May 2009 Archives

May 26, 2009

Out of Network Billing Under Increased Scrutiny

Out of network patient billing gives rise to many issues. As a result, some health care providers, including physician groups and ambulatory surgery centers, have struggled with the decision to participate or not to participate in various insurance plans. In addition to the political considerations that arise, various state and federal laws also may apply when providers implement customized collection protocols in addressing monies owed by patients for which the practice or the facility has a non-participating status.

A recent court case involving a New Jersey insurance plan (Horizon Blue Cross Blue Shield of N.J. v. East Brunswick Surgery Ctr., No. 3:08-cv-4227(FLW) (D.N.J. Apr. 23, 2009), highlights the importance of taking a measured approach when making decisions that can have legal consequences. Although the case involves technical aspects of a federal law governing certain insurance plans, the underlying facts and circumstances of the case are of particular interest.

In summary, on April 23, 2009, a federal court in New Jersey found that an insurer was not preempted by federal law from bringing certain state law claims against an out-of-network provider. The provider, East Brunswick Surgery Center (SC), an ambulatory surgery center, was a participating provider in Horizon Blue Cross Blue Shield of New Jersey's health insurance plans ("Horizon"). Among other allegations, Horizon alleged that subsequent to SC's termination of its participating status with Horizon, SC waived certain patient financial obligations (e.g., co-insurance and deductibles) for the purpose of inducing the patients to use its services thereby effectively circumventing Horizon's in-network contractual obligations. Horizon sought to bring various legal causes of action including, civil fraud, misrepresentation, and tortious interference with in-network provider contracts. The case will proceed in state court. However, this case illustrates the need for providers to review collection protocols in out-of -network situations in order to oversee compliance with the applicable state laws.

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May 22, 2009

PRG-Schultz CFO to Leave

The CFO and treasurer of PRG-Schultz International, Peter Limeri, will resign on May 31. PRG-Schultz is a subcontractor in the Centers for Medicare and Medicaid Services (CMS)' Recovery Audit Contractor (RAC) program that identifies and corrects past improper payments from healthcare providers. As a subcontractor, PRG-Schultz keeps between 9% and 12.5% of the payments they collect.

During the RAC program demonstration in California, PRG-Schultz was said to have denied a great deal of the state's Medicare inpatient rehabilitation claims that it evaluated. Moreover, two hospitals filed suit against PRG-Schultz for allegedly reopening a claim without reason, which Medicare necessitates.

The controller for PRG-Schultz, Robert Lee, will take over both of Limeri's former positions.

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May 20, 2009

Health Care Fraud Prevention and Enforcement Action Team Announced

The Health Care Fraud Prevention and Enforcement Action Team ("HEAT")'s formation was announced today by US Attorney General Eric Holder and U.S. Secretary of Health and Human Services ("HHS") Kathleen Sebelius. The purpose of HEAT is to assist in the crackdown on Medicare fraud. HEAT will be comprised of members of both the Department of Justice and the Department of Health and Human Services working together with increased resources and new tools combined to help restore financial stability to our Nation's Medicare and Medicaid systems.

It was also announced that similar teams with local bases, known as Medicare Fraud Strike Forces, which presently exist in southern Florida and Los Angeles, will begin operating in Detroit and Houston. The current teams have achieved considerable success in detecting and examining potentially fraudulent activity and recovering money from those found guilty. HEAT plans to use similar methods as the Medicare Fraud Strike Forces team to address fraud, as well as implement new procedures to prevent it. While the initial focus will be on suppliers of Durable Medical Equipment with home health agencies likely to follow, all providers who significantly rely upon Medicare and Medicaid funding located in these targeted geographic areas are well advised to review their practices for compliance with Medicare and Medicaid regulations and policies.

To read the complete news release, please visit the U.S. Department of Health and Human Services website.

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May 19, 2009

New ASC Conditions for Coverage Have Taken Effect

Ambulatory Surgery Centers ("ASCs") need to take note of additional federal Conditions for Coverage ("CFCs") governing patient rights that took effect May 18, 2009. The Amendments to these CFCs, which the Centers for Medicare and Medicaid Services (CMS) published on November 18, 2008, are codified at "Part 416 - Ambulatory Surgical Services" (42 CFR 416.50).

According to the amendment, the ASC is required to:

  • notify the patient of his or her rights both verbally and in writing prior to the patient's procedure,

  • inform the patient of its policies regarding advance directives, and document the patient's decision to use an advanced directive in his or her chart,

  • and establish a policy to document and respond to patient grievances.
The patient has the right to:
  • employ his or her rights,

  • file grievances,

  • and receive complete information about the procedure he or she is to receive prior to its inception.
The patient also has the right to:
  • privacy,

  • safety,

  • and freedom from maltreatment.
Finally, the ASC must comply with the rules governing the privacy and security of individually identifiable health information.

In sum, ASCs need to ensure that they enact (or, as necessary, modify any existing) policies and procedures to conform with the requirements under the new CFCs. Further, insofar as these obligations already have become effective, it is imperative that ASCs act expeditiously to create or amend those patient rights' policies required by the CFCs.

For the full text of the amendment, please click here.

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May 14, 2009

RAC Presentation Published by CMS

A presentation explaining basic information about Recovery Audit Contractors (RACs) was published by The Centers for Medicare and Medicaid Services (CMS) on their website. The presentation describes RACs as a way to identify and resolve past improper payments, as well as provide reason to avoid future improper payments. Any entity that bills fee-for-service programs is eligible for evaluation by the RACs. There is a link to the schedule of dates that RACs will expand to each of the United States. The presentation also describes the legislation that mandates RACs, the review and collection processes, and the options available to providers who receive claims.

To view the slide presentation, please click here.

CMS also released the recording, transcript and additional information from the April 14 RAC Open Door Forum for Part B providers. To view these resources, please click here.

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May 14, 2009

New RAC FAQ Posted by CMS

The Centers for Medicare and Medicaid Services (CMS) posted a new FAQ regarding Recovery Audit Contractors (RACs) on their website. The FAQ inquires what claim dates CMS uses to determine RAC medical record request limits for a fiscal year. CMS responded that they originally intended to use a designated calendar year's claims to create limits for the following fiscal year (eg calendar 2007 to determine fiscal 2008). However, due to a delay in the RAC program, more current data was available, causing CMS to use a designated calendar year's claims to create limits for the same fiscal year (eg calendar 2008 to determine fiscal 2008).

For the full text of the FAQ and CMS' response, please click here.

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May 13, 2009

Medicare Trust Funds Expected to Deplete Sooner than Last Year's Projection

Medicare trust funds are expected to deplete sooner than projected last year, according to a report released by Medicare trustees. While their 2008 report estimated that funds would run out in 2019, this year's report predicts that funds will exhaust in 2017. The current economic recession, an increasing need to address the public health crisis, the fast-approaching Medicare eligibility of baby boomers, and the rising cost of healthcare were all cited as reasons for the change.

The trustees projected that in this year already, the Medicare trust fund for hospital costs will pay out more in benefits than it will generate in revenue. Furthermore, hospital expenditures are expected to exceed program revenues by greater amounts with each ensuing year. To reverse this trend, drastic increases in payroll taxes and/or drastic decreases in Medicare outlays would be required.

President Barack Obama and his staff are considering various approaches to address the national healthcare crisis. These include decreasing federal payments to private insurers, more rapid approval of generic drugs, governmental negotiation with pharmaceutical companies to decrease drug prices, and financial penalties for physicians and hospitals that do not meet current quality standards.

The report indicates that Medicare Part B, which covers outpatient expenses, and Part D, which covers prescription drugs, should not encounter financing problems due to laws mandating their funding each year.

To view a summary of the Medicare trustees' report, please click here.

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May 12, 2009

Health Law Partner Presents to Oakland County Medical Society and Oakland County Bar Association

On May 12, 2009, Robert S. Iwrey, Esq. will present to members of the Oakland County Medical Society and Oakland County Bar Association. Mr. Iwrey, one of the founding shareholders of The Health Law Partners, P.C., will co-present with Virginia Trzaskoma, the Assistant Attorney General of the State of Michigan. They will discuss the interaction of physician licensing and discipline and criminal investigations and prosecutions.

Mr. Iwrey presently chairs the Oakland County Medical-Legal Committee.

For more information regarding the Oakland County Medical Society, please click here. For more information regarding the Oakland Country Bar Association, please click here.

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May 11, 2009

Reimbursement Rates Cut for Michigan Medicaid Providers

Michigan Governor Jennifer Granholm ordered decreases in the payment of Medicaid providers as part of the state's budget cuts seeking to eliminate this year's expected deficit. These cuts are in spite of the fact that the number of Michigan Medicaid patients is growing. While this growth draws more federal funding, the finances are not being used to compensate the Medicaid providers for their increase in services. Countless areas of the state's budget received cuts, but this is particularly devastating for Medicaid providers, who already lose money by serving patients with low incomes.

Despite opposition from healthcare workers, Michigan lawmakers approved Granholm's proposed cuts on Tuesday, May 5.

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May 6, 2009

HHS Issues HITECH Act Guidance for Securing PHI Relative to Breach Notification Regulations

The Health Information Technology for Economic and Clinical Health (HITECH) Act, passed as a part of the American Recovery and Reinvestment Act of 2009 (ARRA) (i.e., the Stimulus Bill), requires the development of regulations requiring certain covered entities to provide thorough notification in the cases where there has been a breach of unsecured protected health information (PHI). These regulations will apply to covered entities and business associates under the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

This notification may include, depending on the size of the breach and the urgency of notification, written notice to the individual, conspicuous posting on the website, telephone contact when urgent, notice to prominent media outlets, notice to the U.S. Department of Health and Human Services (HHS) Secretary, and/or posting on the HHS web site.

However, these notification procedures can largely be avoided if the PHI has been secured through one of a number of methodologies or technologies.

On April 17, 2009, HHS issued guidance that specifies methodologies and technologies whose use renders information sufficiently unusable. Essentially, use of these methodologies creates a safe harbor, which results in covered entities and their business associates not being required to go through the notification procedures because the information breached is considered secured (secured PHI is unusable, unreadable, or indecipherable to unauthorized individuals).

HHS and the Federal Trade Commission (FTC) are each preparing to issue breach notification regulations. HHS regulations will apply to covered entities and business associates under HIPAA; FTC regulations will cover vendors of personal health records and other non-HIPAA covered entities.

The HHS guidance issued last month relates to these two forthcoming regulations, and suggests that successful encryption (depending on the strength of the encryption algorithm and the security of the descryption key or process) and destruction (of paper or electronic forms of information) are the only methodologies that sufficiently secure PHI. HHS is seeking comments and input regarding additional technologies, risks of re-identification, the use of limited data, and other considerations, to be received by May 21, 2009.

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May 4, 2009

Michigan Medicaid False Claims Act Approved by OIG

The Michigan Medicaid False Claims Act (FCA) has been found by the Department of Health and Human Services (HHS) Office of Inspector General (OIG), which has the authority to make this determination, to meet the requirements of the Deficit Reduction Act (DRA).

Section 6031 of the DRA creates a financial incentive for States to enact laws that establish liability to the State for individuals and entities that submit false or fraudulent claims to the State Medicaid program. This incentive can reach 10% of any moneys recovered by the federal government when a State brings action against a Medicaid provider under its false claims law. To qualify for the incentive, States must create a law that meets the requirements set out in Section 6031(b); the Michigan Medicaid FCA has satisfied those requirements, as reviewed by the OIG and Department of Justice (DOJ).
Michigan's FCA was initially found insufficient by the OIG in 2007 (with an explanation issued in a supplement on July 24, 2008), and has since been amended.

Implementation of the FCA will likely lead to a rise in fraud enforcement activities in Michigan.

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May 1, 2009

"Red Flag Rules" Enforcement Delayed

"Red Flag Rules" enforcement has been delayed by the Federal Trade Commission ("FTC") until August 1, 2009. On the eve of the scheduled May 1, 2009 enforcement date for the Red Flag Rules, the FTC announced that it is delaying the enforcement date until August 1, 2009. The purpose of this extension is to give creditors and financial institutions more time to develop and implement written identity theft prevention programs.

The Red Flag Rules require financial institutions and "creditors" to develop and implement identity theft prevention programs that provide for identification, detection, and response to patterns, practices or specific activities (known as red flags) that could indicate identity theft. Health care providers are subject to the Red Flag Rules if they extend credit to a consumer/patient by establishing an account that permits multiple payments (e.g., establishing a payment plan).

Additional guidance on the Red Flag Rules is forthcoming and will be available on the FTC website.

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