June 2009 Archives

June 30, 2009

Defendants Sentenced for Medicare Fraud Scheme

In Miami, judges have begun sentencing defendants convicted of playing a role in the Medicare fraud scheme. The Department of Health and Human Services (HHS) has initiated the Healthcare Fraud Prevention and Enforcement Action Team (HEAT), which is aimed at reducing Medicare and Medicaid fraud. The indictments include, but are not limited to, conspiracy to defraud the Medicare program, criminal false claims, and violations of the anti-kickback statutes. Last week, the authorities arrested 53 people in Detroit for similar offenses and had indicted over 250 nationwide.

Today, Judge Paul C. Huck sentenced Roberto Rodriguez to 97 months in prison for his role in the scheme, which involved HIV infusion services. Besides prison-time, Rodriguez was also ordered to pay over $9 million in restitution to the Medicare program. In March, Rodriguez plead guilty to healthcare fraud involving a medical center he co-owned--Midway Medical Center--stating he and his co-conspirators knowingly billed Medicare for procedures they did not administer and for drugs he did not prescribe.

According to the HHS, "[m]ost of the services allegedly provided to patients at Midway were billed to the Medicare program as treatments for thrombocytopenia, a disorder involving a low count of platelets in the blood." After further investigation and admissions by Rodriguez, none of those patients had low platelets, and Rodriguez was aware of this. Rodriguez admitted to having chemists manipulate the blood samples to reflect low platelet levels prior to being sent to be tested by the laboratory. When he received the test results reflecting a low platelet count, he could prescribe the thrombocytopenia medications for the patients. Rodriguez admitted to defrauding Medicare in false claims totaling over $20 million.

Rodriguez defrauded Medicare in multiple clinics. His co-conspirators have also been sentenced to prison. This is the beginning of a string of individuals who will be convicted and sentenced under this nation-wide Medicare fraud scheme.

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June 26, 2009

New York's Mandatory Compliance Regulations are Hot Off the Press

On Wednesday, the New York State Register published the new rules surrounding the New York Office of Medicaid Inspector General ("OMIG") final rule on mandatory compliance programs, which enumerates specifics including who must comply and how to comply. The rules have also been published in the New York Code, Rules, and Regulations--18 NYCRR § 521. This rule is effective on July 1, 2009 and covered providers must have compliance programs in place satisfying the requirements of the rule within 90 days of this date--September 28, 2009.

According to § 521.1, automatically applies to certain providers (i.e. hospitals, nursing homes, home care services, etc.). It also applies to other entities that provide or submit claims for care, services or supplies under the medical assistance program or entities that should be reasonably expected by a provider to be a substantial portion of their business operations.

Per 521.2, the Substantial portion test is defined as:

(1) When a person, provider or affiliate claims or orders, or has claimed or has ordered, or should be reasonably expected to claim or order at least five hundred thousand dollars ($500,000) in any consecutive twelve-month period from the medical assistance program;
(2) when a person, provider or affiliate receives or has received, or should be reasonably expected to receive at least five hundred thousand dollars ($500,000) in any consecutive twelvemonth period directly or indirectly from the medical assistance program; or

(3) when a person, provider or affiliate who submits or has submitted claims for care, services, or supplies to the medical assistance program on behalf of another person or persons in the aggregate of at least five hundred thousand dollars ($500,000) in any consecutive twelvemonth period.

Notably, the definition would include not only those providers receiving $500,000 in Medicaid funds, but also those providers or entities that claim at least $500,000 from the medical assistance program.

Every covered provider is required to do the following:
1. Implement a compliance program
2. Initially certify the compliance program with the OMIG and recertify each year
3. Elements of the compliance program
a. Have written policies and procedures in place describing the compliance expectations
b. Designate an employee vested with the responsibility of the day-to-day operation of the compliance program
c. Train and educate all affected employees
d. Have communication lines to the reasonable compliance position
e. Have in place disciplinary policies for noncompliance
f. Ensure a system for routine identification of compliance risk areas
g. Ensure a system for responding to compliance issues as they are raised
h. Have in place a non-intimidation and non-retaliation policy for participation in the compliance program
The commissioner of health and the Medicaid Inspector General determine if a compliance program is effective and appropriate.

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June 25, 2009

Medicare Fraud Sting Operation in Detroit

On June 24, a federal grand jury in the Eastern District of Michigan indicted 53 Metro-Detroiters for allegedly submitting false Medicare claims totaling over $50 million. The sting operation undertaken by the Medicare Fraud Strike Force in Detroit, was coordinated by the Department of Health and Human Services Healthcare Fraud Prevention and Enforcement Action Team (HEAT) and is but one phase in a multi-phase initiative to reduce Medicare and Medicaid fraud. The indictments include conspiracy to defraud the Medicare program, criminal false claims, and violations of the anti-kickback statutes. According to the Department of Health and Human Services (HHS), the defendants "participated in schemes to submit claims to Medicare for treatments that were in fact medically unnecessary and oftentimes, never provided." Detroit is just one place authorities have targeted as part of the HEAT initiative, which has already indicted over 250 people in Florida, Los Angeles, and Miami.

According to the Medicare Fraud Strike Force, maximum prison sentences range from 2 to 20 years, per count. In addition to incarceration, the defendants are also facing criminal restitution (i.e., paying back the amounts proven by the government to have been unlawfully received), civil fines (e.g., treble damages), administrative sanctions (e.g., exclusion from the Medicare and Medicaid programs), and potential loss of health care licenses (if applicable). For many individuals, multiple counts of healthcare fraud--each count which carries a maximum prison sentence of 10 years--could, essentially, be a life sentence. For instance, one individual has been charged with 1 count of conspiracy to commit healthcare fraud, 3 counts of healthcare fraud, 1 count of conspiracy to launder money, and 6 counts of money laundering. If she is convicted on just the 6 counts of money laundering, she could face up to 60 to 120 years in prison (depending on which money laundering statute she has been proven to have violated). For someone in her 50s, this would essentially be a life sentence.

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June 24, 2009

President Obama Announced Deal with Pharmaceutical Companies and Signed Anti-Smoking Bill

Today, President Obama announced an $80 billion deal struck with the pharmaceutical industry. The deal involves the drug manufacturers taking steps to close the gap in the Medicare prescription drug coverage system, commonly known as the "doughnut hole." According to President Obama, "Medicare covers up to $2,700 in yearly prescription costs and then stops, and the coverage starts back up when the costs exceed $6,100." The deal would provide Medicare recipients $30 billion in discounts, cutting their brand-name prescription drug costs in half. Such cut in prices would probably prevent patients from switching from brand-name to generic prescription drugs. This proposal will not be in effect until President Obama's comprehensive health care bill passes in Congress.

This week, President Obama signed into law the Family Smoking Prevention and Tobacco Control Act, commonly known as the anti-smoking bill. This law will give the Food and Drug Administration (FDA) the power to regulate tobacco--an industry the FDA has not regulated in the past. President Obama mentioned that signing this bill into law represents a victory over tobacco companies that try to lure in the younger generations. Under the law, the FDA will ban tobacco advertising that targets children, require lower amounts of nicotine in tobacco products, prohibit sweetened cigarettes that allure younger smokers, and forbid labels that say "light" and "low tar."

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June 23, 2009

OIG Posts Four Audit Reports & Administrative & Civil/Criminal Enforcement Actions

The Office of Inspector General (OIG) posted four audit reports as well as administrative and civil/criminal enforcement actions on Friday, June 19. The audit reports concern four separate situations:

  • The University Medical Center of Southern Nevada billed Medicare improperly for two outpatient claims in 2004, resulting in an overpayment of about $22,000.
  • In 2004 and 2005, Louisiana State University Health Sciences Center billed Medicare incorrectly for two outpatient claims and received approximately $58,000 in overpayments.
  • The State of Michigan received $1.1 million in overpayments for 2006 & 2007, due to computer problems that resulted in incorrect claims.
  • CareFirst of Maryland, Inc. received $1.5 million in claims that were unallowable based on the termination of two different contracts.

To read the complete audit reports, as well as an update of Civil Monetary Penalties and the OIG Criminal and Civil Enforcement Actions for May, please visit the OIG website.

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June 22, 2009

New Florida Law Requiring Doctors and Pharmacists Report Prescriptions to an Electronic Database

Governor Crist is at it again, signing more healthcare legislation into law. This time, Crist signed into law a bill that will "establish a statewide, comprehensive electronic system to monitor the prescribing and dispensing of controlled substances" that should be complete by June 30, 2010 (SB 462). The bill further states, "[e]ach time a controlled substance...is dispensed to an individual, the controlled substance must be reported to the agency through the system as soon thereafter as possible, but not more than 15 days after the date the controlled substance is dispensed." A knowing failure to comply results in a misdemeanor charge against the physician. This bill does not apply to all controlled substances, there are exceptions and exclusions. Florida is not the first state to enact a drug tracking database.

The purpose of this law is to prevent illegal drug trafficking and what has been known as "doctor shopping." Doctor shopping occurs when individuals go from doctor to doctor trying to see which physician will prescribe addictive medications. Additionally, south Florida is known for selling narcotics en masse. According to Senator Aronberg, a Democrat from Greenacres, "the state has turned a blind eye to this...we've become the drug supplier for the rest of the country."

There are advocates on both sides of this issue. One of the biggest concerns surrounding this law is privacy and whether or not patients' privacy will be maintained and the consequences that flow from a database of people and the drugs they have been prescribed. Proponents of the law argue that this is a great tool for physicians in identifying potential drug addicts and doctor shoppers. Once identified, physicians can act and prescribe accordingly.

With the rise of prescription drug abuse and resulting deaths, this law is a step toward protecting addicts and soon-to-be addicts from acquiring additive narcotics. Though it may not be perfect, it is a place to start.

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June 19, 2009

CMS Updates Medicare Policy Regarding Outpatient Observation

On May 22, 2009, CMS published changes to the Medicare Benefit Policy Manual and Medicare Claims Processing Manual related to outpatient observation. The changes are set forth in Transmittal 1745 and will become effective July 1, 2009. The changes delete references to "admission" and "observation status" in relation to outpatient observation services. CMS acknowledged that the term "admission" is confusing to hospitals, because hospitals generally use the term "admit" to indicate an inpatient admission. Further, CMS stated that since there is no payment status called observation status, the term "observation status" also could confuse hospitals. Observation care is an outpatient service, which is ordered by a physician and reported with the HCPCS code.

During the RAC demonstration program, many hospitals experienced claim denials where the RAC denied an inpatient hospital service as not medically necessary, but the RAC found that outpatient observation services would have been medically necessary for the patient. While Transmittal 1745 seeks to provide clarification between the two concepts of inpatient hospital services on one hand, and outpatient observation services on the other, the changes fail to provide a meaningful distinction.

Additionally, Transmittal 1745 contains provisions seeking to clarify the use of condition code 44, and a new section entitled "Policy and Billing Instructions for Condition Code 44" was added to Chapter 1 of the Medicare Claims Processing Manual.


In preparing for the expected scrutiny of short hospital stay cases, hospitals are well advised to take a critical look at the "order" process for inpatient admissions. The Medicare Benefit Policy Manual (CMS Internet-Only Publication 100-02), Chapter 1, Section 10 reflects that.

An inpatient is a person who has been admitted to a hospital for bed occupancy for purposes of receiving inpatient hospital services. Generally, a patient is considered an inpatient if formally admitted as an inpatient... The physician or other practitioner responsible for a patient's care at the hospital is also responsible for deciding whether the patient should be admitted as an inpatient.

Our experience in appealing denials of short stay cases in the demonstration program often revealed records containing no formal order for inpatient admission signed by the admitting physician. Many cases revealed orders for admission with no specificity as to whether or not the order was for outpatient or inpatient admission, orders for a particular unit where both inpatient and outpatient admitted patients were housed and many cases with no order at all.

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June 18, 2009

CMS Delays Recovery Audit Contractor (RAC) Medical Necessity Reviews

According to its most-recently published "Expansion Schedule," the Centers for Medicare and Medicaid Services (CMS) planned to expand the Recovery Audit Contractor (RAC) program to 23 states by March 1, 2009, and the remaining states by August 1, 2009 or later. RAC automated reviews soon will begin, but medical necessity reviews have been delayed.

On Friday, June 12, 2009, HLP partner Jessica Gustafson spoke with Commander Marie Casey, the Deputy Director of the Division of Recovery Audit Operations at CMS. Pursuant to this conversation, Commander Casey indicated that CMS expects RAC "automated reviews" to begin this month or next month in the first 23 states. An "automated review" is a review of claims data without a review of the records supporting the claim. Generally speaking, RACs may conduct automated reviews only in situations where there exists both (a) a certainty that the service is not covered or is incorrectly coded, and (b) a written Medicare policy, article, or coding guideline applicable to the claim. RACs also may use automated review, even if there is no specific Medicare policy, article or coding guideline on point, in some "clinically unbelievable" situations or when identifying duplicate claims and/or pricing mistakes.

"Complex reviews," i.e., reviews of medical or other records in situations where there is a high probability (but not a certainty) that a claim includes an overpayment, are anticipated to begin later this year. Specifically, coding and diagnosis-related group ("DRG") claim reviews are anticipated to begin in September 2009. Medical necessity reviews are not expected to begin before January 2010.

Before the RACs begin conducting medical necessity reviews, they must receive approval of the areas planned for review by CMS's "issue review team." According to the June 12, 2009 conversation with Commander Casey, as of this date, CMS has not approved any medical necessity issues for review.

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June 17, 2009

Stark Law Article Published by Partners in AHRA

Health Law Partners Adrienne Dresevic and Carey F. Kalmowitz published an article in Link, the American Healthcare Radiology Administrators (AHRA) member newsletter, which discusses current application of the Federal Stark law. The article addresses the In-Office Ancillary Services Exception (IOASE), which many office-based diagnostic imaging arrangements rely upon to enable referring physicians to provide ancillary services within their practices. Without such an exception, the Stark law prohibits physicians from referring Medicare patients to entities that provide designated health services (DHS) if the physician has a financial relationship with that entity. Ms. Dresevic and Mr. Kalmowitz explain that despite attempts to restrict or eliminate the IOASE, it still continues to permit appropriately structured diagnostic imaging arrangements in the physician office setting.

To read the Link article, please click here.

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June 16, 2009

Medical Identity Theft on the Rise

Over 250,000 Americans fall victim to medical identity theft each year, according to an article by the New York Times, and the increased use of electronic medical records with less than adequate privacy protection has allowed this number to rise. Medical identity theft is easily carried out when thieves attain someone's name and Social Security number, insurance group policy number and member ID, or by downloading personal health information from medical office or hospital computer systems. Many people are completely unaware that they are victims of medical identity theft and that their insurance providers are paying fraudulent claims.

Aside from financial problems, victims of medical identity theft may face severe medical consequences if physicians treat them based on false information in their patient charts, such as incorrect blood type or allergies. This inaccurate information may also be passed along to several medical offices or hospitals, and in general patients must correct it separately at each individual location.

According to the article, the policies that protect people from standard identity theft, such as the Fair Credit Reporting Act, do not exist for medical identity theft. For example, whereas people can receive a free copy of their credit report every year, there are large costs involved in obtaining your own medical records.

To prevent medical identity theft, some medical offices now require that patients show photo ID, to be compared with photos in their patient charts, and others use password protection on all electronic medical records. However, with President Obama's plan to significantly increase the use of electronic medical records, much greater precautions will need to be implemented.

Creditors and financial institutions, which include healthcare providers that allow patients to establish payment programs, should currently be implementing identity theft prevention programs. Enforcement by the Federal Trade Commission of the Red Flag Rules, which aim to identify possible acts of identity theft, is set to begin on August 1, 2009.

For the full text of the New York Times article, please click here.

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June 15, 2009

Obama to Talk to AMA Regarding Future of Healthcare

Today, President Obama plans to address the American Medical Association (AMA) to discuss his future plans regarding healthcare. His plans intend to make the healthcare industry in the United States--one that represents roughly 18% of the U.S. economy--more efficient through a government-sponsored insurance plan while not adding to the federal deficit. This government-sponsored insurance plan will not replace private coverage; rather, it will work alongside it where individuals do not have to change their coverage if they are happy with it. While much of the country is jumping at the idea of a government-sponsored insurance program, the medical field and some Congressmen are weary of the unintended but possible effects.

President Obama declared that part of his plan to give the healthcare field a face lift involves many reforms. Amongst those reforms include putting a federal limit on malpractice suits as they are a cause of high healthcare costs; taking greater advantage of electronic records and assessments of procedures and treatments; and forcing an increased efficiency in Medicare services. Additionally, he stated that "affordable healthcare for the American people is tied directly to insisting upon fiscal responsibility."

Despite the desire for change, the medical field may not be prepared to go under the knife, a sentiment shared by Congressmen as well. According to Nancy Nielsen, president of the AMA, physicians "oppose any public plan that forces physicians to participate." As a result of this sentiment, many have suggested that President Obama's current healthcare plan, even with a Blue House and Senate, would not pass. Needless to say, Republicans are not enthusiastic about a government-run healthcare system, either.

Some senators--including Senator Kent Conrad, a Democrat of North Dakota--are drafting legislation that would transfer the responsibility from the government to non-profit cooperatives, which would provide insurance for the uninsured. Non-profit cooperatives would negotiate with healthcare providers for lower rates and would act like private plans.

Regardless of what happens at the AMA meeting, President Obama will have to appeal to the AMA whose support he desperately needs to pass his healthcare reform. He will have to convince them that physicians will not lose their discretion, compensation, and freedom to practice medicine with a State-sponsored health insurance program, a task that may not be easy to achieve.

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June 12, 2009

Florida Allows Insurance Companies to Pay Out-of-Network Physicians Directly

Florida gives physicians the green light to be paid. On June 10, Governor Crist, of Florida, signed a bill that will allow insurance companies to pay out-of-network physicians directly, if the patient allows. Prior to this law, out-of-network physicians prayed that they would receive their claims payment from patients who received it from the insurance company. Oftentimes, their prayers weren't answered and physicians were left with uncompensated services. This law will allow physicians stop praying. Physicians will now be able to focus their efforts on providing optimum medical services to their patients instead of chasing a money trail. Unfortunately, though this law sounds like it would solve a long-time problem, business, health insurers, and consumer groups oppose it.

The biggest concern surrounding this law is that out-of-network doctors will charge the insurance companies whatever they want for services rendered versus accepting a negotiated discount for in-network physicians. For example, an in-network physician receives a negotiated rate of $80 for a service rendered to a patient. An out-of-network physician, for that same service rendered, has discretion to charge a greater fee since that physician is not constrained by the insurance company. If that out-of-network physician determines that the service is worth $100, and the insurer pays the reasonable and customary rate of $70, the physician could then bill the patient for the remaining $30. The fear opponents have is that physicians will value their services at exorbitant prices, thus charging patients the balance between the value of the service and the reasonable and customary charge paid by the insurance company.

The proponent of the law would contend that regardless of what stance an individual takes, this law is not as much about the patients as it is the insurance companies. Insurance companies currently control the physicians and the patients. This law gives physicians more discretion over compensation for medical procedures without being bullied by the insurance company to pay less than what a medical procedure is worth. This law allows for physicians to focus on the practice of medicine instead of running after patients for compensation.

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June 11, 2009

Update of the Michigan Medical Marihuana Act

On June 11, 2009, the Substantive Law Committee of the Health Care Law Section of the Michigan State Bar held a teleconference on the recent Michigan Medical Marihuana Act. Included amongst the presenters was Melanie Brim, the current Director of the Bureau of Health Professions at the Michigan Department of Community Health. Ms. Brim indicated that once the ballot initiative was passed, the Department was faced with an expedited timeframe in which to promulgate the governing provisions of the Act, shortening the typical timeframe of 12 to 18 months to just 4 months. This expedited timeframe may explain why the provisions of the Act are silent on many key issues--leaving many unanswered questions. The biggest question that remains unanswered is: how does a qualified patient obtain the marijuana? Absent any legal authority or guidance to enable her to provide an answer, Ms. Brim simply responded: "the same way you got it prior to the ballot initiative." With 50 to 75 patients applying per day for registration to legally use marijuana for certain pre-approved medical conditions, the number of unanswered questions regarding this Act are likely to continue to rise. To date, approximately 2,377 applications have been received by the Department. Despite these growing numbers, the FDA maintains that smoking marijuana has a high potential for abuse, has no currently accepted medical use in treatment in the U.S., and has a lack of accepted safety for use under medical supervision.

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June 10, 2009

The OIG Cracks Down On Fraud and Abuse Cases

The OIG excludes almost 1,500 individuals and entities for fraud and abuse-related crimes. In its most recent Semiannual Report to Congress for October 1, 2008 to March 31, 2009, the OIG includes in its summary of accomplishments "exclusions of 1,415 individuals and entities for fraud or abuse involving Federal health care programs and/or their beneficiaries" resulting in over $2 billion in receivables. The OIG describes in more detail its criminal and civil enforcement involving, in part, false filing claims for reimbursement against Medicare, Medicaid, and other Federal health care programs. To resolve false claims, the OIG partners with the FBI, Medicaid Fraud Control Units (MFCU), as well as other law enforcement agencies. MFCU assists the Government in detecting, prosecuting, and punishing fraudulent activity against Medicaid programs by investigating and prosecuting "providers charged with defrauding the Medicaid program or abusing, neglecting, or financially exploiting beneficiaries in Medicaid-sponsored facilities." The OIG report summarizes "notable enforcement actions" in its report including a hospice in Alabama, a medical transcription service provider in Massachusetts, a physician in California, and a durable medical equipment (hereinafter "DME") company in Texas.

In Alabama, SouthernCare, Inc; SouthernCare Holdings, Inc.; SouthernCare Carry, L.L.C.; and Michael Pardy allegedly submitted false claims to Medicare. This finding resulted in the entities paying $24.7 million for "treating patients who did not meet Medicare's hospice eligibility criteria."

In Massachusetts, MedQuist, Inc. allegedly overbilled the Department of Veterans Affairs, the Department of Defense, and the Public Health Service for "medical transcription services by inflating the number of lines billed to the Government instead of applying the contractually prescribed method." The settlement resulted in $6.6 million to the United States.

A California physician, Paul Lessler, allegedly "allowed his UPIN to be used to bill Medicare for respiratory therapy." Additionally, he is alleged to have billed for the claims incident to his services when he did not directly supervise the procedures, suggesting that the services were performed at his office as opposed to the "noncovered board and care facilities." He is also alleged to have paid kickbacks to marketing personnel who recruited patients to him. Dr. Lessler agreed to pay $2.18 million and to be excluded for 15 years.

Finally, in Texas, a Ihem Wilson and Theresa Peter allegedly owned and/or operated Access Medical Supply, "a DME company that billed Medicare for motorized wheelchairs" that often "provided less expensive motorized scooters." As a result of a 35-count indictment, Wilson plead guilty to health care fraud and wire fraud and was sentenced to almost 6 years in prison and required to pay $3,217,579. Peter, a co-conspirator, was required to spend about 1 year in prison and to pay $1,582, 277 (this sentence came in July of 2008).

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June 9, 2009

Medicaid Enrollment Up; Physician Acceptance of Medicaid Patients Down

Michigan Medicaid enrollment is increasing, due to the challenging economic status of the state, says the Detroit News. However, also due to the state's economy, Medicaid is cutting reimbursement payments to physicians, causing many of them to turn down new or even all Medicaid patients. According to physicians, the reimbursements they receive from Medicaid, even before the most recent cuts, are too low - they sometimes receive only one-third of the actual cost of treating the low-income patient. The new cuts will only force more physicians to turn away more Medicaid participants.

Medicaid currently has 1.6 million Michigan residents enrolled, a record high, as compared to 1.5 million in 2006. Conversely, the Detroit News reports, approximately 71% of physicians surveyed in 2008 were accepting new Medicaid patients, as compared to 80% of physicians in 2006.

Experts fear that these trends will cause physicians to leave the state, as well as cause Medicaid patients to go to the emergency room rather than a doctor's office. This drains more funds from the state budget and could cause Medicaid to lose money.

While the state intends to monitor the situation and work with Medicaid to maintain Michigan doctors, officials assert that the payment cuts are essential to balance the state budget.

For the full text of the Detroit News article, please click here.

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June 8, 2009

Health Law Partner to Present at World Research Group's Healthcare Management Conference

On August 3-4, 2009, Abby Pendleton, Esq. will speak at the World Research Group's Healthcare Management Conference titled "Preparing for the Next Round of Medicare RAC Reviews." Ms. Pendleton, a founding member of The Health Law Partners, P.C., will present among several experts in the field of Recovery Audit Contractors. She will discuss how to manage the RAC appeals process.

Ms. Pendleton has authored numerous publications regarding the RAC program and successfully appealing Medicare claim denials. These publications include:

"Recovery Audit Contractors And Medicare Audits: What Can Hospitals and Health Systems Expect as the RAC Program Expands Nationwide?" co-authored: Abby Pendleton, Esq. and Jessica L. Gustafson, Esq., American Health Lawyers Association, Hospitals and Health Systems Practice Group Member Briefing, January 2009.

"Get Ready -- Recovery Audit Contractors Are Coming to Michigan," co-authored: Abby Pendleton, Esq. and Jessica L. Gustafson, Esq., Michigan Medical Law Report, Vol. 4, No. 4, Winter, 2009.

"RAC to the Future: What Can Medicare Providers and Suppliers Expect from the Recovery Audit Contractor Program?" co-authored: Abby Pendleton, Esq. and Jessica L. Gustafson, Esq., The Health Lawyer, The ABA Health Law Section, Vol. 21, No. 2, December, 2008.

"The RACs Are Coming - Are You Ready?" co-authored: Abby Pendleton, Esq. and Jessica L. Gustafson, Esq., The RAP Sheet, American Health Lawyers Association, Regulation, Accreditation and Payment Practice Group, December 2008.

"Recovery Audit Contractors and Medicare Audits: Successful Strategies for Defending Audits," co-authored: Abby Pendleton, Esq. and Jessica L. Gustafson, Esq., Caring, National Association of Home Care and Hospice, November 2008.

"Get ready for increased nationwide Medicare audit activity," co-authored: Abby Pendleton, Esq., and Jessica L. Gustafson, Esq., Michigan Medical Law Report, Vol. 3, No. 3, Fall, 2007.

"Get Ready: The RACs May Be Nationwide Sooner Than Expected!" co-authored: Abby Pendleton, Esq. and Jessica L. Gustafson, Esq., HCCA Compliance Today, 2007.

For more information about the World Research Group's Healthcare Management Conference, please click here.

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June 3, 2009

Civil False Claims Act Liability Expanded

Liability under the Civil False Claims Act has been expanded. On May 20, 2009, President Obama signed the Fraud Enforcement and Recovery Act (FERA) into law. FERA contains amendments to the civil False Claims Act (FCA) that expand liability under FCA and gives the government increased powers to investigate. According to FERA, an entity violates FCA if it knowingly avoids or does not fully pay money to the United States. This includes the duty that arises from retaining any overpayments.

Regarding overpayments, an entity must return the overpayments and an improper failure to do so would be the basis for an FCA action. This requires those entities to have systems in place tracking over payments and when there is a requirement to return the overpayments. This issue will be sensitive with respect to the Stark Law and prohibitions on self-referral. Under FERA, the Attorney General has been extended the investigative authority in FCA violations.

The most important implication of FERA is that it overturns the 2008 Supreme Court decision in Allison Engine Co. v. United States ex rel. Sanders, 128 S.Ct. 2123 (2008), eliminating the requirement that a claim be presented to a federal government representative. Now, the liability can extend to include any false or fraudulent claim for government money irrespective of a claim being presented to a government official, the government has the money, or the defendant's intent (or lack thereof) to defraud the government. A recipient could be liable under FCA if the funds received were used on behalf of the government or to advance a government interest, including Medicare, Medicaid Advantage, and Medicaid HMOs.

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