RECOVERY AUDIT CONTRACTOR (RAC)
We have extensive experience with RAC audits and appeals, working directly with healthcare entities subject to RAC audits.
STARK ANDANTI-KICKBACK
We have represented Independent Diagnostic Testing Facilities (“IDTFs”), mobile leasing entities, radiology group practices, and other imaging providers.
STAFF PRIVILEGES & LICENSING MATTERS
We provide assistance and guidance through the legal process focused on the goal of resolving your matter successfully and efficiently.
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On July 29, 2016, the Centers for Medicare & Medicaid Services (“CMS”) announced that it is expanding statewide (and extending for an additional six (6) months), the temporary enrollment moratoria on new Medicare Part B home health agencies (“HHAs”) in Florida, Texas, Illinois, and Michigan.  The statewide expansion also applies to Medicaid and Children’s Health Insurance Program (“CHIP”).

The expansion and extension also apply to non-emergency ground ambulance suppliers in New Jersey, Pennsylvania, and Texas.  CMS is also lifting the temporary moratoria on all Medicare Part B, Medicaid, and CHIP emergency ground ambulance suppliers.  These changes are effective as of July 29, 2016.

CMS also announced the Provider Enrollment Moratoria Access Waiver Demonstration (“PEWD”).  Under PEWD, CMS can allow exceptions to enroll providers and suppliers in the moratoria areas if access to care issues are identified and for the development and improvement of methods of investigating and prosecuting fraud in Medicare, Medicaid, and CHIP.

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The United States Department of Health and Human Services has new actions planned to address the opioid crisis. The buprenorphine rule has been finalized, which allows physicians who have waivers to prescribe buprenorphine products (e.g., Suboxone) for up to 100 patients for 1 year or more to obtain a waiver to treat up to 275 patients. Also, per Centers for Medicare & Medicaid Services (CMS) many doctors have reported feeling financial pressure to overprescribe opioids since Medicare payments to hospitals are tied to scores on the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey, therefore CMS is recommending that the pain management questions on the HCAHPS be eliminated. Lastly, Indian Health Service is mandating that its opioid pharmacists and prescribers check their state prescription drug monitoring program database before dispensing or prescribing any opioids. In an effort to improve and expand prescriber education and training programs, HHS will also be conducting over a dozen studies on pain treatment and opioid misuse.

To learn more about the latest actions by HHS see the HHS July 6, 2016 news release.

Robert S. Iwrey, Esq., a founding partner of The Health Law Partners, P.C., practices in all areas of healthcare law and devotes a substantial portion of his practice assisting clients in pharmacy legal matters including compliance, third party payor audits, government investigations, state licensing and DEA registrations. For more information regarding this article or pharmacy legal matters, please contact Robert S. Iwrey, Esq. at (248) 996-8510 or (212) 734-0128 or riwrey@thehlp.com.

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New rules published on June 30th, 2016 in the Federal Register could dramatically change the regulatory enforcement landscape for healthcare providers, with fraud penalties nearly doubling under the False Claims Act and the Anti-Kickback Act.

The False Claims Act (which in pertinent part imposes penalties on healthcare providers for submitting false claims to a government program) has had a penalty range of $5,500 to $11,000 per claim since 1996, but such penalties will increase to a range of $10,781 to $21,563 per claim. Penalties for violations of the Anti-Kickback Act (which prohibits physicians from referring Medicare beneficiaries to an entity in which they have a financial relationship for designated health services) will correlatively be substantially enhanced, from $11,000 per violation to $21,563 per violation.

The basis for these adjustments is the Federal Civil Monetary Penalties Inflation Adjustment Act of 1990, which requires that civil monetary penalties be adjusted regularly in order to account for inflation. These changes are set to take effect on August 1st, 2016. Public comments on the changes can be submitted to the Justice Department until August 29th, 2016.

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On Thursday, the U.S. Supreme Court issued a decision that recognizes implied certification as a viable theory under which to pursue False Claims Act cases against healthcare providers. Implied certification can impose liability if a contractor has engaged in a lie by omission, for instance, failing to disclose its noncompliance.

In the case, Universal Health Services v. Escobar, the court ruled that companies are subject to False Claims Act liability and the implied certification theory, but only if: (1) claims from healthcare providers request payment and make “specific representations about the goods or services provided” and (2) an organization’s failure to disclose noncompliance with “material” requirements would equate to “misleading half-truths.”

This case could result in a significant increase in False Claims Act cases being pursued against healthcare providers.

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The HHS Office for Civil Rights (“OCR”) has begun issuing notices for Phase 2 HIPAA Audits applicable to covered entities and their business associates. In Phase 2, OCR will review the policies and procedures adopted and employed by covered entities and their business associates to satisfy standards and implementation specifications of the Privacy, Security, and Breach Notification Rules. Phase 2 audits will primarily be desk audits, however, some on site audits will occur.

Please be sure to check your spam filters and junk email folders because notices for Phase 2 HIPAA Audits are sent via email. The initial email notice for a Phase 2 HIPAA Audit seeks to confirm an entity’s address and contact information. Following confirmation of this contact information OCR will send a pre-audit questionnaire.

We have a number of clients who are undergoing Phase 2 HIPAA Audits and our experience in responding to these audits will minimize any potential disruption to your healthcare operations. Contact Clinton Mikel, Esq., at cmikel@thehlp.com, or at 248-996-8510, for guidance and counsel on how best to respond to any Phase 2 HIPAA Audit notice that you have received.

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On November 2, 2015, President Obama signed into law the Bipartisan Budget Act of 2015 (the “Act”) (Public Law 114-74). Among the various provisions within the Act is a change in how the IRS audits partnerships, as well as elimination of the tax matters partner. The new rules apply to partnership returns for tax years beginning on January 1, 2018. However, pursuant to procedures yet to be established by the IRS, partnerships can elect to apply the new rules to any return for a tax year that began after November 2, 2015.

These new rules are subject to clarification prior to becoming fully applicable. Evidence that the clarification process has begun is found in the March 28, 2016 IRS request for comments on implementation of a number of the partnership audit provisions. Comments were due on April 15, 2016 on electing out of the new audit rules, designation of the PR, and the push up election, in addition to other components of these new rules.

Under the new rules, audits and resulting adjustments will take place at the partnership level. Any subsequent assessment of taxes and related penalties and interest will be assessed at the entity level at the highest individual or corporate tax rate in effect for the year under audit.

Partnerships can elect to have the assessment pass directly to partners by way of a “push up” election. Where a push up election has been made, a revised K-1 is issued to those who were partners during the reviewed year. A benefit of the push up election is that underpayments can be calculated based on a partner’s individual tax rate, and offset based on the partner’s specific tax situation, rather than being taxed to the partnership at the highest marginal rate without offsets. Individual partners may also be able to deduct interest on underpayments while the partnership cannot.

Qualifying partnerships can opt out of the new rules. Upon opt out, any tax adjustments and related penalties and interest are determined at the partner level. The IRS has yet to specify the exact process by which a partnership will opt out. However, the Act limits opt out to those partnerships with 100 or fewer partners. In this context, a partner includes an individual, a C corporation, any foreign entity that would be treated as a C corporation if it were a domestic entity, an S corporation, or an estate of a deceased partner. Each individual S corporation shareholder counts towards the 100 partner limit. Opt out is not available if there is a partnership or trust among the partners.

The Act also eliminates the role of tax matters partner and replaces it with the Partnership Representative (the “PR”). The PR is not required to be a partner of the partnership but must have a substantial presence within the United States. If a partnership has not designated someone as a PR, the Act authorizes the IRS to appoint someone as the PR.

The PR is the direct liaison between a partnership and the IRS. The PR has the exclusive right to act for, represent and bind a partnership in an audit proceeding. This includes whether or not to extend the statute of limitations, contesting or settling an audit, and various Tax Court matters. Individual partners have no such rights outside of the partner’s control and authority over the PR.

Partnerships must prepare for the impact of these new rules.

Because tax adjustments and related penalties and interest can be assessed against a partnership entity, it is possible for current partners to be financially responsible for the actions of former partners. Partnership agreements and operating agreements (“Agreements”) should be amended so that those who were partners in the reviewed year indemnify the partnership and the other partners from any subsequently assessed tax, penalties and interest. Where there is no push up election or indemnification, Agreements should outline the process by which partners determine whether tax adjustments and related penalties and interest will be treated as a general expense to the partnership entity or allocated to partners.

A partnership that opts out of the new rules must remain cognizant of any incoming partners and how they may impact the partnership’s ability to opt out.

Considering the powers held by the PR, it is imperative that partnerships designate their PR as well as establishing oversight and control of the PR. While it is somewhat reasonable to believe that the IRS would appoint someone from within a partnership to the PR role, the Act provides no limitations as to who the IRS can appoint to this role.

Agreements should specify the process and limitations under which the PR is appointed and is authorized to act for the partnership. Certain situations may justify indemnification for the PR as well. The PR must be required to provide regular and timely communication to partners regarding all tax matters. Resolution of partner deadlock regarding PR actions or authority should also be incorporated in Agreements.

These rules also require consideration in the context of mergers and acquisitions. The possibility exists that a target partnership could be audited and assessed taxes and penalties after a merger or acquisition has taken place. Merger and acquisition agreements should contain indemnification provisions whereby partners for the tax year at issue remain liable for any additional taxes, interest and penalties.
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On Tuesday, May 10, 2016, Clinton Mikel, a Partner at The Health Law Partners and Chairman of the eHealth, Privacy and Security Interest Group of the American Bar Association Health Law Section, will be a guest speaker at Politico’s “Outside, In: Unhealthy Hacking: Medical Privacy in the Age of Cyber Attacks,” a live event featuring leading voices in health care, technology, and policy discussing privacy and cybersecurity in the healthcare sector.

In addition to Clinton Mikel, panelists include Texas Representative Will Hurd, Leslie Krigstein, VP of CHIME (College of Healthcare Information Management Executives), and Deven McGraw, Deputy Director for Health Information Privacy, HHS Office for Civil Rights, among others.

Among the issues the panelists will address are the following: Can health care providers afford security? Is the cyber-kidnapping of hospitals the new normal? Is greater health information exchange going to lead expanded, dangers/hacks? Is the need to secure records another driver toward consolidation in health care, because of the costs? Do we need more congressional or regulatory action to assure our records are safe and secure?

Politico will live stream the May 10 event at http://www.POLITICO.com/live beginning at 5:30 p.m. EST.
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Adrienne Dresevic, Esq., of The Health Law Partners, PC, and Kathleen DeBruhl of DeBruhl Haynes, The Health Law Group, are pleased to announce the American Bar Association Health Law Section’s Physicians Legal Issues Conference on June 9-10, 2016, in Chicago, Illinois. This annual conference is attended by both attorneys and physicians and is held in conjunction with the Chicago Medical Society and the American Association for Physician Leadership.

This year’s theme is “Thriving in a Time of Change: Attorneys and Physicians Working Together”. Physicians continue to face challenging odds in a rapidly evolving healthcare market–whether remaining independent, adapting to “employment” by an integrated system, or addressing consolidated payer markets with little or no negotiating power. This unique conference offers physicians, attorneys and their administrative partners an opportunity to hear how these issues are being addressed by physicians and how physicians can succeed at maintaining viable medical practices that offer quality services at their core.

Physicians and their legal counsel will have access to national speakers and will be educated on key issues affecting employer and hospital relationships, business and industry responses to payer consolidation and market control, and every day “survival” techniques in hospital and private practice settings. Whether you are a physician or entering the field of healthcare law, this conference will provide valuable insight and strategies that can improve your practice.
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Please join The Health Law Partners, P.C., in congratulating Adrienne Dresevic (a Founding Shareholder), and Clinton Mikel (a Partner), for earning what has been described as the “Pulitzer Prize of Legal Writing”.

The Burton Award for Distinguished Legal Writing, which is run in association with the Library of Congress and co-sponsored by the American Bar Association, is earned each year by 35 exceptional authors nationwide.

Submissions for the Distinguished Legal Writing Award are extremely competitive. The award is generally selected by professors from Harvard Law School, Yale Law School, Stanford Law School, and Columbia Law School, among others.

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The HHS Office for Civil Rights (“OCR”) has announced that it will begin the 2016 Phase 2 HIPAA Audit Program, the next phase of audits of covered entities and their business associates. In Phase 2, OCR will review the policies and procedures adopted and employed by covered entities and their business associates to satisfy standards and implementation specifications of the Privacy, Security, and Breach Notification Rules. Phase 2 audits will primarily be desk audits, however, some on site audits will occur. OCR will evaluate the results and procedures used in the Phase 2 audits to develop a permanent audit program.
The Phase 2 audit process begins with OCR sending an email to covered entities and business associates requesting verification of an entity’s address and contact information. OCR will then send pre-audit questionnaires to obtain information about the size, type, and operations of covered entities and business associates. This information will be used in conjunction with other information to create potential audit subject pools.
If a covered entity or business associate does not respond to OCR’s email request to verify contact information or the pre-audit questionnaire, OCR will use publically available information to verify contact information or respond to the questionnaire. Thus, covered entities and business associates should be aware that ignoring OCR’s emails will not keep them from being part of potential audit subject pools.
OCR will post updated audit protocols on its website closer to when it will begin to conduct the 2016 audits. The audit protocol will be updated to reflect HIPAA Omnibus Rulemaking.
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