Health Law Attorney Blog

Effective September 1, 2013, Blue Cross Blue Shield of Michigan (BCBSM) will implement a new Prescriber Prescription Block Policy. The policy focuses on protecting patient and public safety.

Under the new policy, prescriptions will no longer be payable if:
• A provider prescribes drugs that are not medically necessary, may cause significant patient harm, or are not appropriate for the documented medical condition.
• A provider is being investigated for fraud, waste, or abuse.
• A provider has been sanctioned at the time the prescription is dispensed. A provider may be sanctioned by the Office of the Inspector General, the Government Services Agency, the Centers for Medicare & Medicaid Services, or state licensing boards. BCBSM will notify sanctioned providers if they fall under the purview of the Prescriber Prescription Block Policy as well as affected members who have had a prescription written by a sanctioned provider within the past four months. Following notification, all prescription claims ordered by a sanctioned provider will be rejected. The block will be effective for five years or more.

BCBSM provided a list of steps it will take prior to acting under the new policy in order to prevent blocking a provider unnecessarily. The list includes, but is not limited to:
• Conduct an investigation to review the past 60-days of the prescriber's activity,
• Obtain opinions from BCBSM medical consultants,
• Present findings and obtain approval for a provider sanction from BCBSM executive leaders and the Audit Investigative Committee.

Pharmacies will be notified at the point-of-sale that a prescriber is sanctioned by both a fax-blast communication and an electronic message. In such a situation, the member may choose to pay for the prescription out of pocket but he will not be reimbursed by BCBSM.

To see more details on the new policy, click here.

Continue reading "BCBSM Announces a Prescriber Prescription Block Policy" »

On May 9th, the Centers for Medicare and Medicaid Services (CMS) announced the start of a procurement process for new Medicare Fee for Service Recovery Audit Program contracts. The General Services Administration issued a Request for Quotes (RFQ) seeking four A/B Recovery Auditors, one national Durable Medical Equipment auditor and one Home Health/Hospice Recovery Auditor.

On May 23rd, the CMS announced that it has completed the next step in the transition process by creating a new Recovery Audit Program map with revised jurisdictions. To see the revised map, click here.

The current RACs will continue to function throughout the transition. CMS advised that beginning in Summer 2013, there may be a decline in Additional Documentation Requests (ADRs). However, all prepayment reviews and post-payment manual therapy reviews will continue without decline.

Continue reading "May 23, 2013 - CMS Announces a Revised Recovery Audit Program Map" »

On May 18, 2013, the Office of the Inspector General (OIG) of the Department of Health & Human Services issued a Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs. This Bulletin replaces the previous version issued in 1999.

The Bulletin performs several functions:

• Lists prohibited payments.
• Details the scope of the potential civil monetary penalties (CMPs)
• Clarifies CMP liability for employing or contracting with an excluded person
• Provides best practices for screening employees and contractors

Prohibited Payments
Since the publication of the 1999 Bulletin, various statutory amendments, including the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and the Patient Protection and Affordable Care Act of 2010, have expanded the OIG's authority to exclude individuals and health care entities from Federal health care programs. The effect of an OIG exclusion is that no Federal health care program payment may be made for any items or services furnished (1) by an excluded person or (2) at the medical direction or on the prescription of an excluded person. The exclusion and its prohibitions follow the individual, even if he changes to another health care profession while excluded.

Prohibited payments include:
• All methods of Federal health care program payment, including itemized claims, cost reports, fee schedules, capitated payments, a prospective payment system, or other payment system and applies if the payment is made to a State agency or a person that is not excluded.
• Payment for items or services furnished by an excluded individual including items and services beyond direct patient care. For example, the prohibition includes payment for the preparation of surgical trays, the review of treatment plans, and transportation services such as ambulance drivers, regardless of whether such services are separately billable or are included in a bundle payment.
• Administrative and management services that are payable by the Federal health care programs, even if the services are not separately billable. This includes health information technology services and support, strategic planning, billing and accounting, staff training, and human resources, unless wholly unrelated to Federal health care programs.
• Any items and services furnished at the medical direction or on the prescription of an excluded person when the person furnishing the items or services either knows or should know of the exclusion. Providers that furnish items and services on the basis of orders or prescriptions, such as imaging centers and laboratories, are subject to liability if they furnish items to a Federal program beneficiary on the basis of an order written by an excluded physician. To avoid liability, providers should ensure that the ordering physician is not excluded.

Potential CMPs
An excluded person that submits a claim for payment to a Federal health care program or causes such a claim to be submitted may be subject to a CMP of $10,000 for each claimed item or service furnished during the period that the person was excluded as well as treble damages and program exclusion. The excluded person may also be subject to criminal and civil liability.

CMP Liability for Employing or Contracting with an Excluded Person
The updated bulletin clarifies that a provider may employ or contract with an excluded individual without CMP liability as long as no Federal health care program pays, directly or indirectly, for items or services being provided by the excluded individual, or if the excluded individual furnishes items or services solely to non-Federal health care program beneficiaries. The provider must also ensure that no claims are submitted to, and no payment is received from, Federal health care programs for items or services that the excluded individual provides. Such items or services must relate solely to non-Federal health care program beneficiaries.

Best Practices
Considering the range of relationships that the revised Bulletin includes, the OIG recommends searching the OIG-administered List of Excluded Individuals and Entities (LEIE) prior to hiring or contracting with an individual or company. The OIG recommends that employers screen individuals and contractors who provide any item or service which is either directly or indirectly, in whole or in party, payable by a Federal health care program. To avoid potential CMP liability, the OIG further recommends that providers perform monthly screenings using the LEIE to determine the exclusion status of current employees and contractors. Providers should determine whether or not to screen contractors, subcontractors, and the employees of contractors using the same analysis that they would for their own employees.

The OIG suggests that when checking the LEIE, providers should maintain documentation of the initial name search performed and any additional searches conducted. All names, including maiden names, should be searched.

The OIG recommends that providers use the LEIE as the primary database for purposes of exclusion screening as it is updated monthly and provides more details about persons excluded by OIG than other lists. However, additional exclusion lists can be found at:
• https://www.sam.gov
• http://www/npdb-hipdb.hrsa.gov

The full text of the Bulletin can be found here.

Continue reading "Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs" »

On May 13, 2013, the American Orthotic and Prosthetic Association ("AOPA") filed suit in the federal district court for the District of Columbia against the Centers for Medicare and Medicaid ("CMS"), alleging that payment denials by CMS and its Recovery Audit Contractors ("RAC") are invalid. The lawsuit states that CMS rules call for denial of payment for a prosthetic device if specific documentation from the prescribing physician is not obtained by the supplier of the prosthetic device, despite the fact that other documentation shows that the device is medically necessary.

The complaint alleges that new standards issued on CMS' contractor websites in a "Dear Physician" format are void because they did not go through the rulemaking process with a public notice and comment period. The complaint also argues that CMS changed its standard - where before records of prosthetists (deemed professionals) were accepted to show medical necessity with the same deference given as that afforded to other medical records, including physician records. Further, the complaint alleges that the posting of the "Dear Physician" Letter and subsequent enforcement of it is arbitrary and capricious. Additionally, the AOPA expresses frustration with CMS' inaction and lack of enforcement against physicians who do not provide prosthetists with the required documentation. In essence, the complaint argues, the physician has no skin in the game as no incentive exists for him to provide appropriate documentation.

The full complaint can be found here.

Continue reading "American Orthotic and Prosthetic Association Files Lawsuit Alleging Unlawful Changes in Medicare Standards Resulting in Unfair RAC/Prepayment Audits" »

On April 30, 2013, the Department of Health and Human Services ("HHS") Office for Civil Rights ("OCR") announced the availability of new tools to educate health care providers and consumers about the Health Insurance Portability and Accountability Act ("HIPAA") Privacy and Security Rules. Specifically for health care providers, three HIPAA education modules (offering free CME credits) have been made available with a free account through Medscape. These include:

• Patient Privacy: A Guide for Providers
• HIPAA and You: Building a Culture of Compliance
• Examining Compliance with the HIPAA Privacy Rule

The OCR has also produced a video, entitled "HIPAA Security Rule", designed for providers in small practices. Additional videos and materials related to consumer education about HIPAA are available through the OCR's YouTube site and the OCR Consumer Guidance website.

Continue reading "OCR Releases HIPAA Privacy and Security Education Tools" »

The state of Michigan joined more than two dozen states in passing legislation to permit reporting of unsafe drivers by healthcare providers. Pursuant to Michigan Public Acts 354 and 355 of 2012, signed into law in late December of 2012, physicians and optometrists may now report information regarding a patient's mental or physical qualifications to operate a motor vehicle to the Secretary of State. The new law, codified at MCL 333.5139 (and correlating with MCL 257.362 which includes Michigan driver's license qualifications), is summarized below.

Episodes Affecting Safe Motor Vehicle Operation

The purpose of the law is to allow for reporting of a patient's mental or physical qualifications that may affect his/her ability to safely operate a motor vehicle. Specifically, the report should specify an "episode" that affects a patient's mental or physical qualifications to operate a vehicle. An episode includes:

o A condition causing or contributing to loss of consciousness, blackout, seizure, fainting spell, syncope, or other impairment of level of consciousness;
o An experience causing impairment of an individual's driving judgment; and
o Impairment of vision.

No Affirmative Obligation to Report or Warn

Physicians and optometrists have no affirmative obligation to report or warn under the statute. All reporting is voluntary. Physicians and optometrists who choose not to report under this statute are specifically immune from any criminal or civil liability to the patient or a third party injured by the patient's actions. The same immunity applies to any report under the statute made to the secretary of state.

Reporting and Minimum Recommendations

Reports made to the secretary of state may be made for the purpose of initiating or contributing to an examination of a patient's mental or physical qualifications to drive. In the report the physician or optometrist must recommend a period of suspension of at least 6 months (12 months for a commercial license). Thus, a reporter should consider whether the medical condition or "episode" underlying the report merits a suspension of at least 6 months because any report submitted under the statute must recommend at least a 6 month suspension.

Privacy Considerations

Public Act 355 explicitly states that reports submitted to the secretary of state are confidential. For purposes of reporting under this statute, regulations promulgated under the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") permit such disclosure if the reporter believes in good faith that the disclosure is necessary to prevent or lessen a serious and imminent threat to the health and safety of a person or the public and the disclosure is to a person or persons reasonably able to prevent or lessen the threat. See 45 CFR 164.512(f).

Note that the statute allows for reporting to the secretary of state and warning third parties. While reporting to the secretary of state seems to fit within the permitted disclosure for a threat to health or safety, a physician or optometrist should ensure prior to disclosing protected health information to third parties under the Michigan statute that such a disclosure complies with HIPAA as well.

Continue reading "New Michigan Law Permits Reporting of Unsafe Drivers by Physicians and Optometrists" »

The Department of Health and Human Services Office of Inspector General ("OIG") issued an Updated Provider Self-Disclosure Protocol ("SDP") on April 17, 2013 which supersedes the original SDP published in 1998 and three later-released open letters that provided additional guidance. The SDP clarifies that it is only available for "all health care providers, suppliers, or other individuals or entities who are subject to OIG's Civil Monetary Penalties ("CMP"). The notable exclusion is violation of the Physician Self-Referral Law (a.k.a. "Stark Law") - self-disclosure of Stark Law violations can instead be disclosed through a similar Self-Referral Disclosure Protocol through the Centers for Medicare and Medicaid Services ("CMS"). The OIG also notes that the self-disclosure process is not an alternative means for seeking an OIG opinion regarding whether an actual or potential violation has occurred.

Importantly, because good faith disclosure of potential fraud through the SDP is a sign of a "robust and effective compliance program," the OIG has instituted a presumption against requiring integrity agreement obligations in exchange for a release of the OIG's permissive exclusion authorities.

When the SDP is used, the disclosing party must agree to waive pleading of statute of limitations, laches, and other similar defenses, so as not to simply use the self-disclosure process as a device to delay OIG investigation past the statute of limitations. The disclosing party must also ensure that corrective action is taken to resolve any impropriety. The SDP outlines 11 core requirements for all disclosures and then sets out specific subsets of requirements for false billing disclosures, conduct involving excluded persons, and conduct involving the Anti-Kickback Statute or Stark Law.

The SDP states that self-disclosing parties should expect to repay more than single damages, and that the OIG's general practice is 1.5 times single damages. A minimum $50,000 settlement is required for any case accepted into the SDP. If a self-disclosing party does not believe it can afford the penalties, it must disclose pertinent financial information to support its belief.

The full Updated OIG's Provider Self-Disclosure Protocol is available here. In addition, the OIG updated its SDP training video and issued a new podcast explaining the changes. These are available through the OIG website.

Continue reading "UPDATE TO OIG's PROVIDER SELF-DISCLOSURE PROTOCOL" »

On April 25, 2013, the Centers for Medicare and Medicaid ("CMS") announced the release of additional information for states on implementation of the Affordable Care Act ("ACA"), part of a series of FAQs addressing the subject. The new FAQ provides information on three topics:

1. The availability of the federal match (75%) for maintenance and operations, and conditions for receiving funding;

2. Issues regarding communication between Medicaid and the "Federally-facilitated Marketplace", including eligibility decisions, and enrollment registers; and

3. Section 1115 demonstrations guidance.
The FAQ, as well as previously released FAQs in the series are available here.

Continue reading "CMS Announces Release of Additional FAQs Regarding the State Implementation of the ACA" »

On Thursday, April 25, 2013, the Centers for Medicare and Medicaid Services announced that it would delay implementing Phase 2 of its Ordering and Referring Physician Claims Editing program due to technical difficulties. CMS has delayed implementing phase 2 of the program before and it is unclear when it will resolve the technical issues.

The Ordering and Referring Provider program is designed to ensure that claims from Laboratories; Imaging Centers; Durable Medical Equipment, Prosthetics, and Orthotics Suppliers ("DMEPOS"); and Home Health Agencies were appropriately referred or ordered by an eligible provider. Once Phase 2 is implemented, claims from the providers and suppliers listed above will be reviewed to ensure that they include:

1. The name and National Provider Identifier ("NPI") of a referring physician/non-physician provider;
2. That the referring/ordering provider is registered with the Internet-based Provider Enrolment, Chain and Ownership System ("PECOS"); and
3. That the ordering/referring provider is eligible to refer/order the supplies or service at issue in the claim.

If a claim does not meet the requirements, the claim will be denied.

As a result of the announced delay in Phase 2 implementation, CMS has instructed its Contractors to continue providing educational edits to inform providers/suppliers when a claim lacks the appropriate information or when the referring/ordering provider is not eligible to order/refer that particular service or supply.

This delay in implementation is a good time for referring and ordering providers to verify that they are properly enrolled in PECOS, and, likewise, for the entities listed above to review their billing practices to ensure they are capturing the required information from the referring and/or ordering providers.

The Health Law Partners will continue to monitor CMS for updates on Phase 2 implementation and will provide an update in this blog.

Continue reading "CMS Announces Delay to PECOS Phase 2 Ordering or Referring Provider Denial Edits" »

On Thursday, April 11, 2013, the Obama Administration released its Budget Request for Fiscal Year 2014 ("FY 2014") that begins at the beginning of October. If implemented, the Budget Proposal would include approximately $1.8 trillion in savings over the next ten years, enough to replace the automatic sequestration that took effect last month and was imposed as part of the Budget Control Act of 2011.

To achieve these savings, the Administration's Budget Request includes nearly $401 billion in Healthcare reductions that would likely affect all providers. While it is nearly impossible that the budget will pass Congress, some of the proposals are likely to make it into law in one form or another.

One of the numerous proposals from the Centers for Medicare and Medicaid Services ("CMS") is beginning in 2015, to exclude radiation therapy, outpatient therapy, and advanced imaging services from the Stark Law's exception for In-Office Ancillary Services ("IOAS") except in cases where a practice meets certain accountability standards, as defined by the Secretary. The IOAS exception to the Stark Law's prohibition on physician self-referrals was intended to allow physicians to provide beneficiaries with certain services that were a natural extension of their core practices and to lawfully bill for such services; however, CMS takes the position that radiation therapy, outpatient therapy, and advanced imaging services, in a significant number of cases, do not fit within the rationale underlying the IOAS exception insofar as they are "rarely performed on the same day as the related office visit." In addition, CMS cites evidence suggesting that allowing these services to fit the IOAS exception has led to overutilization and rapid growth of these services. By excluding the services from the exception, CMS believes that the government will save nearly $6.1 billion over the next 10 years.

CMS has also proposed to begin requiring prior authorization for advanced imaging services on the theory that the rapid growth in the number and intensity of services in the last decade is the result of inappropriate use of the services. In its summary of the proposal, CMS notes that this proposal would bring the program in line with private payers, which typically require prior authorization. Furthermore, the proposal satisfies a request from the Government Accountability Office ("GAO") that CMS implement prior authorizations or attempt other methods to limit growth in spending for advanced imaging services. However, at this time, CMS does not believe this will have an effect on the budget.

Continue reading "Obama Administration Budget Request for Fiscal Year 2014 Proposal Would Exclude Certain Services from the In-Office Ancillary Services Exception to Stark and Require Prior Authorization for Advanced Imaging Services" »

Jessica Gustafson, Esq. and Abby Pendleton, Esq., co-chairs of the firm's Medicare and RAC department authored an ABA Health eSource article titled "CMS Acquiesces to Hospital Pressure, Allows Part B Billing of Hospital Services Following Part A Denial of Inpatient Hospital Claims for Medical Necessity: Is It Enough?" To view this article click here.

Continue reading "CMS Acquiesces to Hospital Pressure, Allows Part B Billing of Hospital Services Following Part A Denial of Inpatient Hospital Claims for Medical Necessity: Is It Enough?" »

On March 26, 2013, the Office of Inspector General ("OIG") of the United States Department of Health and Human Services ("HHS") issued a Special Fraud Alert ("SFA") regarding the potential for Physician-Owned Distributorships ("PODs") to violate the federal Anti-Kickback Statute ("AKS"). While the OIG has provided guidance previously on the potential for physician-owned entities to create AKS and other fraud and abuse issues, this SFA focuses on the "specific attributes of PODs" that the OIG believes makes these entities "inherently suspect under the anti-kickback statute. With the increase in prevalence of these types of entities, this is an important development that has even piqued the interest of the Wall Street Journal.

At the heart of the OIG's new SFA is the agency's belief that any "opportunity for a referring physician to earn a profit" could be unlawful remuneration under the AKS. Previously, the OIG's has highlighted a number of questionable features for physician-owned entities, such as:

1. Selecting investors for their potential to generate business;
2. Requiring investors that retire or move from the service area to divest their ownership; and
3. Distributing outsized returns compared to the level of risk in the investment.

In particular, the OIG believes that physician-owned entities, particularly PODs, with these features may lead to issues including:

• Corruption of medical judgment;
• Overutilization;
• Increased costs to Federal and State Medical Programs; and
• Unfair competition.

In this new SFA, the OIG, recognizing that whether an entity is lawful under the AKS is dependent on the intent of the parties involved, includes a number of features that the agency believes provide evidence of the intent to induce illegal remuneration.

• The size of the investment offered to each physician varies with the expected or actual volume or value of devices used by the physician.
• Distributions are not made in proportion to ownership interest, or physician-owners pay different prices for their ownership interests, because of the expected or actual volume or value of devices used by the physicians.
• Physician-owners condition their referrals to hospitals or ASCs on their purchase of the POD's devices through coercion or promises, for example, by stating or implying they will perform surgeries or refer patients elsewhere if a hospital or an ASC does not purchase devices from the POD, by promising or implying they will move surgeries to the hospital or ASC if it purchases devices from the POD, or by requiring a hospital or an ASC to enter into an exclusive purchase arrangement with the POD.
• Physician-owners are required, pressured, or actively encouraged to refer, recommend, or arrange for the purchase of the devices sold by the POD or, conversely, are threatened with, or experience, negative repercussions (e.g., decreased distributions, required divestiture) for failing to use the POD's devices for their patients.
• The POD retains the right to repurchase a physician-owner's interest for the physician's failure or inability (through relocation, retirement, or otherwise) to refer, recommend, or arrange for the purchase of the POD's devices.
• The POD is a shell entity that does not conduct appropriate product evaluations, maintain or manage sufficient inventory in its own facility, or employ or otherwise contract with personnel necessary for operations.
• The POD does not maintain continuous oversight of all distribution functions.
• When a hospital or an ASC requires physicians to disclose conflicts of interest, the POD's physician-owners either fail to inform the hospital or ASC of, or actively conceal through misrepresentations, their ownership interest in the POD.

While the OIG considers the factors above evidence of intent, the agency does not consider the list a "blueprint for how to structure a lawful POD" and other PODs without these characteristics may violate the AKS. In particular, the OIG mentions concerns with PODs that:

• Exclusively serve its physician-owners rather than a POD that also sells to Ambulatory Surgical Centers ("ASCs") and Hospitals and
• Purport to designs and sell their own devices, particularly when the physician-owners are the sole users of the device.
Because both sides of a transaction are liable for violations of the AKS, the SFA indicates Hospitals and ASCs that have arrangements with PODs to provide devices are also at risk if one purpose of the arrangement is to secure physician referrals to the facilities.

Following OIG's release of this SFA, the Physician-owners, managers, and partners of existing PODs, as well as individuals and/or entities considering forming a new POD, should contact their legal counsel to begin to examine the structure of their entities in order to, at minimum, ensure the entities do not include any of the features the OIG highlight above. Likewise, hospitals and ASCs should examine agreements with PODs to ensure they are not structured to generate referrals from the physician-owners.

Continue reading "HHS Office of Inspector General Issues Special Fraud Alert Regarding Physician Owned Distributorships" »

On March 13, 2013, the Centers for Medicare and Medicaid Services ("CMS") concurrently issued Ruling CMS-1455-NR (the "Ruling") and a proposed rule for revising Medicare Part B billing policies in the event of Part A payment denials (the "Proposed Rule").

BACKGROUND

Since the conclusion of the Recovery Audit Contractor ("RAC") demonstration program and prior to March 13, 2013, CMS has taken the position that following a contractor's denial of a Part A inpatient hospital claim, hospitals were permitted to bill Medicare Part B for only a very limited portion of the denied services (i.e., the "ancillary services"). Moreover, these ancillary services could only be billed under Part B if such services were provided during the prior year under existing timely filing rules. Compounding the litany of financial problems created for hospitals from RAC denials, the RACs have denied an extraordinary number of short stay inpatient claims, in many cases many years following the dates of service, leaving hospitals with zero payment for services fully rendered, which the hospitals believe were reasonable and necessary under Part A. Although in many cases the RACs have determined that the services were reasonable and necessary as outpatient services, the RACs failed to provide Part B offset.

Accordingly, hospitals have had no choice but to vigorously pursue relief through the Medicare appeals process. In many cases, hospitals have argued that the inpatient services were medically necessary. Moreover, as an alternative, hospitals have argued that they are at least entitled to an offset under Part B (e.g., payment for outpatient observation services, payment for the procedure as if the patient had been an outpatient, etc.). Notably, some Administrative Law Judges ("ALJs") have agreed that to the extent the Part A denial is upheld, the hospital is entitled to Part B payment (not limited to ancillary services) and have ordered same ("Partially Favorable Decisions"). The Medicare Appeals Council likewise agrees and has issued many decisions to this effect. Although CMS has been vocal in its disagreement on this issue, in July of 2012, CMS issued a memorandum to its contractors providing instructions as to how to effectuate the Partially Favorable ALJ and MAC decisions. For the past few months, many ALJs have also started to remand cases back to the Qualified Independent Contractor ("QIC") stage of appeal as the QICs have ignored the hospitals' arguments related to the Part B offset issue. Amazingly, despite the remand orders, the QICs have been reissuing the exact same decisions made in the first instance, in essence failing to comply with the ALJ's orders and refusing to address the Part B offset issue.

CMS' position, as adopted by its contractors, has led to a significant financial impact on hospitals as well as resulted in the unnecessary unburdening of the Medicare appeals process.

CMS STEPS IN

Given pressures asserted by the hospital community, including the recent litigation over the above issues filed by the American Hospital Association and five (5) health systems, on March 13, 2013, CMS announced a new Ruling in conjunction with the release of a proposed rule to define Part B billing policies when a Part A claim for a hospital inpatient admission is denied as not medically reasonable and necessary. While this Ruling provides significant relief, CMS' continued position that outpatient observation services cannot be billed is troubling. Moreover, CMS proposed long term solution as set forth below is not palatable for the hospital community.

CMS RULING 1455-NR

Applicability

Ruling 1455-NR (the "Ruling") became effective immediately on March 13, 2013. The Ruling is the interim guideline until CMS finalizes the proposed rule on the issue, establishing a permanent policy. The Ruling reiterates CMS' position that the MAC and ALJ decisions discussed above are contrary to longstanding CMS policy that only allows billing for Part B ancillary services within a specified time from the dates of service (following a finding of Part A overpayment). The Ruling acknowledges that CMS is "acquiescing" to the ALJ and MAC decisions discussed above, and is applicable to all denials made (1) while the Ruling is in effect, (2) prior to the effective date of the Ruling where appeal rights have not expired, and (3) prior to the effective date for which an appeal is pending.

Summary of Billable Services under Ruling

When a Part A claim for inpatient services is denied by a Medicare contractor (not self-audit determinations or utilization review determinations) as not reasonable and necessary, the hospital may do the following:

1. Submit a Part B inpatient claim for more than just ancillary services. The hospital is entitled to bill a Part B inpatient claim for the Part B services that would have been payable had the beneficiary originally been treated as an outpatient rather than admitted as inpatient. However, CMS states that the hospital may NOT bill for those services that specifically require an outpatient status (e.g., outpatient visits, ED visits, and outpatient observation services). CMS' decision to not permit observation services is particularly problematic as many of the cases at issue involve admissions from the ER where observation services would be applicable.

2. Submit a Part B outpatient claim for reasonable and necessary services for the outpatient services furnished during the 3-day payment window prior to the original inpatient window, including ED visits and observation services.

No Duplicate Claims

In order to rebill the claims, a hospital cannot have an outstanding appeal for payment under Part A. In other words, a hospital must withdraw the pending Part A appeal or wait for an appeal decision to become final or binding before rebilling is allowed. Once a claim for Part B reimbursement is submitted, the hospital will no longer be able to pursue an appeal for the Part A claim.

Timeframe for Rebilling

While the Ruling is in effect, a hospital will have 180 days from the date of determination or dismissal of a Part A appeal to rebill under Part B. The Ruling retains the presumed date of receipt: 5 days from the date of the notice/decision unless there is evidence to the contrary.

Treatment of Current ALJ Remands

Cases that have been remanded by an ALJ will be returned to the ALJ level and adjudicated according to the new scope defined by this Ruling - namely, the ALJ may only decide if Part A inpatient billing was appropriate because the services provided were reasonable and medically necessary. According to the Ruling, it is CMS' position that the ALJ may not order Part B payment. Rather, the hospital must either withdraw the appeal from the ALJ or wait for a determination before rebilling for Part B services. This statement is particularly problematic, raising questions as to whether CMS has such authority via a memorandum ruling to essentially take away a provider's due process appeal rights. Hospitals who seek outpatient observation payment as an alternative are well advised to continue making arguments in the appeals process as such issues may need to be preserved for potential federal court cases. Patient Status (copayments, deductibles, etc.)

Under the Ruling, because a patient's status (inpatient vs. outpatient) cannot be changed after discharge, the patient will be considered an inpatient for Part B inpatient services billed, and an outpatient for Part B outpatient services billed.

Part A/B Rebilling Demonstration Terminated

The Ruling noted that the demonstration program for Part A to Part B billing, an experiment targeted at solving the problem of excessive lengths of observation care stays, is terminated since the Ruling and the permanent rule to follow are the perceived resolution to the problem.

PROPOSED RULE FOR PART B INPATIENT BILLING IN HOSPITALS

The Ruling is only the interim solution. Also on March 13, 2013, CMS released a proposed rule to be published in the Federal Register on March 18, 2013, which would supersede the Ruling once issued as a final rule. The Proposed Rule would retain the right for hospitals to rebill under Part B for inpatient hospital services deemed not to be reasonable and medically necessary within the same scope as defined in the Ruling, but significantly narrows the circumstances for doing so. In fact, CMS readily admits that the Proposed Rule will "greatly limit the capacity in which a hospital could rebill," thus offsetting the cost to the Medicare program. The additional limitations not present in the Ruling, but introduced in the Proposed Rule are described below.

As detailed below, CMS's proposed long term solution is not a fair remedy for hospitals and must be challenged. Hospitals must take advantage of the comment period as well as continue to pursue legal recourse if necessary.

One Year from Service Limitation

The most significant problem with the proposed rule is CMS' position that Part B claims may only be filed within one (1) year of the beginning date of service, irrespective of any audit or decision on appeal. This severely restricts the availability of CMS' solution and casts doubt as to its real intention behind the Proposed Rule. If a determination is not made within one year of the beginning date of service (which will be the circumstances in most audit determinations outside of pre-payment review), a hospital will not be able to avail itself of Part B billing in the event that Part A services are found by an auditor to be not reasonable and medically necessary. CMS treats the billing as an original claim, and not as an adjustment.

Hospitals May "Self-Audit" and Rebill

Unlike the interim solution under the Ruling discussed above, the Proposed Rule would allow hospitals that discover inpatient hospital admissions to be not medically necessary in the course of utilization reviews to rebill these claims as Part B if the other requirements of the Proposed Rule are met. CMS anticipates that hospitals will increase "self-audits" and rebill under Part B, saving the Medicare program money by reducing the number of Part A claims. CMS also anticipates lower appeal volumes.

Patient Requirement and Treatment

For a hospital to be allowed to rebill services under Part B, the subject patient must be enrolled in Medicare Part B. The Proposed Rule also requires that any Part A payment collected from the patient be refunded. Additionally, the Proposed Rule contemplates requiring prior notice to patients about possible changes in deductible and cost sharing if Part A payment is denied. Patients would continue to be liable for Part B copayments, the full cost of drugs that are usually self-administered, and Part D coverage (the patient may pursue Part D reimbursement).
A patient's right to appeal a Part A inpatient admission denial is not extinguished by a hospital's submission of a Part B claim. If a patient has a pending Part A claim, the hospital may not file a concurrent Part B claim. If the patient's appeal is not decided within 12 months of the date of service, hospital will not be able to rebill under Part B.

HOSPITAL IMPACT

While CMS purports to address the problem of increasing lengths of outpatient hospitalizations and resolve the piecemeal solution of MACs and ALJs ordering payment as if outpatient services were performed when it is determined that inpatient hospital services are not reasonable and medically necessary, in reality the Proposed Rule will not likely result in these solutions.

First, as noted above, in permitting hospitals to rebill claims as Part B claims if an inpatient hospital claim is denied as not medically necessary under Part A, CMS has expressly created an exception for rebilling observation services; this is not permitted. Therefore, as it is clear that RACs are continuing to aggressively deny hospital "short stay" cases, there is very little incentive for hospitals not to admit beneficiaries as outpatients and order observation services for the first 24-48 hours of each hospitalization, in cases where there beneficiary will require services that can be provided both to "outpatient observation" patients and inpatients (i.e., ongoing monitoring and assessment). This result decreases reimbursement to the hospitals, and increases costs passed along to beneficiaries and does not ensure "accurate" reimbursement.

Moreover, creating a result that ALJs are purportedly stripped of authority to issue "partially favorable" decisions raises significant due process concerns.

The one-year claims filing limitation included in the Proposed Rule would put a hospital between a rock and a hard place - it must decide whether to preemptively accept reduced payment when in fact it is very likely that an ALJ or MAC may find that inpatient hospital services were indeed medically necessary, or to risk losing all payment for medically necessary services rendered to the Medicare patient.

For the reasons described above, the Proposed Rule does not create a meaningful solution for hospitals, and will not result in more "accurate" payments being made to hospitals.

The HLP intends to submit comments to this Proposed Rule. For more information on the information addressed herein, including RACs, the Ruling or Proposed Rule, please contact Abby Pendleton or Jessica Gustafson at (248) 996-8510.

On March 8, 2013, the Centers for Medicare and Medicaid Services ("CMS") issued Transmittal 2668 (Change Request 8180) to Publication 100-04 (Medicare Claims Processing), rescinding and replacing Transmittal 2634 (January 11, 2013). Transmittal 2634 provided clarifications in the manual language to reflect revisions to 42 C.F.R. § 410.69. The newly-released Transmittal 2668 maintained all changes made by Transmittal 2634, but deleted two inadvertently retained sections: 140.1.1 and 140.1.2.

42 C.F.R. § 410.69, which went into effect January 1, 2013, defines and sets forth the requirements for certified registered nurse anesthetists ("CRNAs") and anesthesiologist's assistants ("AAs"). § 410.69 defines "Anesthesia and related care" as "those services that a certified registered nurse anesthetist is legally authorized to perform in the state in which the services are furnished." An "Anesthetist" encompasses both CRNAs and AAs.

Transmittal 2634 amended Chapter 12 Section 140 and its subsections as follows:

• Defined "Anesthetist" consistent with 42 C.F.R. § 410.69, including CRNAs and AAs
• Added "nonphysician" as clarification to the term anesthetist
• Removed the applicable CRNA conversion factor from the calculation of the anesthesia services fee schedule for services on or after January 1, 1996 (i.e. after that date, the applicable CRNA conversion factor is no longer used in determining the fee schedule)
• Added "reasonable and necessary" to the medical or surgical services performed by CRNAs which will be paid for by CMS

Transmittal 2668 replaced Transmittal 2634, keeping all changes, but removing Sections 140.1.1 and 140.1.2, which were inadvertently retained by Transmittal 2634. These sections related to notifications/verifications of certification and renewal of certification of CRNAs and AAs by and between CMS, employers of CRNAs/AAs, and carriers. All other changes made by 2634 were retained by 2668.

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The Department of Health and Human Services ("HHS" or the "Department") has marginally raised the interest rate on overpayment debts owed to the Department. HHS published notice of the newly certified interest rate for the quarter ended December 31, 2012 in the Federal Register on March 5, 2013. The new rate, 105/8%, represents a ¼% increase from the previous quarter, ending September 30, 2012. 45 C.F.R. §30.18 directs HHS to charge a rate of interest as determined and fixed by the Secretary of the Treasury, but allows for variation by statute, contract, or repayment agreement. The rate applied by HHS tends to trail the Treasury rate from the previous quarter. Notably, 42 C.F.R. § 405.378, which governs interest charges also imposes the same interest rate on underpayments owed to providers. CMS Transmittal 217 (Change Request 8201) to Publication 100-06, published January 11, 2013) applies the same 105/8% rate to underpayments as well as overpayments, effective January 17, 2013.

Continue reading "HHS Slightly Increases Interest Rate on Overpayment Debts/Underpayments Owed Providers" »