beneficiary profiles in these areas.
Review of chiropractic services billed with Acute Treatment Modifier: The OIG will be looking for maintenance therapy inappropriately billed with an AT modifier.
Physician Reassignment of Benefits: The OIG will be looking for inappropriate reassigment arrangements, where fraudulent providers are getting information from legitimate physicians to fraudulently request reassignment on behalf of the physicians.
Medicare payments for unlisted procedure codes: The OIG will be examining usage of such codes and the accuracy of Medicare payments by the carriers for these codes.
Unbundling of clinical laboratory tests: The OIG will look for laboratories attempting to circumvent the bundling requirements by billing on different dates of service or obtaining separate specimens.
Clotting factor furnishing fee: The OIG will be examining whether providers are appropriately performing all services required by this fee.
Medicare billings with GY Modifier: The OIG will examine patterns and trends regarding use of the GY modifier, which is to be used where the service is statutorily excluded or not a "covered service" under Medicare. Under these circumstances, Medicare beneficiaries are responsible for payment and an ABN is not required.

To view the full text of the OIG 2009 Work Plan, please click here.

As part of maintaining an effective compliance plan, Compliance Officers may want to focus annual self-audits or provider education in some of these areas.

Rickard & Associates Recent Article Explains Prior Determinations Process

2008-10-16T19:26:00.002-04:00

Rickard & Associates, P.C. attorneys Lori-Ann Rickard and Amy Fehn recently authored an article for the Health Lawyer, a highly regarded publication of the American Bar Association's Health Law Section on the topic of Prior Determinations.

The article, entitled, Prior Determinations: How Helpful Will They Be? analyzes the recently published Final Rule that sets forth the process for Medicare beneficiaries to receive prior determination of coverage for certain services. The purpose of this process is to allow beneficiaries and their physicians the opportunity to find out whether Medicare will cover a service before incurring the expense of the health care procedure.

As discussed in the article, however, the process will only be available for a very limited number of procedures. Also, the length of time that it may take to navigate the process may make it impractical.

To read the full article, please click here.

RAC for Michigan will be CGI

2008-10-15T14:20:00.003-04:00

On October 14, 2008, CGI Group, Inc. announced that it was selected as the Recovery Audit Contractor (RAC) Services Contract for CMS Region B, which includes Michigan and six other Midwest states. The RAC program was implemented by CMS to utilize private contractors to identify and recover overpayments.

For the CGI press release, click here.
For more information on the RAC program, click here.

OIG Advisory Opinion No. 08-16: Favorable Opinion Regarding Hospital Sharing of "Pay For Performance" Incentives

2008-10-15T14:07:00.004-04:00

On October 14, 2008, the OIG posted Advisory Opinion 08-16. This opinion deals with an arrangement whereby a hospital wishes to participate in a private insurer's "pay for performance" program and share the savings with physicians who assist in meeting the required quality targets.

Under the proposed agreement, the hospital would enter into a quality enhancement professional services agreement with a physician entity requiring members of the physician entity to undertake various tasks to ensure that certain Quality Targets are achieved. Such tasks would include development of policies and procedures, conducting peer review, and auditing medical records.

The hospital would receive bonus compensation for meeting certain designated Quality Measure and would then pay the physician entity a percentage of this bonus, up to 50%.

The OIG noted that the Civil Monetary Penalties (CMP) statute could be violated if physicians were induced by the program to limit care to federal health care beneficiaries. For example, one Quality Target, requires a prophylactic antibiotic to be discontinued at certain times, which may be sooner than the physician's normal practice.

However, the OIG found the following factors to provide adequate safeguards:

There is medical support for the position that the proposed arrangement has the potential to improve patient care.
Financial incentives will be tied to meeting Quality Targets, which correspond with Quality Measures endorsed by CMS and the Joint Commission.
The Quality Targets are reasonably related to the practices and patient population normally found at the hospital.
Affected patients will be notified of the program.
The transparency of the program allows for public scrutiny and accountability.
The hospital will monitor the Quality Targets to protect against inappropriate reductions or limitations in care or services.

The OIG also noted that the arrangement could violate the anti-kickback statute if physicians were encouraged to join the hospital staff in order to participate in the program. However, the following factors were deemed to provide sufficient safeguards:

Participation would be limited to physicians who had been on the medical staff for at least one year.
There would be a cap tied to the hospital's based compensation for the base year so that increased referral of patients to the hospital would not result in increased compensation for the physicians.
The physicians would be compensated on a per capita basis and all physicians who have been on the medical staff for at least a year would be permitted to participate.
Compensation would be based on meeting Quality Targets only, not for referrals of patients and the private insurer who is overseeing the "pay for performance" program will have no incentive to overcompensate either the hospital or the physicians based on patient volume.
The program is limited in time to a three year agreement.
The Quality Targets are an important part of the "pay for performance" program and the hospital requires the assistance of the physicians to meet them.

To read the full opinion, please click here.

OIG Advisory Opinion No. 08-15: Favorable Opinion Regarding "Gainsharing" Plan Between Hospital and Cardiologists

2008-10-15T12:39:00.005-04:00

On October 14, 2008, the OIG posted Advisory Opinion 08-15. The arrangement in question involves a cost savings program implemented between a hospital and a group of cardiologists who perform cardiac catheterization procedures at the hospital. Specifically, the hospital agreed to pay the Cardiology group a share of three years of cost savings specifically attributable to the implementation of 30 recommendations regarding the group's cath lab practices including product standardization and substitution, as well as the designation of certain devices as "use as needed".

The OIG noted that the arrangement could violate the Civil Monetary Penalty (CMP) statute because it could induce physicians to reduce or limit services provided to Medicare or Medicaid patients. However, the following safeguards were noted to be adequate:

The specific cost-savings actions and resulting savings are separately and clearly identified and there is transparency for accountability to the public.
There is credible medical support that the implementation of the recommendations does not adversely impact patient care.
The arrangement applies to all patients, regardless of insurer.
Baseline thresholds beyond which no savings could be incurred were established based on objective historical and clinical measures.
Individual physicians still have a full selection of products available.
Patients are given a written disclosure regarding the program.
Financial incentives have been reasonably limited in duration and amount.
Distributions are made to group physicians on a per capita basis, reducing the possible incentive for any individual physician.

The OIG drew a distinction between this type of plan and "gainsharing" plans that pay physicians a percentage of generalized cost savings that are not tied to specific, identifiable cost saving activities.

With regard to the anti-kickback statute, the OIG noted that this arrangement could create an inducement for physicians to refer patients to the hospital so that they could obtain additional payment through the cost-savings program. However, the following factors were considered as appropriate safeguards:

Participation is limited to cardiologists already on staff at the hospital.
Only cardiologists are part of the group, so there is no incentive to refer patients to the group.
Profits are distributed on a per capita basis, to mitigate any incentive of an individual to generate disproportionate savings.
The arrangement is based on specific actions.
Payments have been limited in scope, duration and amount.

The OIG reiterated that gainsharing arrangements in general are a high risk area and that the opinion is based on the specific arrangement.

To read the full opinion, please click here.

E-Prescribing Guide Available to Help Physicians Obtain Financial Incentives for Electronic Prescribing

2008-10-13T19:30:00.004-04:00

A guide for physicians explaining and providing resources regarding electronic prescribing was presented at a CMS National E-Prescribing Conference in Boston last week. The guide was developed by the E-Health Initiative Foundation, in partnership with various health care related associations.

The guide contains general information on e-prescribing for those physicians who are completely unfamiliar with the concept and also a great deal of advice for those who are ready to take the next steps toward implementing e-prescribing in their practices.

The guide can be downloaded here.

Beginning in 2009, providers will be able to participate in an incentive program for e-prescribers. A Fact Sheet on the incentive program can be viewed here.

New England Journal of Medicine Roundtable on Health Care in the Next Administration

2008-10-10T11:05:00.004-04:00

Video and transcript from a recent roundtable on "Health Care in the Next Administration" can be found on the New England Journal of Medicine's website. The roundtable is moderated by Dr. Arnold Epstein and includes commentary from senior health policy advisors for both the McCain and Obama campaigns.

Dr. David Cutler, representing Barack Obama's plan, discussed the following highlights of Sen. Obama's plan for reform:

Reduction of the cost of medical care by reducing duplicative tests, waste, redundancies
Offer lower cost health insurance to middle and lower class families
Focus more on prevention
Eliminate pre-existing condition exclusions
Children up to the age of 25 could be covered by parents' plan, regardless of whether they're in school
Malpractice reform, specifically reform that reduces errors
Invest in health information technology
Measure quality and get the information to providers so that they can learn from it
Depoliticize science
Open to revisiting mandates in the future if providing access to affordable health care doesn't work

Dr. Gail Wilensky, representing John McCain's plan, discussed the following highlights of Sen. McCain's plan for reform:

Eliminate current tax exclusion for health care benefits
Give refundable tax credit for insurance coverage
Open insurance market to allow people to buy from other states (increasing competition)
Subsidized state high-risk pools for predictably high cost individuals who cannot get coverage elsewhere
Emphasis on price and quality transparency

To read the full text of the transcript, click here. The video can be viewed here.

OIG Supplemental Compliance Program Guidance for Nursing Facilities (And Those Who Do Business With Nursing Facilities!)

2008-10-07T13:50:00.010-04:00

On September 30, 2008, the OIG issued a Supplemental Compliance Guidance for Nursing Facilities, supplementing the original Nursing Facility Compliance Guidance issued on March 16, 2000.

The Supplemental Compliance Guidance focuses on specific risk areas related to quality of care, claims submissions, the anti-kickback statute and others.

This guidance should be reviewed not only by nursing facilities, but also by those providers who do business with long term care facilities, especially the section regarding the anti-kickback statute as this section addresses common risk areas in nursing facilities' relationships with other entities such as hospitals, ambulance suppliers, DME suppliers, pharmaceutical manufacturers and suppliers, hospices, etc.

Quality of Care

The Supplemental Guidance discusses the recent trend toward the use of the False Claims Act or Civil Monetary Penalties Law to address quality of care issues, including insufficient staffing, failure to develop comprehensive resident care plans, improper medication management, inappropriate use of psychotropic medications, and improper protection of patients from harm caused by staff or other residents.

Submission of Accurate Claims

In addition to longstanding concerns related to duplicate billing, insufficient documentation and false or fraudulent claim reports, the OIG discussed:

Improper reporting of resident case-mix by SNFs;

Improper provision of therapy services, including improper utilization of therapy services to inflate the severity of RUG classifications, overutilization of services billed to part B and underutilization of services provided to PPS patients;

Failure to screen for individuals or entities excluded from federal health care programs; and

Inadequate or nonexistent restorative and personal care services

Violations of the Anti-Kickback Statute

The following types of arrangements between nursing facilities and referral sources or those entities to whom nursing facilities serve as referral sources were examined:

Receipt of free goods or services from a potential referral source, such as a pharmacy, laboratory, DME suppliers, hospices or hospitals are likely to constitute a prohibited kickback.
Services contracts between referral sources or those who receive referrals from the nursing facility must be examined to determine whether they comply with relevant anti-kickback statute safe harbors - examples of contracts that must be scrutinized include those with pharmacies, clinical laboratories, DME suppliers, ambulance providers, parenteral and enteral nutrition suppliers, diagnostic testing facilities, rehabilitation companies, and physical, speech or occupational therapists.
Prescribing decisions must be based on the best interests of the patient and not tainted by kickbacks or what is on the nursing facility's formulary (especially where the formulary is established based on purchasing agreements with pharmaceuticals or contracts with health plans).
Discounts must be appropriately reported in accordance with the discount safe harbor.
Nursing facilities cannot engage in "swapping arrangements" where the nursing facility accepts a low price from a supplier or provider for services covered by Part A, in return for referral of business covered by Part B. Some provider types that might be prone to such "swapping arrangements" are ambulance providers, DME suppliers, and clinical laboratories.
Hospices cannot offer free services such as nursing care to non-hospice patients in return for referral of patients eligible for hospice care.
Arrangements where hospitals pay for "reserved beds" must be carefully scrutinized to ensure that the beds are an appropriate number for what the hospital needs, the payments are appropriate in amount, and the beds are truly kept empty.

Other Risk Areas

Nursing facilities must be aware of the Stark regulations, especially if they bill the Medicare program for "designated health services" such as laboratory services or physical or occupational therapies. All referrals for physicians must be scrutinized to determine whether the physician or his/her family member has a financial relationship with the nursing facility (e.g., investor, consultant, employee, medical director) and whether such relationships fall within a relevant Stark exception.
Anti-supplementation: the facility must accept Medicare or Medicaid payment as payment in full and cannot charge beneficiaries additional amounts.
Medicare Part D: Residents must be given freedom to choose a Part D plan and nursing facilities may not accept payments from any plan or pharmacy to influence beneficiaries to select a particular plan.
HIPAA Privacy and Security regulations have gone into effect since the publication of the 2000 Compliance Guidance and nursing facilities are generally considered to be "covered entities."

To read the full text of the Supplemental Compliance Guidance, please click here.

OIG Advisory Opinion 08-14: Favorable Opinion on Motivational Incentives Program

2008-10-05T22:19:00.002-04:00

On October 2, 2008, the OIG posted Advisory Opinion 08-14 dealing with a substance abuse treatment center's use of "motivational incentives" to reward patients' achievements.

The treatment center would introduce motivational incentives to encourage regular attendance and cooperation for certain patients when deemed to be clinically indicated by clinicians following published guidelines.

The OIG noted that such a program could be considered an inducement which would violate both the anti-kickback statute and the civil monetary penalty provisions, however, the program at issue was deemed not to violate the statutes because of the following safeguards:

The program follows the therapeutic guidelines consistent with the training curricula and planning materials jointly published by the NIDA and SAMHSA, based on government sponsored research;
The incentives never take the form of cash (instead would be given as gift cards to stores, gas stations, etc.);
The incentives are low in value ($5 - $10, not to exceed $200/month or last for more than 3 months);
The incentives are only be introduced as clinically indicated and as part of an established treatment plan;
Patients need to "earn" the incentives through verifiable participation in core elements of the treatment plan, such as providing drug free urine specimens or attending sessions;
The treatment plans are certified to be "medically necessary" and appropriate;
The incentives are not advertised and are not offered to all participants (the incentives will be clinically indicated for only 25% of the participants).

The OIG noted that they would not have looked favorably on the arrangement if the incentives would have routinely approached $200 or be offered for longer than 3 months or if it had not been part of a targeted, properly structured, and clinically appropriate treatment plan.

To read the full text of the opinion, please click here.

OIG Advisory Opinion 08-13: OIG OKs Medigap Network Discount Arrangement

2008-10-04T14:54:00.002-04:00

On October 2, 2008, the OIG posted Advisory Opinion 08-13 which addressed the use of a "preferred hospital" network as part of a Medigap plan. In this arrangement, hospitals enter into contracts with an MCO as part of the preferred network. Pursuant to these contracts, Medigap policyholders are given discounts of up to 100% off of Medicare inpatient deductibles (which would normally be the responsibility of the Medigap plan). The MCO is paid an administrative fee each time a policyholder receives a discount.

In return for choosing a network hospital, the policyholders share in the savings by receiving a $100 credit toward their next renewal premium.

The OIG determined that although waivers of Medicare cost-sharing amounts and relief of a financial obligation would normally constitute prohibited remuneration under the kickback statute and the civil monetary penalties statute, the arrangement presented a very low risk of fraud and abuse for the following reasons:

With regard to the discount:

The waivers would not increase or affect per service Medicare payments;
The discounts would not increase utilization since the patients already had purchased the supplemental insurance;
The disount would not unfairly affect competition because all accredited hospitals could become a member of the network if they so chose;
The arrangement is unlikely to affect professional medical judgment because the physician or surgeon would not receive remuneration and the patient could go to any hospital without incurring out of pocket charges.

With regard to the "premium credit":

The OIG found that the premium credit would essentially fall within the statutory exception for differentials in coinsurance and deductibles as part of a benefit plan design (as found in Section 1128A(a)(6)(C) of the Social Security Act). Even though the premium credit was not technically a "differential", it would have the same purpose and effect.

To read the full opinion, please click here.

OIG Advisory Opinion No. 08-12: Favorable Opinion Regarding Preauthorization Services

2008-10-02T18:39:00.003-04:00

In Advisory Opinion 08-12, the OIG issued a favorable opinion to a requester regarding a proposed new business venture that would be in the business of providing preauthorization processing and submission services to radiology and imaging services across the country.

The company would charge a "per service" fee for each preauthorization processed and submitted. The fee would be the same regardless of whether the preauthorization was ultimately approved by the insurer. The vast majority of preauthorizations would be submitted to private insurance companies, but occasionally a patient could be a Medicare beneficiary enrolled in a Medicare Advantage plan with preauthorization requirements.

The OIG noted that the arrangement would not fit within the personal services safe harbor because the compensation is not set in advance, however, there could be no violation of the anti-kickback statute without referrals for Federal Health care program services.

The OIG noted that:

The new company would not be a health care provider;
The only services being offered were administrative in nature and were provided at fair market value;
The proposed arrangement did not involve preauthorization for certain products or services (e.g., promotion or marketing of such services);
Services are not being provided by a supplier to a referral source.

Although the OIG found that the arrangement as set forth would not violate the anti-kickback statute, the OIG noted that the same arrangement could be problematic if a third party (such as a manufacturer) was paying the company to provide the services to a referral source (such as a physician), thus alleviating them of the costs of processing or submitting preauthorizations.

To read the full opinion, please click here.

OIG Issues Favorable Advisory Opinion to Proposed Waiver of Cost Sharing for Government Sponsored Study

2008-10-01T13:13:00.006-04:00

On September 24, 2008, the OIG posted Advisory Opinion 08-11, addressing the question of whether cost sharing obligations could be waived for participants of an oxygen therapy study sponsored by CMS and the National Heart, Lung, and Blood Institute (NHLBI). The purpose of the study is to determine the benefits of continuous oxygen therapy for patients with moderate COPD and will consist of two study groups: a control group and a group who receives the continuous oxygen treatment. The study sponsors seek to waive cost-sharing obligations to promote patient compliance and alleviate the financial burden on the patients who are selected for the oxygen treatment group.

The OIG determined that the waiver of cost-sharing obligations would not violate the anti-kickback statute or the CMP statute for this particular study because:
1. It is a government sponsored study;
2. It is neither a commercial study nor is it product-oriented or product-specific;
3. The waiver of cost sharing is a reasonable means of enhancing the likelihood of success of the study.

The OIG pointed out several times during this opinion that waiver of cost-sharing in commercial studies would create different risks, including the inducement of patients to forego equally effective or more appropriate care.

To read the full opinion, please click here.

OIG Issues Modification of Advisory Opinion 04-15

2008-09-22T16:19:00.006-04:00

On September 4, 2008, the OIG posted a “Notice of Modification" for OIG Advisory Opinion No. 04-15, which was originally issued on October 29, 2004. The request for modification was made because the requestor sought to modify the proposed arrangement.

Original Arrangement

The original/current arrangement is a grant assistance program to help pay for prescription medications for financially needy patients with certain chronic diseases (some of which are Medicare patients). The program was set up by the requestor, a non-profit charitable organization and is funded by donors, some of which are drug manufacturers.

The OIG concluded, in Opinion 04-15, that the original program would not violate the Civil Monetary Penalties or Anti-Kickback provisions because the subsidy would not be likely to influence the beneficiary’s selection of a particular provider. Specifically, the following elements of the plan were noted to prevent abuse:

Drugs are prescribed prior to the patient’s application for assistance.
Financial assistance grants are determined solely by patient need and do not take into account the patient’s provider or the use of products manufactured by any particular donor.

The Proposed Modification:

The requestor sought to modify the arrangement by providing donors with monthly aggregate applicant data (currently they do not receive any data). The reports would not contain any individually identifiable information and would not give donors any indication regarding the frequency of medical conditions that would require use of the donors' products. The requestor also sought to modify the donor agreement to allow donors to terminate participation with a 120 day notice (rather than agreeing to three years as was previously required), and to expand the number of disease categories eligible for grants.

The OIG determined that the proposed modifications would not affect its previous conclusions. Some of the facts cited by the OIG that led to the favorable decision on the proposed modification were as follows:

The donor could not determine any correlation between its donations and volume of its products ordered for the patients.
The notice of termination would provide ample time to transfer patients out of the program and transfers would be made solely on financial need and a last in/first out basis.
The new disease categories were not determined or influenced in any manner by the donors.

To read the full text of the opinion regarding the modification, please click here. To read the original opinion 04-15, please click here.

More Changes to the Stark Regulations – Some Effective October 1, 2008

2008-09-18T11:03:00.002-04:00

On August 19, 2008, CMS published a final rule which will bring changes to the Stark Regulations. Because some of these changes are effective as early as October 1, 2008, it is important that providers and health care entities review their current relationships to ensure compliance by this date.

Background:

The Stark Regulations generally prohibit a physician from making a referral for the furnishing of Designated Health Services (“DHS”), for which payment may be made under the Medicare or Medicaid programs, to an entity with which the physician or an immediate family member has a financial relationship unless a statutory exception exists.

Designated Health Services include the following:

• Clinical laboratory services
• Physical therapy services
• Occupational therapy services
• Radiology services (including MRI, CAT scans and ultrasounds)
• DME
• Parenteral and enteral nutrients, equipment and supplies
• Prosthetics, orthotics, and prosthetic devices and supplies
• Home health services
• Outpatient prescription drugs
• Inpatient and outpatient hospital services

There are many exceptions to the prohibition, all of which require strict adherence to published criteria. Examples of commonly used exceptions, include, without limitation: certain in-office ancillary services; certain electronic prescribing items and services; certain publicly traded investments; the extension of professional courtesy in certain situations; rental of office space and/or equipment where the lease meets certain criteria; bona fide employment relationships, personal services arrangements and physician recruitment where specific criteria is met.

Some of the important changes that providers should be aware of are summarized below.

Changes Effective October 1, 2008:

Revision of “Stand in the Shoes” provisions

Under the new rules, a physician owner or investor of a “physician organization” (e.g., a Professional Corporation), will “stand in the shoes” of that organization for purposes of determining financial relationships. If a physician does not have the right or ability to receive any financial benefits of ownership or investment in the “physician organization”, he or she is not deemed to “stand in the shoes” of the “physician organization" for the purposes of analyzing financial relationships.

Although CMS had proposed “Stand in the Shoes” rules which would apply to DHS entities (e.g., hospitals) and their wholly owned subsidiaries, those rules have not yet been made final.

Ownership or Investment Interests in Retirement Plans

CMS modified the current carve out for ownership or investment interests in a retirement plan to clarify that such a carve out only applies to preclude an “ownership or investment” interest based on participation in an employer sponsored retirement plan for the purposes of investment or ownership in the employer’s entity. It would not apply to an entity that was purchased using the retirement funds (e.g., if a group practice invests in an imaging center with assets from the retirement plan, the relationship would not be excluded from the Stark “ownership or investment interest” definition).

Changes Effective October 1, 2009:

Prohibition of “Per Click” and Percentage Based Lease Payments Between Referral Sources

The final rule prohibits direct or indirect compensation arrangements, such as leases, between referral sources to be based on a “per click” basis and also prohibits space or equipment leases between referral sources to be based on a percentage based formula (e.g., percentage of revenue, collections, or services provided).

It is important to note that this final rule is contrary to guidance given by CMS in the past. Thus, it is imperative that providers who are parties to lease arrangements based on per-click or percentage compensation have these arrangements re-examined under the new rules, even if they were previously reviewed by legal counsel.

Limitations to “Under Arrangements” Services

Under the new rules, an entity will be considered a “DHS entity” if it furnishes DHS, even if it doesn’t bill for or submit claims for the services. This will cause entities who furnish DHS services “under arrangements” to other entities to be defined as “DHS entities”. Thus, any relationships with physicians who make referrals for the DHS services will have to meet a Stark exception.

Providers who think that they might be affected by any of these changes should consult with competent health care counsel immediately to determine whether any changes need to be made to the structure of such relationships.

To read the full text of the 2009 IPPS rule which contains these changes, please click here.

Electronic Health Records Bill Introduced

2008-09-17T10:04:00.003-04:00

According to a story on kaisernetwork.org, Rep. Pete Stark introduced an Electronic Health Records Bill on September 15, 2008.

This bill would create assistance and incentives for physicians to implement electronic health records. Physicians who meet the federal standards would be eligible for payments of up to $40,000 over five years and hospitals could receive several million dollars. Eventually, the incentives would be phased out and noncompliant health care providers would be penalized.

To view the entire story, click here.

Staten Island University Hospital Agrees to $88.9 Million Dollar Settlement

2008-09-16T17:29:00.002-04:00

According to a story in the New York Times, Staten Island University Hospital entered into a $88.9 Million settlement agreement for the following allegations:

Alleged submission of claims for unlicensed beds which were hidden from state inspectors;
Alleged billing of payable cancer treatment codes for services that were not payable by Medicare or Tricare;
Alleged overstatement of the count of residents in training to receive increased reimbursement;

The settlement also requires the hospital to enter into a corporate integrity agreement.

OIG Issues Unfavorable Advisory Opinion Regarding Block Leases of Space, Equipment and Personnel

2008-08-27T14:31:00.003-04:00

On August 26, 2008, the OIG posted Advisory Opinion 08-10 which concluded that a proposed "block lease" arrangement between an oncology physician practice and a group of urologist referral sources would potentially violate the Anti-kickback statute.
The oncology group in question provides various cancer treatments in a facility setting, including a procedure called Intensity-Modulated Radiation Therapy ("IMRT") which is used to treat prostate cancer. Patients who receive IMRT are typically referred by urologists.
The proposed arrangement involved the leasing of space, equipment and personnel to the urologists so that the urologists could see patients at the facility at least eight hours per week and could also perform the IMRT procedures (through the lease arrangements) instead of referring the services to the oncology physician group.
The OIG determined that the relationship was a "joint venture" and was nearly identical to that described in a Special Advisory Bulletin on Contractual Joint Ventures issued in 2003.
Specifically, the following points were found to be problematic:
1. the Urologist group would be expanding into a related line of business which is dependent on referrals from urologists.
2. The Urologists would not actually participate in the performance of IMRT, but rather would contract out substantially all IMRT operations (including the professional services).
3. The Urologist group would commit little in the way of financial, capital or human resources and would assume very little real business risk.
4. The Urologist group would be in a position to ensure the success of the business by referring to the facility's IMRT operations and also choosing IMRT over other forms of treatment.
5. The oncology physician group is a provider of IMRT services in its own right and could provide the services in its own right.
6. The Urologist group would use the leased facilities, equipment and personnel to serve the very same patient base that used to be referred to the oncology group.
7. The aggregate income to the Urology group would be based on volume/value of referrals because historical data could be used to fit the historical value of referrals.
8. Both groups would share in the economic benefit of the IMRT.

The OIG went on to point out that it was irrelevant whether the various components of the arrangement fit into safe harbors, such as equipment safe harbors or the in-office ancillary exception (it appears that the arrangement was structured to meet these safe harbors, although the OIG did not render an opinion as to whether the safe harbors were met). The problem with the arrangement, according to the OIG, is the possible intent to provide a referral source (the urologists) with a manner in which to share in some of the profit from the referrals that would otherwise go to the oncology group.

Providers and their counsel should be very aware of arrangements such as this, that might technically meet various safe harbors, but still contain an overriding prohibited intent to induce referrals.

WPS Issues Reminder for Ambulance Suppliers: Include Complete Addresses on Run Sheet

2008-08-25T22:13:00.005-04:00

The following was included in the Medicare E-News for August 25, 2008 reminding ambulance suppliers to include the complete address of the destination and origin:

All ambulance suppliers (BOTH AIR and GROUND) MUST include the complete address of the origin and destination for each transport on the run sheet and on the claim submitted to Medicare. The origin is the point where the load mileage begins and the destination is the point where the load mileage ends. Load mileage only includes the miles where the patient is on board the ambulance.

Be sure to include the name and address of any facility or airport involved, i.e.
* Sunshine Hospital at 111 S Main St, Somewhere, IL 55555 to Somewhere Airport 2001 S Airport Dr, Somewhere, IL 55555
* Interstate 88 between mile marker 212 and 213 to Daisy Hospital at 2000 Sunflower Lane, Daisy, Kansas 55555

The information is required to process the claim timely and correctly. Remember missing or incomplete information can delay payment, or cause a claim denial.

This information can also be found on the WPS website.

Recent Fraud and Abuse Enforcement

2008-08-19T14:47:00.004-04:00

Altering Records

A story on MyCentralJersey.com states that a New Jersey podiatrist recently admitted to obstructing a federal health care audit. According to the story, a Medicare contractor requested 25 charts as part of an audit. In response to the audit request, Dr. Schmierer and his co-conspirators re-wrote seven of the patient notes in order to justify the level of service billed. The doctor faces a maximum of five years in prison and as much as a $250,000 fine.

Billing After Patient Death

According to a story on Click2Houston.com, a Missouri City occupational therapist was sentenced to 15 years in prison for billing Medicare for services "rendered" to patients who were deceased at the alleged time of service.

Falsified Physician Statements

According to a story on WZTV in Nashville, a Birmingham Alabama man was charged with 17 counts of health care fraud for falsifying paperwork indicating that physicians had approved power wheelchairs and other accessories for Medicare patients. Joel Allan Sloan faces up to 20 years in prison and a fine of up to $250,000 or both.

HHS Proposes Adoption of ICD-10 Code Sets

2008-08-19T13:38:00.002-04:00

On August 15, 2008, HHS issued a press release announcing a proposed regulation that would replace the ICD-9-CM code sets with ICD-10 code sets when reporting health care diagnoses and procedures. The ICD-9 has been criticized as outdated. The full text of the regulation can be viewed here. Comments on the proposed rule must be submitted by October 21, 2008.

A related regulation was also proposed to update the standards for HIPAA compliant electronic transactions, which is essential to allowing use of the ICD-10 code sets. The regulation that modifies the HIPAA electronic transaction standards can be viewed here.

Revised PhRMA Code Tightens Restrictions on Gift Giving in the Pharmaceutical Industry

2008-08-18T15:06:00.003-04:00

The Revised Pharmaceutical Research and Manufacturers of America (PhRMA) Code on Interactions with Health Professionals was revised in July 2008.

The voluntary code places even greater restrictions on pharmaceutical companies, including:

prohibition of the distribution of non-educational items (such as pens, mugs and other "reminder objects" with the company's logo) even if the items are of minimal value because these items "may foster misperceptions that company interactions with healthcare professionals are not based on informing them about medical and scientific issues."
prohibition of provision of restaurant meals to health care professionals, although occasional meals in the health care professionals' offices are acceptable.
required training for representatives on applicable laws, regulations and industry codes of practice.
companies who pledge to abide by the Code will be listed on a website and will certify compliance annually.
more detailed standards regarding the independence of continuing medical education (CME).
disclosure requirements for healthcare providers who are members of committees who set formularies or develop clinical practice guidelines and also serve as speakers/consultants for the pharmaceutical companies.

Although the PhRMA Code is voluntary, the OIG has stated in its Compliance Guidance for Pharmaceutical Manufacturers, published in 2003, that "although compliance with the PhRMA Code will not protect a manufacturer as a matter of law under the anti-kickback statute, it will substantially reduce the risk of fraud and abuse and help demonstrate a good faith effort to comply with the applicable health care program requirements."

The press release setting forth the highlights of the revised PhRMA code can be found here and the Code itself can be viewed here.

The 2003 OIG Compliance Guidance for Pharmaceutical Manufacturers can be found at this link.

OIG Issues Favorable Opinion Regarding Orthopedic and Neurosurgery "Gainsharing" Arrangement

2008-08-12T15:34:00.002-04:00

On August 7, 2008, the OIG posted a favorable opinion regarding an arrangement under which a medical center agreed to share cost savings with groups of orthopedic surgeons and neurosurgeons related to reduction of waste and use of specific medical devices and supplies during certain spine fusion surgery procedures.

The cost savings components of the arrangement were: (1) limitation of the use of Bone Morphogenetic Protein ("BMP") to an "as needed" basis; and (2) standardization of the use of certain spine fusion devices and supplies where medically appropriate.

The OIG determined that the arrangement would potentially violate the anti-kickback statute and/or the Civil Monetary Penalties "CMP" provisions of the Social Security Act. However, the following safeguards were deemed to be sufficient in these particular circumstances:

The specific cost savings actions and resulting savings were clearly and separately identified, thus allowing for transparency and public scrutiny;
The requestors provided credible medical support to show that patient care would not be adversely affected;
The measures were to be implemented for all patients regardless of insurance coverage and not disproportionate with respect to Federal health care program beneficiaries;
Objective historical and clinical measures were used to create thresholds beyond which no further savings could be realized (based on the Medical Center's patient populations and the patient populations of comparable hospitals);
The standardization processes still allowed the same selection of devices and supplies to individual physicians;
The Medical Center and surgery groups provided written disclosures of the arrangement to patients;
Financial incentives were reasonably limited in duration and amount;
The groups distributed the profits on a per capita basis to avoid any one surgeon's ability to generate disproportionate cost savings.

The OIG pointed out that this opinion did not speak to the legality of the arrangement under the Stark regulations. However, a new Stark exception for Gainsharing was proposed in the Proposed 2009 Medicare Physician Fee Schedule discussed in this recent blog entry.
The full text of Advisory Opinion 08-09 can be viewed here.
This is the third gainsharing opinion posted by the OIG this year. To read our blog entry regarding the other two Advisory Opinions posted earlier this year, click here.

Government Files $140 Million Civil Fraud Complaint Againts 4 Cincinnati Health Care Entities

2008-07-30T18:47:00.003-04:00

According to a story on Cincinnati.com, the government filed a $140 million dollar civil complaint against Christ Hospital, the Health Alliance of Greater Cincinnati, Ohio Heart and Vascular Center and Medical Diagnostic Associates for an alleged kickback scheme which allegedly involved "trading refferals".

The complaint claims that the hospital awarded time in its diagnostic center to cardiologists according to how many patients they sent to the hospitals for surgical procedures. The cardiologists who were awarded time in the diagnostic center were allowed to use the facilities and equipment without paying overhead and were also sent referrals of patients from the emergency room.

This suit originated from a whistleblower suit filed by Harry Fry, a cardiologist with the group. The government joined in the whistleblower suit back in April. For the full story as set forth on Cincinnati.com, click here. For information from the Department of Justice, click here.

OIG Issues Favorable Advisory Opinion to Proposed ASC Joint Venture Between Surgeons and Hospital

2008-07-28T14:21:00.002-04:00

In Advisory Opinion 08-08 posted on July 25, 2008, the OIG issued a favorable opinion regarding a proposed ambulatory surgery center (ASC) joint venture between an orthopedic group and a hospital.
Although the proposed arrangement does not meet a safe harbor, the OIG found the following safeguards to be sufficient:

Although investment through a "pass through" entity does not meet the ASC investment safe harbor, the investors' ownership in the "pass through" entity (e.g., a partnership) was proportional to the investor's capital investment;
Although four of the eighteen investors did not meet the safe harbor test requiring 1/3 of all procedures performed in the previous year to be ASC qualified procedures, the four investors were a proportionately small number and had specialties that required the ue of a hospital based operating room. These surgeons also certified that they would not make referrals to the ASC unless they personally performed the procedures.
Although the hospital is in a position to make referrals to the ASC through its employed physicians, precautions were put in place to ensure that physicians were not required or encouraged to make referrals to the ASC. Also, compensation was not based on referrals to the ASC.
Although the Anesthesia Agreement does not meet the personal services or management contract safe harbors, the parties certified that the services were reasonable and necessary and the compensation was based on fair market value.

To read the full text of the Advisory Opinion 08-08, please click here.

HHS Sues Michigan Physician for $2.48 Million for False Claims

2008-07-28T13:51:00.003-04:00

After being convicted and sentenced to 10 1/2 years imprisonment for health care fraud, former Michigan dermatologist, Robert Stokes, is now being sued by HHS in a civil case for $2.48 million dollars.
The government alleges that Stokes "up-coded" procedures and repeatedly fraudulently diagnosed patients with impetigo.
The full story can be viewed here.

Missouri Based Lester E. Cox Medical Systems to Pay $60 Million as Settlement for False Claims Allegations

2008-07-23T19:18:00.003-04:00

According to a July 22, 2008 Department of Justice Press Release, Lester E. Cox Medical Centers has agreed to pay $60 million dollars to settle claims that it violated the False Claims Act, the Anti-Kickback Statute and the Stark Statute.
The alleged violations occurred between 1996 and 2005 and involved improper financial relationships with referring doctors and improper Medicare billing, including allegations of non-reimbursable costs being listed on the health system's cost reports and improper billings for dialysis patients.
In addition, the health system entered into a Corporate Integrity Agreement with the HHS OIG which contains measures to ensure compliance with Medicare regulations and policies in the future.

HIPAA Violations Cost Seattle Hospital $100,000 in Addition to a Corrective Action Plan

2008-07-20T13:32:00.004-04:00

HHS and Seattle-based Providence Health and Services entered into a Resolution Agreement on July 16, 2008 to settle alleged violations of the HIPAA Privacy and Security Rules.

The allegations stemmed from 30 complaints received after the health system left backup tapes, optical disks and laptops containing unencrypted Protected Health Information unattended after these items had been removed from the health system.

This is the first time that HHS has required a Resolution Agreement from a covered entity in response to a HIPAA violation.

The health system was also required to enter into a Corrective Action Plan which requires such things as: (1) revision of policies and procedures regarding physical and technical safeguards (e.g., encryption) and governing off-site transportation and storage; (2) training workforce members; (3) conducting audits and site visits of facilities; and (4) submitting compliance reports to HHS for a period of three years.

More information as well as a full copy of the Resolution Agreement can be found here on the HHS OCR HIPAA website.

OIG Expects $2.2 Billion in Recoveries First Half of FY 2008

2008-07-11T15:11:00.003-04:00

In its Semi-Annual Report to Congress posted in June, the OIG announced expected recoveries of $2.2 billion dollars for the first half of fiscal year 2008. The OIG also announced the following enforcement activities for the first half of the fiscal year:

Exclusion of 1,291 individuals and entities for health care fraud and abuse
293 criminal prosecutions for crimes against HHS programs
142 civil actions

Areas of enforcement have included:

collection of money owed to CMS from Medicare Part D sponsors
illegal drug marketing and pricing, including a civil settlement with Bristol-Myers Squibb fro alleged inflation of prices as well as alleged kickbacks to physicians and pharmacies
alleged kickbacks in the artificial joint industry
sentencing of a Michigan dermatologist for upcoding
identification of overpayments for outpatient services in skilled nursing homes

To view a press release containing a summary of the report click here.
To view the full OIG Semi-Annual Report click here.

Proposed 2009 Medicare Physician Fee Schedule

2008-07-10T22:08:00.003-04:00

The Proposed 2009 Medicare Physician Fee Schedule was published in the July 7, 2008 Federal Register. In addition to a 5.4% reduction in physician fees, the fee schedule contains many proposed policy changes. The following are some of the major proposed changes:

Proposed Changes to the Physician Quality Reporting Initiative (PQRI)

Adds new quality measures
Increases the number of conditions covered by measures groups
Adds two new reporting periods
Accept PQRI data via clinical registries and EHRs

Proposed Changes for Physician Based Diagnostic Testing

Providers performing in office diagnostic testing would now be subject by the IDTF rules
Providers would have to enroll as an IDTF

Proposed Stark Exception for Gainsharing

Exception to the Stark referral prohibition for incentive or shared savings programs that meet certain criteria (note that arrangements cannot violate the anti-kickback statue, for which there are no similar safe harbors (although there are several advisory opinions on the topic)).

Proposed Additions to the List of Telehealth Services that Will be Covered

Previously proposed additions were evaluated and suggestions for additional services solicited

The full text of the 2009 Medicare Physician Fee Schedule can be found here.

Legislation to Halt Physician Pay Cuts in President Bush's Hands

2008-07-10T10:59:00.002-04:00

On Wednesday, the Senate passed legislation which would halt the Medicare provider paycuts that were scheduled to take effect July 1 (Medicare has postponed the processing of claims for the first 10 days of this month in light of the uncertainty surrounding the pending cuts). George Bush has threatened to veto this bill in the past. The legislation also includes additional funding for rural providers.

More information can be found at the following links:

Bloomberg.com
MarketWatch

WPS Posts Redetermination FAQs: Advises Providers to Resubmit After 110 Days of No Response

2008-07-08T11:30:00.001-04:00

On July 7, 2008, WPS posted an educational document on its website containing FAQs regarding the Status of the Redetermination Process.

Some interesting points from this document are as follows:

WPS states that providers can expect a response within 90 to 100 days (Note that the regulations require a 60 day response, but the regulations do not impose a penalty on contractors who do not meet this “deadline”).
WPS advises that providers who have not received a response in 110 days should resubmit the request for Redetermination, but they request that providers do not resubmit the request any sooner than 110 days (Note, however, that if the resubmission is received after 120 days it will be deemed untimely, so waiting for the 110 day mark would give providers only 10 days to resubmit the claim and to have such resubmission be considered “timely”).

The fact that WPS is encouraging providers to resubmit requests for redetermination appears to be an admission that some of these requests are being “misplaced”. Thus, it is imperative that providers keep very good records, including copies of all requests sent to WPS as well as USPS confirmation slips (it is advisable to send all such communications via certified mail, return receipt requested).

To read the full FAQ document, please click here.

OIG Issues Favorable Advisory Opinion to Health Care System’s Proposal to Give Unsatisfied Patients $10 Gift Cards

2008-07-08T10:41:00.000-04:00

In Advisory Opinion 08-07, posted on July 7, 2008, the OIG issued a favorable opinion regarding a health care system’s proposal to provide $10 gift cards to patients whose expectations were not met. For example, patients who complained of excess wait times, cancelled appointments or housekeeping concerns might be rewarded with a $10 gift card redeemable at local vendors, such as restaurants or movie theaters.

The OIG determined that the $10 gift cards would be considered “nominal” in value and thus would not violate the Civil Monetary Penalties found in the Social Security Act, or the Anti-Kickback Statute.

The primary reasons that the OIG cited for determining that the remuneration was “nominal” were as follows:

The gift cards would not have a value exceeding $10
The gift cards would be redeemable at specific vendors who do not sell items or services payable by Federal health care programs
The gift cards could not be redeemed for cash or items or services provided by the health system
The health system would track the number of cards given to individual beneficiaries and would ensure that no single beneficiary received greater than $50 worth of gift cards in a given year

To read the full text of Advisory Opinion 08-07, please click here.

Senate Blocks Efforts to Stop Medicare Payment Cuts for Physician

2008-06-27T11:46:00.002-04:00

As we reported in this recent blog entry, the House of Representatives recently passed a bill which would stop the pending 10% payment cuts for physicians which are scheduled for next week. Unfortunately, yesterday, the Senate failed to pass the bill. The full story from the New York Times can be viewed here.

Bill Passed To Prevent Physician Pay Cuts

2008-06-25T13:39:00.003-04:00

According to the New York Times, the House voted on June 24, 2008 to approve a bill which would prevent a pending 10% reduction in Medicare payments for physicians that was scheduled to take effect July 1, 2008.
The bill would also increase payments to physicians by 1.1% next year.
The bill would reduce payments to private health plans that participate in the Medicare Advantage program, as well as reduce co-payments for mental health services and increase assistance to low-income beneficiaries.
To read the full story, click here.

CMS Advisory Opinion Gives OK to Referrals to Diagnostic Center that Meets Rural Provider Exception

2008-06-17T11:58:00.003-04:00

Earlier this month, CMS issued a Stark Advisory Opinion regarding physicians' investments in a Diagnostic Center to which they make referrals. The referrals were for "designated health services" which, according to the Stark Regulations, are generally prohibited if the physicians' have an ownership interest in the entity. There are exceptions to the prohibition, however, and CMS concluded that these referrals met the "rural provider exception". The rural provider exception requires the following:

1. The "designated health services" must be provided in a "rural area", which is defined as anywhere that is not listed as an "urban area", i.e., a "metropolitan statistical area" or "MSA".
2. "Substantially all", i.e., at least 75% of the "designated health services" must be furnished to individuals who live within this "rural area."

CMS found that the Diagnostic Center met both of these criteria, but cautioned that the area could change and become part of an MSA at some point and the "rural provider exception" would no longer be applicable. Likewise, CMS cautioned that the "substantially all" or 75% test is an ongoing requirement.

Therefore, even though these physicians received a favorable ruling, they must constantly monitor the relationship for continued compliance.

WPS to Host Teleconferences on Consultations - June 11 and July 17

2008-06-09T18:17:00.003-04:00

For providers with questions regarding consultations vs. visit codes, WPS recently announced two teleconferences - June 11 and July 17, 2008 from 10-12 Central time. To register and to download the presentation information click here.

Three Former Florida Hospital Workers Charged in 20 Million Dollar Kickback Scheme

2008-06-06T14:59:00.003-04:00

According to the Miami Herald, three former employees of Kendall Regional Medical Center were charged in an alleged kickback scheme that involved phony orders for medical supplies that were never delivered to the hospital. The former employees face up to 20 years in prison. The full story can be read here.

CMS Issues Stark Advisory Opinion on Hospital's Proposal to Provide Physicians with Software Interface

2008-06-04T15:45:00.003-04:00

CMS recently issued an Advisory Opinion regarding a proposal by a hospital system to purchase a custom software interface for installation on computer systems belonging to members of its medical staff. The interface would allow members of the medical staff to order or communicate the results of tests or procedures furnished by the hospital system and could not be used for any other purpose. Although there is a Stark "exception" for "electronic prescribing items and services", CMS did not find it necessary to review the proposed arrangement for compliance with the exception, instead determining that the proposed arrangement would not meet the definition of "a compensation arrangement" pursuant to Section 1877(h)(1)(A) of the Social Security Act or the definition of "remuneration" found at 42 CFR 411.351. Specifically, 42 CFR 411.351 provides that the following is excluded from the definition of "remuneration": "the furnishing of items, devices, or supplies . . . used solely to communicate the results of tests or procedures for the entity"
The full text of the opinion can be read here.

HIPAA Complaints on the Rise

2008-05-27T10:58:00.002-04:00

According to statistics recently posted on the HHS Office of Civil Rights' HIPAA page, the number of HIPAA complaints received from the office continues to rise.

In 2007, there were 8132 complaints filed, compared to 7332 in 2006 and 6853 in 2005. These statistics likely demonstrate one or both of the following: health care providers are becoming lax with compliance and/or patients are becoming more aware of their rights under the HIPAA regulations.

The top five issues investigated for 2007 were:

1. Impermissible uses and disclosures
2. Inappropriate safeguards
3. Access
4. Violation of the minimum necessary rule
5. Violations related to the Notice provisions

More information on enforcement statistics as well as compliance tools can be found on the OCR's website.

OIG Issues Unfavorable Advisory Opinion to Laboratory’s Proposed Labeling Services

2008-05-21T19:53:00.001-04:00

In Advisory Opinion 08-06, posted on May 9, 2008, the OIG issued an unfavorable opinion regarding a laboratory’s proposal to provide free test tube and specimen labeling services to referring dialysis facilities.

In short, the OIG stated that the arrangement had all of the hallmarks of the disfavored conduct addressed by the 1994 Special Fraud Alert “Arrangements for the Provision of Clinical Lab Services” and would, thus, violate the Anti-Kickback statute.

Specifically, the OIG determined that the provision of the free labeling service would be a tangible benefit conferred upon the dialysis facilities which would influence their choice of laboratory. The OIG also saw the potential for “swapping discounts”, i.e., the exchange of the nonmonetary benefit as it relates to composite rate business (billed to the dialysis center) for the referral of noncomposite rate services which are billable by the laboratory to Medicare.

To read the full text of Advisory Opinion 08-06, please click here.

Employee of Counseling Center Faces 10 Years Imprisonment for HIPAA Violation

2008-05-13T09:40:00.004-04:00

An Oklahoma City woman who worked at a counseling center was prosecuted for violations of the HIPAA Privacy laws. According to the news release, she allowed patient charts to be taken so that information could be taken for an identity theft scheme. Because the violation was for "personal gain" she faces a fine of up to $250,000 and up to 10 years in prison.

More Proposed Changes to the Stark Regulations and Solicitation of Comments on Gainsharing and Mandatory Disclosure

2008-05-08T23:30:00.002-04:00

On April 30, 2008, the Hospital Inpatient Prospective Payment System proposed rule appeared in the Federal Register. The proposed rule contained the following proposed changes to the Stark regulations:

1. Modification of the “Stand in the Shoes” provisions

In the Stark II, Phase III rules, as we previously discussed here, CMS sought to decrease the use of the “indirect compensation exception” by requiring physicians to “stand in the shoes” of their physician organizations. However, this created problems for academic medical centers and integrated delivery systems, and was thus postponed for one year. The current proposed rule would accommodate certain financial transactions made between physicians and academic medical centers or integrated healthcare delivery systems, but would still require a DHS entity to stand in the shoes of an organization in which it has a 100% ownership interest.

2. Clarification of “Period of Disallowance”

The proposed rule also provides clarification regarding the length of time that a physician would be prohibited from referring to an entity for DHS once the situation that created the prohibition had been rectified or removed. For non-monetary violations, the “period of disallowance” would end when the relationship between the physician and the entity was brought into compliance with a Stark exception. For monetary violations, the “period of disallowance” would end when the overpayment or underpayment is repaid so long as the relationship otherwise fits within an exception.

3. Solicitation of Gainsharing Comments

The proposed rule also suggested that an exception might be drafted in the future to allow gainsharing arrangements and invited public comment on this issue.

4. Solicitation of Comments on Mandatory “Disclosure of Financial Relationships Report” and Conditions of Participation Disclosures

CMS is also soliciting comments on its proposal to require disclosure and collection of information on financial relationships between hospitals and physicians, including a proposed change to the hospital conditions of participation which would require hospitals to disclose to patients any financial relationships between hospitals and physicians.

Comments on the Proposed Rule will be accepted until June 13. The CMS Fact Sheet can be found here.

Medicare Launches "Personal Health Record" Pilot

2008-05-06T09:16:00.003-04:00

According to an article on the Government Health IT website, Medicare has launched a pilot program in South Carolina which will allow beneficiaries to voluntarily utilize a personal health record (PHR) program. The PHR is a product of HealthTrio, which also offers employer-sponsored PHRs.
The program was supposed to begin earlier this year but was postponed due to "serious security issues".

WPS: CERT Program Shows Increased Errors in Documentation of Physician Orders

2008-04-28T21:45:00.004-04:00

A recent CERT alert issued by WPS Medicare states that they have detected an increase in errors related to lack of physician orders for diagnostic tests.

According to CMS guidelines:
An "order" is a communication from the treating physician/practitioner requesting that a diagnostic test be performed for a beneficiary. The order may conditionally request an additional diagnostic test for a particular beneficiary if the result of the initial diagnostic test ordered yields to a certain value determined by the treating physician/practitioner (e.g., if test X is negative, then perform test Y). An order may be delivered via the following forms of communication:
* A written document signed by the treating physician/practitioner, which is hand-delivered, mailed, or faxed to the testing facility;
* A telephone call by the treating physician/practitioner or his/her office to the testing facility; and
* An electronic mail by the treating physician/practitioner or his/her office to the testing facility.

If the order is communicated via telephone, both the treating physician/practitioner or his/her office, and the testing facility must document the telephone call in their respective copies of the beneficiary’s medical records.

For more information on ordering diagnostic tests, see CMS Transmittal 80

Alleged Kickback Scheme in New Jersey Involves Salaries for Sham Professorships

2008-04-22T14:51:00.004-04:00

According to a recent article in the Star-Ledger, at least 16 physicians received salaries from the University of Medicine and Dentistry of New Jersey as "clinical assistant professors" that were allegedly disguised kickbacks for patient referrals. An attorney for one of the physicians refuted these allegations, stating that bona fide services were performed in return for the payments.
The alleged kickback scheme was revealed as part of a whistleblower suit filed by the former chief of the cardiology program and was allegedly an attempt to steer more patients into a failing cardiology program that was at risk of losing its state accreditation.

Draft OIG Supplemental Compliance Program Guidance for Nursing Facilities Published in Federal Register

2008-04-17T12:06:00.003-04:00

In the April 16, 2008 Federal Register, the OIG published its Draft Supplemental Compliance Program Guidance for Nursing Facilities. This guidance is intended to supplement the Compliance Guidance for the Nursing Facility Industry published in March 2000. Because the proposed guidance is a supplement, rather than a replacement, it is intended to be read in conjunction with the 2000 guidance.
Some of the areas highlighted by the supplemental guidance are:
- Quality of care
- Submission of accurate claims
- Anti-Kickback
- Stark/Self-Referral
- Anti-Supplementation
- Medicare Part D
- HIPAA Privacy and Security

The deadline for submitting comments is 5:00 P.M. on June 2, 2008.

OIG Posts New "Open Letter" to Health Care Professionals Clarifying the Self-Disclosure Protocol

2008-04-17T11:02:00.005-04:00

On April 15, 2008, the OIG posted a new "Open Letter to Health Care Providers" on its website. The Open Letter discusses certain "refinements and clarifications to the OIG's policies."

Most importantly, the letter states that initial submissions must contain all of the following:

(1) a complete description of the conduct being disclosed;
(2) a description of the provider's internal investigation or a commitment regarding when it will be completed;
(3) an estimate of the damages to the Federal health care program and the methodology used to calculate that figure or a commitment regarding when the provider will complete such estimate; and
(4) a statement of the laws potentially violated by the conduct

The letter also emphasizes that the SDP can only be used when the provider believes in good faith that the matter implicates potential fraud against the Federal health care programs, rather than merely an overpayment.

In light of these clarifications, providers should be very careful about using the Self-Disclosure protocol, since the OIG is essentially requesting that they admit to illegal conduct and fraud and it will be very hard to change this position after the Self-Disclosure is made.

CMS Revises ABN Form - Providers Must Begin Using By September 1, 2008

2008-04-15T20:05:00.004-04:00

According to the CMS website, providers may begin using the revised Advance Beneficiary Notice (ABN) form which replaces the existing ABN-G (Form CMS-R-131G), ABN-L (Form CMS-R-131L), and NEMB (Form CMS-20007). Providers must make the transition to the new form no later than September 1, 2008.

An ABN must be given to a patient where the provider believes that the service may not be covered as "reasonable and necessary." If an ABN is not provided to the patient in this situation, the provider may be financially liable.

More information and links to download the revised form can be found here.

Missouri Doctor Gets 6 Months Prison for Destroying or Altering His Files

2008-04-15T10:52:00.002-04:00

According to a recent article in the St. Louis Post-Dispatch, a Missouri eye doctor was sent to prison for six months for altering or destroying files after learning that an audit had detected overbilling. The jail sentence was for the obstruction of justice charges and was in addition to the doctor's agreement to repay over $300,000 and his employers' agreement to repay $252,551. He will also lose his Missouri license.

The Fox Guarding the Hen House? Former OIG Special Agent Sentenced for Theft of Seized Funds

2008-04-15T10:42:00.003-04:00

The FBI recently released a press release discussing the sentencing of a former HHS OIG Special Agent who was sentenced to 26 months in prison for bank fraud and forging the signature of a judge or court official. Scott Gompert was an OIG investigative agent for eight years and used his expertise and connections to identify bank accounts holding funds derived from criminal activities. He then forged fraudulent seizure warrants to direct the financial institutions holding such funds to turn the funds over to phony government "seizure accounts."

Michigan Hospitals Reach Settlement With Medicare on DHS Funds

2008-04-10T12:09:00.002-04:00

Eight Michigan hospitals will receive approximately $1 million dollars each for their portion of a settlement with CMS as the result of a lawsuit brought by 666 hospitals across the country for non-payment of certain "Disproportionate Share Hospital Adjustment" funds or DSH funds. Hospitals are entitled to DSH funds if they treat a disproportionate number of indigent persons.
To read the full story as printed in Crain's, click here.

Final Regulations on Intermediate Sanctions Provide Further Clarification and Examples

2008-04-06T13:46:00.005-04:00

On March 28, 2008, the IRS issued final regulations related to “Intermediate Sanctions.” In order to fully understand the issues addressed by the final regulations, it is important to have a basic understanding of Intermediate Sanctions.

Background of Intermediate Sanctions

The final “intermediate sanctions” regulations were issued by the IRS in 2002 as part of the Tax Payer Bill of Rights 2 (also known as “TBOR2”). Intermediate sanctions are an alternative sanction to loss of an entity’s exempt status (either in addition to or instead of loss of the exempt status).

Intermediate sanctions may be imposed on a “disqualified person” who receives an excess benefit and on “organization managers” who approve such excess benefit transactions. An excess benefit transaction is defined as “any transaction in which an economic benefit is provided by an applicable tax-exempt organization directly or indirectly to or for the use of any disqualified person, and the value of the economic benefit provided exceeds the value of the consideration (including the performance of services) received for providing the benefit. (See Treas. Reg. §53.4958-4(a))

March 28, 2008 Final Regulations

The purpose of the final regulations issued on March 28, 2008 is to clarify the relationship between the excess benefit transaction penalties and revocation of an organization’s exempt status. Specifically, the final regulations set forth the following factors to be considered by the IRS when determining whether an organization will face loss of its tax-exempt status in addition to the intermediate sanctions (the factors are substantially similar to those contained in the proposed regulations; major changes are noted):

1. The size and scope of the organization’s regular and ongoing activities that further the exempt purposes before and after the excess benefit transaction occurred;

2. The size and scope of the excess benefit transaction or transactions (collectively, if more than one) in relation to the size and scope of the organization’s regular and ongoing activities that further exempt purposes;

3. Whether the organization has been involved in multiple excess benefit transactions with one or more persons; (NOTE: the final regulations substituted the term “multiple” for “repeated” to make clear that it includes repeated instances of the same excess benefit transaction, as well as individual occurrences of multiple excess benefit transactions including the same or different individuals.)

4. Whether the organization has implemented safeguards that are reasonably calculated to prevent excess benefit transactions; and

5. Whether the excess benefit transaction has been corrected or the organization has made good faith efforts to seek correction from the disqualified person who benefited from the excess benefit transaction. (NOTE: an example is included which clarifies that it is not necessary to remove the “disqualified person” from the organization in order to correct the excess benefit transaction).

Numbers 4 and 5 as set forth above will be given more weight if the excess benefit transaction is voluntarily reported to the IRS before the IRS discovers it.

The final regulations also contain new examples to help determine whether a tax-exempt organization is serving a public vs. a private benefit.

Conclusion

In light of these new regulations, boards of tax-exempt organizations should (1) take steps to ensure that the organization is serving a public purpose in light of the new guidance and examples and (2) ensure that appropriate compliance efforts are being undertaken on a regular basis with regard to tax-exempt issues, including identification of potential excess benefit transactions.

The full text of the regulations can be found at 75 Fed. Reg. 16519

To Self Report or Not to Self Report - That is the Question

2008-04-01T22:29:00.003-04:00

AIS Health recently published a story about a Texas hospital that self reported a potential Stark violation - an arrangement that was entered into by the previous management. The decision to self-report was based on the OIG's representation that lenience would be shown to those who self report. However, in this case, the U.S. Attorney's office ended up settling the matter for the hefty sum of $400,000.

The arrangement involved a physician who was a referral source and had been receiving free rent for several years. The CEO argued that the U.S. Attorney should have shown more leniency and stated that news of this settlement will make other hospitals think twice about self disclosing.

Considering that the Stark law penalties can include up to $1500 per referral, all payments for referred services can be considered an overpayment, and an additional $100,000 civil monetary penalty can be imposed, the U.S. Attorney's office actually could be said to have exercised some leniency. A violation of the Stark law can also result in exclusion from the Medicare program, which did not occur in this case. In addition, this arrangement likely violated the Anti-kickback statute which could result in criminal charges and additional fines.

The decision to self-disclose is certainly not one to be taken lightly, but the bigger lesson in this story is the seriousness with which the federal government is taking violations of the Stark law.

Two Florida Men Sentenced To Prison For Medicare Fraud

2008-04-01T22:16:00.002-04:00

Two Florida Men Sentenced To Prison For Medicare Fraud
According to a recent press release, two Florida men, the owner of a DME company and the owner of a pharmacy, were sentenced to 63 and 56 months of prison time in unrelated cases involving the payment of kickbacks in return for aerosol drug treatments.

The first case involved Juan Carlos Castaneda, the owner of a pharmacy. Mr. Castaneda pled guilty to charges related to paying kickbacks in return for prescriptions for aerosol treatments. Specifically, Mr. Castaneda paid DME companies 50% of the payments he received from Medicare as compensation for the referral.

The second case involved Jorge Noava, who pled guilty to paying cash kickbacks to a physician in return for the referral of bogus prescriptions for medically unnecessary equipment and aerosol treatments.

Interestingly, Castaneda was sentenced to a longer prison term (63 months) than Noava (56 months) despite the fact that, according to the U.S. Department of Justice Press Release, the Noava case involved fraudulent/not medically necessary claims and the Castaneda case involved kickbacks only.

Many providers seem to think that kickbacks are not as risky or as potentially serious as the submission of false claims, but these cases should be a wake up call.

HHS Hospital Compare Website Now Contains Patient Survey Results

2008-03-30T15:47:00.002-04:00

The HHS Website "Hospital Compare" which helps consumers to find and compare hospitals based on quality indicators recently added a very interesting tool that allows prospective patients to view and compare information gathered from patient satisfaction surveys. The survey includes questions such as how well the patient felt their nurses and doctors communicated with them, whether it was quiet at night, whether their bathroom was clean and whether their pain was controlled.

OIG to Turn Focus to Physicians in Orthopedic Device Kickback Scheme

2008-03-25T10:51:00.003-04:00

After reaching settlements with several large orthopedic device manufacturers for offering kickbacks to physicians, the OIG recently announced that it will be turning its focus to the physicians who accepted such bribes. This is according to a recent NY Times article. According to the article, the kickbacks were in the form of consulting fees as well as travel, food, lodging and entertainment.

If physicians have doubts as to whether it is appropriate to accept certain gifts or money from device suppliers, pharmaceutical companies or others, some good resources to consult include the AMA Code of Ethics, the OIG Compliance Guidance for Physician Practices, the OIG Compliance Guidance for Pharmaceutical Manufacturers, and the 1994 Fraud Alert Addressing Pharmaceutical Marketing Practices.

April 1 Deadline for Use of Tamper-Proof Prescription Pads

2008-03-18T14:40:00.003-04:00

April 1, 2008 is the deadline on which providers who are writing prescriptions for medications payable by the Medicaid program must utilize tamper-resistant prescription pads. In order to be compliant, prescription pads must contain at least one security feature. However, beginning October 1, 2008, the prescription pads will be required to contain three security features. For more information about the Tamper Prescription Pad Law and a list of vendors who supply compliant prescription pads (including some free resources) click here.

CMS Posts Updated Brochure Regarding Appeals Process

2008-03-10T19:09:00.002-04:00

CMS recently posted an updated brochure outlining the five steps involved in the appeals process. Although the information is very general in nature, it does provide a decent overview of the process for those who may be unfamiliar with the various levels of appeal.

WPS Posts New Information Related to NPI and March 1 Deadline

2008-03-08T15:57:00.002-05:00

As most providers hopefully know, March 1, 2008 marks the date on which 837P/CMS-1500 claims MUST be submitted with an NPI (at this point and until May 23, 2008, providers may submit the NPI paired with a Legacy number (e.g., a PIN)). According to an informational document posted on the WPS site, providers' claims may be rejected even when submitted with an NPI if the NPI is not consistent with the enrollment information received by WPS. If a claim is rejected, providers are told to first check the NPPES NPI Registry to ensure that the information contained is correct and to have that sheet available when calling WPS or other Medicare contractor.

Google Health Raises HIPAA Questions

2008-03-03T21:01:00.003-05:00

Google recently announced a pilot program whereby it will offer individuals the ability to authorize health care providers to share the individual's health care information with other providers through an electronic data base. For more information, see this Google Blog Entry. The benefit of "personal health records" such as this is the ability for individuals to have all of their health information in one place, which is especially helpful for those who travel a lot or have seasonal homes.

Because entities such as Google are not "covered entities" for the purposes of HIPAA, the program would presumably operate on the requirement that an individual would "authorize" providers to share information with Google. If the information is shared through patient authorization, the company would not meet the definition of a "business associate". Thus, once this information has been disclosed, it will no longer be protected by HIPAA, which raises a number of issues that are set forth in this report from the World Privacy Forum.

Favorable Advisory Opinion for Drug Company’s Computerized Kiosks

2008-02-25T15:31:00.001-05:00

In Advisory Opinion 08-05, posted on February 22, 2008, the OIG issued a favorable opinion to a pharmaceutical and healthcare company that was seeking to place computerized kiosks in physician offices. The proposed kiosks would administer a survey to patients to help them discuss certain disease conditions with their physicians.

The OIG determined that the kiosks would not provide anything of value to either patients or their physicians because there would be no incentives, such as coupons, associated with the use of the kiosks and the kiosks would have no independent value to the physicians.

The OIG did note that the kiosks were a type of “direct to consumer” advertising which could implicate Federal or state consumer protection laws, as well as FDA or FTC regulations.

To read the full text of Advisory Opinion 08-05, please click here.

CMS Issues Final Rule Regarding Prior Determinations of Medical Necessity

2008-02-25T14:55:00.002-05:00

On February 22, 2008, CMS issued a final rule titled “Medicare Program; Prior Determination for Certain Items and Services.” This rule was promulgated pursuant to Section 938 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the MMA).

If physicians are uncertain whether a service will be covered by Medicare because of questionable medical necessity, this final rule allows the physician (or a beneficiary who has received an ABN) to request a prior determination for certain services if they are included in a “national list” established by CMS. The list will include the most expensive physician services in the physician fee schedule which are performed at least 50 times annually and those plastic and dental procedures which are sometimes covered by Medicare and have an amount of at least $1,000 on the physician fee schedule. The lists will be located on the contractors’ websites, on the Medicare.gov website or through the Medicare 800 number (1-800-Medicare).

The contractor is required to respond to the request within 45 days. However, it is important to note that there is no penalty built into the rule if the contractor fails to meet this deadline.

If the determination is favorable, that determination will be binding when the claim is submitted for payment (although the claim can still be reviewed for eligibility and reimbursement criteria). If the determination is unfavorable, the claim may still be submitted to Medicare for payment and appealed through the appeals process (note that there is no appeals process for the prior determination; the beneficiary would actually have to go ahead and receive the services before being afforded a right to appeal).

For the full text of the Final Rule, see 73 Fed. Reg. 9672.

HHS Publishes Proposed Rule Regarding Implementation of Patient Safety Act

2008-02-17T22:22:00.004-05:00

On February 12, 2008, the Department of Health and Human Services published a proposed regulation to implement certain aspects of the Patient Safety Act, which was signed into law in 2005.

The proposed rule deals with the establishment of Patient Safety Organizations or PSOs. Health care providers will be able to voluntarily report information regarding medical errors confidentially to these PSOs, thus allowing for the sharing of medical error information which will hopefully allow for greater analysis of such information and improved quality of care. .

The proposed rule establishes what types of entities can become a PSO, the certification process and sets forth the strict confidentiality provisions that will be applicable to the information held by the PSO. The rule also creates separate rules for certification of a “component organization” to ensure that confidential “patient safety work product” is kept separate from other components of the organization. For example, the data in a hospital based PSO could not be available to anyone involved in areas such as credentialing and all employees of such departments would have to be separate from those that are part of the PSO.

Comments on the proposed rule must be received by April 14, 2008. The full text of the rule can be viewed here.

OIG Advisory Opinion No. 08-04: OIG OK's Free Trial Prescription Program for Hemophilia A Patients

2008-02-14T16:23:00.004-05:00

In Advisory Opinion 08-04, posted on February 12, 2008, the OIG issued a favorable opinion to a pharmaceutical manufacturer on a proposal regarding the provision of complimentary trial supplies of medication to certain Hemophilia A patients.

The medication is used as a short term treatment to control and prevent bleeding episodes in Hemophilia A patients, for example when surgery is required. Physicians would be given the opportunity to enroll a small percentage of patients in the program, but the medication would be sent directly to the patient.

The key reasons why the OIG determined that the relationship would not violate the anti-kickback statute were:

No charge would be made to the Medicare/Medicaid programs for the prescription;
The risk of giving the one time supply in order to “steer” patients is diminished because patients who choose to stay on the medication will be responsible for significant co-payments on their refills;
Patients can easily switch to another medication after the free supply runs out (there are no clinical barriers to doing so);
The risk of overutilization is unlikely because of the short term nature of the medication;
There are numerous other safeguards, including: physicians will not have possession of the medication (thus, no opportunity to resell or bill third party payors), only a limited number of free trials will be provided to any one physician or clinic and patients will be told that there is no obligation to purchase this medication again in the future;
The proposed arrangement complies with the Prescription Drug Marketing Act of 1987 (“PDMA”.

To read the full text of Advisory Opinion 08-04, please click here.

WPS to Host Teleconference on Consultations and More Guidance Regarding "Intent of Request"

2008-02-12T11:58:00.003-05:00

As we discussed in a recent Health Law Blog entry, Medicare carriers such as WPS continue to be focused on proper billing of consultation services and are encouraging providers to perform "self-audits". WPS recently announced that it will be holding a teleconference to give providers the opportunity to ask questions. The Teleconference will be on March 19, 2008 beginning at 1:00 P.M. Further details can be found here.

Additional information was also posted on the WPS site regarding "determining the intent of the request" when deciding whether a visit is a true consultation or a "transfer of care."

The following is from the WPS website:

Intent of a Consultation Service:
The originating physician or qualified Non-Physician Practitioner (NPP) asks another physician or qualified NPP for advice, opinion, recommendation, suggestion, direction, or counsel in the evaluation or treatment of a patient, because that consultant has expertise in a specific medical area beyond the originating physician's or NPP's knowledge. The requesting physician anticipates continuing to treat the patient condition.

When a physician or qualified NPP refers a patient to another, there should be a request and a report back. The documentation of the intent of the request is Medicare's determining factor in whether a service is a consultation or a new or subsequent patient visit code.

Transfer of Care:
Occurs when the originating physician or qualified NPP requests another physician or qualified NPP to assume responsibility for management of the patient's care for that condition and does not expect to continue treating the condition. In this case, the appropriate new or established patient visit code is appropriate according to the place of service and level of service performed.

The full educational article can be viewed here.

OIG Advisory Opinion No. 08-03 Gives Thumbs Up to Prompt Pay Discount

2008-02-09T15:18:00.000-05:00

In Advisory Opinion 08-03, posted on February 8, 2008, the OIG issued a favorable opinion with regard to a health system’s prompt pay discount program.

The program would offer a discount to Medicare, Medicaid and other Federal health care program beneficiaries who paid their co-insurance or deductible amounts either before discharge or within 30 days of being notified of the program.

The OIG determined that the program would fit within the waiver of coinsurance and deductible safe harbor for inpatient stays because the arrangement met all of the requirements of the safe harbor, i.e., the discount would not be claimed as bad debt or otherwise shifted to the Medicare/Medicaid programs or other third parties, the waiver would be made without regard to reason for admission, length of stay or DRG, and the waiver would not be part of a price reduction agreement between the system and a third party payer.

Because the discounts for outpatient co-payments and deductibles would not be covered by the safe harbor, the arrangement’s specific facts were reviewed for potential violation of the anti-kickback statute and/or violation of the Civil Monetary Penalties provisions of the Social Security Act.

Based upon the following factors, the OIG determined that the program was a legitimate prompt payment discount and not a means to induce patients to self-refer to the health system. Specifically, the OIG found the following factors to be decisive:

The health system would not advertise the discount.
Patients would be told of the discount only during the actual billing process.
Other third party payers would also be informed of the prompt payment policies.
All costs of the arrangement would be borne by the health system.
The amount of the discount would bear a reasonable relationship to the amount of the avoided collection costs.

To review the full opinion, please click here.

OIG Advisory Opinion No. 08-02 Gives Approval to Web-Based Researcher/Marketing Firm's Charitable Donations on Behalf of Providers

2008-02-09T14:45:00.000-05:00

In Advisory Opinion 08-02, posted on February 5, 2008, the OIG issued a favorable opinion to a web-based marketing and research company whose clients are pharmaceutical companies and medical suppliers. The company sought to incentivize health professionals’ participation in online surveys by making a monetary donation to the health professional’s charity of choice in return for the completion of such surveys.

The OIG determined that the charitable donation would not be prohibited remuneration under the anti-kickback statute because:

All donations would be made directly to the charity.
Only 501(c)(3) organizations could be designated to receive contributions.
Even though the contribution would be in the health professional’s name, the professional could not receive a tax deduction for the donation.
Donations could not be restricted or earmarked by the health care professional.0
The health care professional would have to certify that neither they, nor any family member, were employed by, held any board or other positions, or had other financial relationships with the chosen charity.

The OIG found that the following additional safeguards provided even further protection against potential abuse:

Charitable donations would not be determined in a manner that is related to the health professionals' prescribing or referring choices.
Pharmaceutical and medical device clients would not be apprised of the health professionals’ charitable selections.
Dollar limits would be placed on the aggregate donation to any one charity that could be made by any one health care professional.

For the full text of the opinion, please visit this link.

OIG Advisory Opinion No. 08-01 Regarding Non-profit Corporation Arrangement for Donated Drugs for Needy Patients

2008-02-09T14:25:00.001-05:00

In Advisory Opinion 08-01, posted on February 1, 2008, the OIG issued a favorable opinion to a non-profit corporation’s program that allows the non-profit corporation to act as a liaison between pharmaceutical manufacturer’s patient assistance programs and clinics (including free clinics and Federally qualified health centers (FQHCs)) to arrange for the provision of medications to needy patients who do not have any form of outpatient prescription drug coverage.

The key reasons why the OIG determined that the relationship would not violate the anti-kickback statute and/or the civil monetary penalties of the Social Security Act are as follows:

There is no potential for either the free clinics or the FQHC to stockpile the medications. Rather, the clinics merely serve as a conduit between the patient assistance programs and the needy patients.
The affiliated free clinics are not in a position to generate any business for the patient assistance programs and do not bill either Medicare or Medicaid.
The arrangement between the patient assistance programs and the FQHCs are transparent, with terms documented in writing and audit trails available to demonstrate the distribution of the drugs to the eligible patients.
The drug companies cannot choose which FQHCs will be permitted to participate in the program. The non-profit corporation oversees the selection in a manner that is not conditioned on the volume or value of Federal health care program business generated by a FQHC.
Protections are in place to permit physicians to exercise independent professional judgment when choosing which medication to prescribe while working at a participating FQHC and there are no arrangements which would require physicians to prescribe the participating sponsors’ medications to insured individuals or to include the medications on the FQHC formulary.
Ultimate recipients of the medications are the financially needy patients who lack outpatient prescription drug coverage.
Although the arrangement does not fit squarely into the safe harbor for donation of goods and services to FQHC’s, it complies with the spirit of the MMA which mandated the new safe harbor.

The full text of Advisory Opinion 08-01 can be read here.

National Business Group on Health Announces Support of Mandates for Individual Health Insurance

2008-01-30T21:06:00.000-05:00

A group representing some of the country's largest employers, including the big three automakers, announced today in a press release that they would support the imposition of mandates on individuals to insure themselves and their dependent children. The press release on the National Business Group on Health's (NBGH) website announced that, in order to make this happen, individuals must be given a range of affordable choices. Not surprisingly, the group is opposed to mandates that would require employers to provide health insurance to employees, stating that it would be harmful to working families and the economy by forcing employers to eliminate jobs. The issue of mandates has been receiving a great deal of press recently in association with the presidential primaries.

CMS Seeks Recommendations and Comments for Revision to Nursing Facility Compliance Guidance

2008-01-24T22:31:00.000-05:00

Today in the Federal Register, HHS encouraged interested parties to submit comments and/or recommendations for a revised compliance guidance for the nursing facility industry. HHS noted that the original compliance guidance for nursing facilities was published in 2000 and risk areas have been more fully identified since this time. The deadline for such comments is February 8, 2008. The notice can be found at 73 Federal Register 4248.

CMS is Urging Providers to Test NPI Claims

2008-01-21T19:04:00.002-05:00

CMS recently issued a communication on its website urging providers to submit "test" claims using only the National Provider Identification (NPI). Providers who have successfully received payment for claims that included both the NPI and the Legacy identifiers (e.g., PIN/UPIN) are now urged to attempt to submit a small batch of claims using ONLY the NPI and increasing the size of such batches as they successfully receive payment.

Providers should be aware of the following important deadlines:

January 1, 2008 - the NPI must be included in the primary provider field for institutional claims (Legacy identifier may also be included).
March 3, 2008 - the NPI must be included in the primary provider field for professional claims (Legacy identifier may also be included).
May 23, 2008 - claims for both institutional and professional services must include ONLY the NPI for primary and secondary provider fields.

More information can be found on the CMS website's National Provider Identification (NPI) page.

Consultation Services Under Continued Scrutiny – WPS Posts New Educational Materials and Encourages Self Audit

2008-01-17T23:34:00.001-05:00

In late December, Wisconsin Physician Services (WPS) updated its Part B Provider Education Site to include additional educational materials related to proper billing of consultation services, including a Consultation Article and a Powerpoint Presentation that was part of a Provider Outreach and Education program in November 2007.

Consultation services have been under increased scrutiny since the publication of an OIG Report in March 2006 (Consultations in Medicare: Coding and Reimbursement) which showed that the Medicare program allowed $1.1 billion dollars more than it should have for consultation services in 2001.

The Comprehensive Error Rate Testing (CERT) program also showed an increase in payment errors on consultation services prompting the WPS Medical Review Department to look closer at data on consultation services.

WPS is urging providers to do self-audits with regard to consultation services using the information provided on the Consultation Resources page of its website and to make refunds where appropriate.

In the Consultation Article, WPS gives the following example as a situation where a consultation code should not be billed: “the originating physician knows the patient has a problem and he/she is not the best choice to treat the problem. The originating physician asks the expert (performing physician) to treat the patient’s condition. The performing provider does not provide a Consultation since he/she assumes responsibility for the problem. He/she has a new or established patient visit.”

The WPS Powerpoint presentation also discusses the use of non-physician practitioners (NPPs) to perform consultations. Specifically, this WPS guidance states that an NPP may perform a consult, but the documentation must reflect that the NPP has additional expertise over the originating physician.

Providers should consider having counsel oversee self-audits, thus protecting any rights to attorney client and/or work product privilege that they may have with regard to the results of the audit.

OIG Posts Two New Opinions Regarding Gainsharing

2008-01-16T17:12:00.000-05:00

On January 14, 2008, the Office of the Inspector General (OIG) of the Department of Health and Human Services issued two favorable Advisory Opinions on the issue of gainsharing.

OIG Advisory Opinion 07-21 involved an arrangement between a hospital and a group of cardiac surgeons. The hospital wanted to share cost savings with the physicians based upon certain recommendations, which included decreasing the use of certain disposable products or substituting the use of reusable products, standardizing the use of certain devices and supplies and decreasing the use of certain antibiotics and medications to an “as needed” basis.

While the OIG determined that the arrangement technically violated the Civil Monetary Penalty in Section 1128A(b)(1)-(2) of the Social Security Act, which prohibits payments from hospitals to physicians that may induce physicians to limit or reduce items or services provided to Medicare and Medicaid patients, the OIG also decided that there were sufficient “safeguards” and, thus did not impose sanctions.

The safeguards cited by the OIG as relevant and effective can be summarized as follows: (1) cost-savings actions and resulting savings were clearly and separately identified; (2) there was credible medical support for the position that the changes would not adversely impact patient care; (3) the arrangement applied to all patients, regardless of insurance or participation in a federal health program and cost savings were calculated on actual out of pocket expenses rather than an accounting convention; (4) historical data and clinical benchmarks were used to establish “floors” below which no savings would occur; (5) individual physicians still had available the same selection of devices and supplies as before; (6) patients were notified of the arrangement and given the opportunity to review the cost savings recommendations prior to admission in the hospital or prior to surgery (although they noted that this would not be enough standing alone); (7) financial incentives were reasonably limited in duration and amount; and (8) the group would distribute profits on a per capita basis, thus mitigating any incentive for individuals to generate disproportionate amounts of cost savings.

OIG Advisory Opinion 7-22 involved a very similar arrangement, but with respect to the anesthesiologists involved in the cardiac procedures. The OIG determined that sanctions would not be imposed because of certain “safeguards” essentially the same as those set forth above.

Stark II Regulations, Phase III Changes are Now in Effect

2008-01-15T12:59:00.002-05:00

As of December 4, 2007, the changes made in the Stark Regulations, Phase III are in effect.

On September 5, 2007, CMS issued Phase III of the Stark Regulations, with 88 pages of commentary in the Federal Register. In addition to this new final rule, CMS recently discussed additional proposed changes and comments in the July 12, 2007 proposed physician fee schedule. The continued attention to the Stark Regulations is evidence that CMS will likely increase enforcement of the regulations. The recent changes also, for the most part, appear to indicate a trend toward more stringent interpretation of the regulations. Because the Stark Regulations are very lengthy and complex, we have tried to summarize the changes that will most likely affect our clients. If you make or receive referrals from an entity with which you have a financial relationship, we encourage you to have these relationships analyzed under both the Stark regulations and the Anti-kickback statute.

Background

The Stark Regulations generally prohibit a physician from making a referral for the furnishing of Designated Health Services (“DHS”), for which payment may be made under the Medicare or Medicaid programs, to an entity with which the physician or an immediate family member has a financial relationship unless a statutory exception exists.

Designated Health Services include the following:

• Clinical laboratory services
• Physical therapy services
• Occupational therapy services
• Radiology services (including MRI, CAT scans and ultrasounds)
• DME
• Parenteral and enteral nutrients, equipment and supplies
• Prosthetics, orthotics, and prosthetic devices and supplies
• Home health services
• Outpatient prescription drugs
• Inpatient and outpatient hospital services

There are many exceptions to the prohibition, all of which require strict adherence to published criteria. Examples of commonly used exceptions, include, without limitation: certain in-office ancillary services; certain electronic prescribing items and services; certain publicly traded investments; the extension of professional courtesy in certain situations; rental of office space and/or equipment where the lease meets certain criteria; bona fide employment relationships, personal services arrangements and physician recruitment where specific criteria is met.

Violation of the Stark II law could result in a physician being required to refund money for services and imposition of civil penalties of up to $100,000.

Changes

The recently published changes, which went into effect December 4, 2008 (ninety days from the September 5, 2008 publication date), affect several of the above referenced exceptions. The changes most likely to affect our clients are as follows:

A. Professional Courtesy:

In Phase II of the Stark Regulations, CMS created an exception for professional courtesy extended to physicians on an entity’s medical staff or in an entity’s local community. In the Phase III regulations, CMS clarified that this professional courtesy exception only applies to entities with a “formal” medical staff. While this would appear on first blush to include only hospitals or similar large entities, CMS stated in its comments to the final rule that it considers a group practice or a physician office to be an entity with a “formal” medical staff that could use this exception if the other elements of the exception are met. CMS also clarified however, that in order to meet this exception, the entity must have a written professional courtesy policy that is approved by its governing body. Thus, it is very important for group practices who seek to extend professional courtesy involving designated health services to their staff or other physicians in their local community to develop a formal written policy that is in compliance with the Stark regulations.

B. “Standing in the Shoes” of a Physician Organization:

The Stark Regulations contain an exception for “indirect compensation arrangements.” Prior to the recent changes, a financial arrangement with a physician’s group practice would have been analyzed under this exception. However, the recent changes provide that a physician will “stand in the shoes” of a physician organization (e.g., a group practice or professional corporation). Thus, if you are a physician and your group practice enters into a lease arrangement or employment arrangement with a physician or entity with whom you have a referral relationship, CMS would categorize this as a “direct” compensation arrangement with the physician or entity. Thus, you would want to ensure that the arrangement met all of the criteria of a specific exception, such as the employment exception or the leased space exception. The final rule contains a “grandfather” provision for those arrangements that were analyzed and structured in accordance with the “indirect compensation exception”. However, if such agreements are renewed, they must be re-analyzed to determine whether they appropriately fit within another exception.

C. Exclusion of “Office Space Rental” from Fair Market Value Exception

Although there is a separate exception for office space rentals that meet certain criteria, such a rental could be alternatively analyzed under the catch-all “fair market value” exception which was, in some circumstances, easier to meet. Office space rentals have now been excluded from the fair market value exception, which means that all office space rentals will have to meet the separate “office space rental” exception.

D. Compliance Training

Prior to the recent changes, the Stark regulations contained an exception for compliance training offered to physicians by an entity, so long as continuing medical education credits were not awarded. The final rule provides a positive change in this regard, allowing continuing education credits to be awarded, so long as compliance remains the primary purpose of the program.

E. Additional Changes

Other changes include revisions to the Physician Recruitment exception, modification of the Personal Services exception to allow for a holdover period of up to six months under the same terms as the original agreement, and the ability of physicians to repay any compensation in excess of the permissible maximums under certain conditions, without penalty.

Additional Comments

As discussed previously, in addition to changes, CMS also used the Phase III Stark Regulations as an opportunity to clarify and comment on certain aspects of the regulations, even where no changes were made.

A. Percentage Arrangements

In comments to the Phase III rule, CMS calls into question the legality of certain “percentage arrangements” for the purposes of meeting the requirement of certain exceptions, including the personal services exception. In this rule, CMS calls into question arrangements that are based on percentage of collections or percentage of net revenues. In the recent comments to the proposed fee schedule changes in July, CMS expressed an intent to eliminate “per click” or “per unit” lease payments. Thus, it is important that compensation based on percentages or leases based upon per unit measurement be carefully analyzed for compliance.

B. Clarifications to Group Practice Compensation

In order to qualify for the in-office ancillary exception, a group practice may not compensate its members based on the volume or value of their referrals to the group, however, there is an exception for certain productivity bonuses. In the recent final rule, CMS clarified that physicians may receive a productivity bonus based on services that are personally performed or performed “incident to” the physician’s services. However, CMS also clarified that such services must meet all “incident to” billing rules and could not be services which have their own separate benefit category, such as diagnostic tests. For example a physician could not receive a productivity bonus based on x-rays unless he or she personally performed those x-rays and could not receive a productivity bonus based on physical therapy services that were not supervised in accordance with the “incident to” billing requirements.

Dr. Sanjay Gupta to cover Michigan Primaries

2008-01-13T19:45:00.001-05:00

Dr. Sanjay Gupta, CNN correspondent and Michigan native will be returning to Michigan to cover the Michigan primaries and examining the problems with Michigan's economy as they relate to health care and candidates' health care platforms.

For more information see: CNN Paging Dr. Gupta Blog - You're Health: What Matters to You

CMS Will Delay Application of Anti-Markup Rule in Certain Situations

2008-01-11T16:00:00.000-05:00

CMS published a Final Rule in the January 3, 2008 Federal Register delaying the date of applicability of certain "Anti-Markup" provisions contained in the 2008 Physician Fee Schedule Final Rule.

The Anti-Markup provisions as published in the 2008 Physician Fee Schedule Final Rule would have been effective on January 1, 2008 and would have prohibited a physician or other supplier from "marking up" the technical or professional component of a diagnostic test that was purchased by an outside supplier or performed outside of the billing physician or supplier's office. CMS acknowledged that it was not entirely clear whether certain arrangements would fall within this rule, and indicated that it needed more time to consider these issues.

Certain provisions of the rule will not be delayed, however, including anatomic pathology diagnostic services that are furnished in a "centralized building" and are not part of the "same building" (as defined by the Stark Regulations). The anti-markup provision as it applies to the technical component of purchased diagnostic tests will also be effective immediately as, according to CMS, it "is longstanding".

The final rule can be located at: 73 Fed. Reg. 404