February 2010 Archives

February 25, 2010

CMS Releases Home Health Agency Transmittal Regarding Accreditation and Change of Ownership

On February 18, 2010, the Centers for Medicare and Medicaid Services released a transmittal addressing home health agencies ("HHAs") that have deactivated billing privileges as well as conditions on HHAs and changes in ownership (the "Revised HHA Policy"). The Revised HHA Policy affords relief to those HHAs that submitted change-of-ownership ("CHOW") applications prior to January 1, 2010, but which were not approved prior to that date. By operation of the policy, the provider number of any HHA whose CHOW application was not approved by January 1st would be terminated (the "36-Month HHA Transfer Restriction Rule"). A substantial number of HHAs submitted CHOW applications prior to promulgation of the rule, but these applications were not processed by December 31st, and thus these HHAs did not obtain the requisite approval by January 1st. Thus, HHAs with pending applications were beginning to receive notices of termination, and others were awaiting such termination notices. The Revised HHA Policy, however, clarifies that the requirements of the 36-Month HHA Transfer Restriction Rule are effective for CMS-855A applications received on or after January 1, 2010. Most importantly, under the Revised HHA Policy, HHA applications received prior to January 1, 2010 will be handled in accordance with the policies in place prior to January 1, 2010. Thus, all HHAs that submitted CHOW applications by December 31, 2010 will have these processed under the former (i.e., pre-36-Month HHA Transfer Restriction Rule) standards.

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February 24, 2010

Michigan Updates in Medicare and Medicaid

In the past month, Michigan has experienced a great deal of Medicare and Medicaid news. On February 11, Governor Jennifer Granholm announced that in her proposed 2011 budget, she would continue the 8% Medicaid cuts to hospitals, physicians, long-term care, and mental health providers. Further, her proposed budget also reintroduced the 3% physician tax that was voted down in the Senate last summer.

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February 23, 2010

Recovery Audit Contractors (RAC), Fraud Referrals, Recommendations

The Office of Inspector General (OIG) released a report discussing some of its recent findings regarding the Recovery Audit Contractor (RAC) 3-year demonstration program. The report revealed that between March 2005 and March 2008, the RACs "referred two cases of potential fraud to the Centers for Medicare & Medicaid Services (CMS). However, CMS reported that it received no potential fraud referrals from RACs during this period." The OIG learned that the RACs were not properly trained in detecting fraud and recommended to CMS that it do the following: "(1) conduct followup to determine the outcomes of the two referrals made during the demonstration project, (2) implement a system to track fraud referrals, and (3) require RACs to receive mandatory training on the identification and referral of fraud." CMS has accepted and agreed and has already begun to adopt these recommendations.

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February 22, 2010

HITECH "Business Associate" Provisions Enforcement Delayed

Unverified accounts have it that enforcement of the "business associate" provisions of the HITECH Act, which was set to commence on February 17, 2010, is being delayed. The business associate provisions require business associates of covered entities to also implement the HIPAA Security Rule, and portions of the HIPAA Privacy Rule, and also requires that all agreements between covered entities and business associates provide for the business associates' compliance with those to portions of HIPAA regulations.

A partner at HLP saw Adam Greene of the Office of the General Counsel, Civil Rights Division, at the Department of Health & Human Services, mentionthe delay in implementation when speaking at the American Bar Association's 11th Annual Conference on Emerging Issues in Healthcare Law.

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February 22, 2010

Medical Society of the State of New York Urges Calls to Congress To Again Prevent 21% Physician Medicare Cut

As a service to our clients and friends in NY, we are reproducing the notice circulated by the Medical Society of the State of New York urging all interested constituents take action to prevent the proposed 21% reduction in Medicare physician reimbursement. "On February 28, the two month extender of the current Medicare > conversion factor expires. If this is allowed to happen, it will > result in a 21% cut to Medicare physician reimbursement. This could devastate senior access. Congress must act to prevent this from > happening. The American Medical Association and MSSNY continue to push for repeal of the unfair SGR formula used for determining Medicare reimbursement updates. While several proposals are under consideration in Congress which would prevent this cut, including another short-term extender to a time later in the year, no action has yet been taken. Physicians are urged to call the AMA Grassroots Hotline, 1-800-833-6354, to contact Senators Schumer and Gillibrand, as well as their respective member of the House of Representatives, to urge a long-term fix to this problem. Time is running out, so please act now."

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February 16, 2010

Will Physicians Find Permanent Relief From the FTC's "Red Flag Rules"?

A legal ruling finding that the Red Flag Rules promulgated by the Federal Trade Commission ("FTC") do not apply to the profession of law has raised new hope that physicians may find a similar exemption.

In a final rule published in 2007 under the Fair and Accurate Credit Transaction Act of 2003, the FTC issued these "Red Flag Rules," which requires any entity that regularly extends credit or defers payments to adopt a formal policy to detect and prevent identity theft. The rule was originally set to be implemented on January 1, 2008, with compliance required by October 22, 2008. Due to significant confusion about the rule, especially regarding which professions are considered "creditors" under the rule's definition, implementation has been delayed three times (enforcement is currently set to begin June 1, 2010). An Extended Enforcement Policy revised July 29, 2009 by the FTC offered clarification, stating that professions such as physicians and attorneys fit their definition of "creditor," and would be affected by the rules.

However, in a suit for partial summary judgment brought by the American Bar Association against the FTC, the U.S. District Court of D.C. found that the FTC lacked the authority to apply these rules to attorneys. The decision holds that "The context is inconsistent with the regulation of attorneys," and that, "As the plaintiff correctly posits: 'In 'ordinary English,' no one would assume that a lawyer engaged in the practice of law is a 'creditor' simply because the lawyer bills clients for services rendered and does not demand immediate payment.'" This decision exempting attorneys was issued on December 1, 2009.

Physicians and other health care professionals now hope that they will find relief through a similar exemption. On January 27, 2010, the American Medical Association sent a letter to the FTC claiming that health care professionals should be exempted if lawyers are, based on the similarity of their business structures. The letter states, "While acknowledging that there may be minor differences between lawyers and [licensed health care professionals] for purposes of the applicability of the Rule, we believe that the dispositive considerations underlying that decision apply equally to LHCPs."

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February 12, 2010

Florida Appeals Court Finds That Non-Contracted Providers Cannot Balance Bill Patients When an HMO is Liable

A Florida Appeals Court upheld a ruling last month that a hospital-based but non-contracted provider may not balance bill patients for amounts unpaid by the patients' HMO, when the HMO has accepted liability. The text of the ruling can be found here.

In this case, the patients, each a subscriber to one HMO, received pre-authorization from the HMO to undergo surgical procedures at a hospital under contract with the HMO. The hospital's contract with the HMO empowered the hospital to direct hospital-based physicians to perform services for the HMO's members.

The anesthesia provider who performed anesthesia services in conjunction with the surgical procedures had an exclusive relationship with the hospital, but was not directly contracted with the HMO. The patients had little-to-no direct contact with the anesthesia provider prior to the procedures. The anesthesia provider then billed the HMO for services provided; the HMO issued payments, which the anesthesia provider accepted, that were for lesser amounts than what had been billed. The anesthesia provider subsequently issued bills for the remaining amounts to the patients.

The patients brought a suit seeking declaratory against the provider based on Section 641.3154 of Florida Statutes (2007), which states,

A provider or any representative of a provider, regardless of whether the provider is under contract with the health maintenance organization, may not collect or attempt to collect money from, maintain any action of law against, or report to a credit agency a subscriber of an organization for payment of services for which the organization is liable, if the provider in good faith knows or should know that the organization is liable.

Because the HMO had issued pre-authorization for the procedures at issue, the HMO had accepted liability for the procedure. Because the anesthesia provider was aware of the pre-authorizations, it should reasonably have known that the HMO had accepted liability.

The court ruled that any payment dispute is between the HMO and the anesthesia provider. Because the HMO had accepted liability for the procedures and because he anesthesia provider knew about it, the patients cannot be billed for the balance.

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February 11, 2010

MIPAA Accreditation for Providers of Advanced Diagnostic Imaging Services

The Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) requires the Secretary to designate organizations to accredit suppliers, including but not limited to physicians, non-physician practitioners, and Independent Diagnostic Testing Facilities, that furnish the technical component of advanced diagnostic imaging services. Advanced diagnostic imaging services include diagnostic magnetic resonance imaging (MRI), computed tomography (CT), and nuclear medicine imaging.

Recently, the Centers for Medicare & Medicaid Services (CMS) approved the following three national accreditation organization to provide the accreditation services for suppliers of the TC of advanced diagnostic imaging procedures: (1) the American College of Radiology; (2) the Intersocietal Accreditation Commission; and (3) the Joint Commission.

The accreditation organizations will assess the overall quality of a practice, including but not limited to, its personnel, equipment, quality assurance activities, and the quality of patient care. In addition, each accreditation organization has quality standards that focus on but are not limited to the qualifications of medical personnel and medical directors, performance specifications for imaging equipment, and quality assurance and control programs to ensure the safety, reliability, clarity, and accuracy of diagnostic imaging.

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February 9, 2010

HLP Welcomes New Health Care Corporate Attorney

HLP is pleased to welcome a new addition to our growing firm, attorney Kathryn Hickner-Cruz, formerly of Hall, Render, Killian, Heath & Lyman, P.C. Kathryn specializes in health care corporate matters, including fraud and abuse, mergers and acquisitions, and private offerings, and has significant experience in federal and state health care law compliance matters. The Health Law Partners, P.C. is excited to have her on our team of lawyers who specialize in the business of health care.

February 9, 2010

CMS Rescinds POS Reimbursement Rules for Diagnostic Tests

CMS rescinded a change order affecting the use of place of service ("POS") codes used for the interpretation of diagnostic tests. Originally issued on December 11, 2009, the rescinded Change Request ("CR") led to significant confusion about the POS for reporting the reading of diagnostic tests.

MLN Matters 6375, which explained the CR, required providers to report the specific date and location where the test interpretation (the professional component) occurred--rather than the date and location where the actual test was performed.

CMS has stated that it will issue a new CR and MLN Matters providing additional, more consistent clarification regarding the use of POS codes in the future.

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February 8, 2010

Home Health Agencies and Ownership Changes

The home health world has been turned upside down. As many are aware, new regulations have been implemented that affect ownership changes for home health agencies ("HHAs"). On January 21, 2010, CMS published a "Medicare Learning Network Provider Inquiry Assistance." This publication clearly states that any "ownership change" within 36 months of the Medicare enrollment date or the most recent ownership change will require a home health agency to enroll as an initial Medicare applicant.

"Ownership Change" is defined as any of the following: CHOW (as defined by Medicare); acquisition/merger; consolidation; change of information request reporting a five percent (5%) or greater ownership change (e.g., stock transfer, asset sale); or change request reporting a change in partners, regardless of the percentage of ownership involved. Previously, a stock sale (as opposed to an asset purchase) of an HHA was not treated as a change of ownership. Instead, HHAs were required to simply submit a change of information form.

Our office has become aware of numerous HHAs who were involved in stock sales and submitted the 855A applications and all relevant information prior to the publication of the final regulation. Despite the fact that the applications were submitted before August, when the regulation was proposed, the applications were never processed and the provider numbers became ineffective on January 1, 2010.

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February 4, 2010

Incentive Payments for Meaningful Use of EHR Technology Does NOT Apply to Anesthesiologists

The American Recovery and Reinvestment Act establishes an incentive program that provides incentive payments to eligible physicians (EP) and eligible hospitals for meaningfully using electronic health records (EHR). While many specialists are learning the conditions under which they can capitalize on these incentive payments, anesthesiologists will learn that they do not qualify as EPs, thus not able to receive incentive payments for their meaningful use of EHRs.

One requirement that a physician satisfy is that s/he is a non-hospital-based physician. "Hospital-based" physicians are defined to include those that provide 90% of their Medicare-covered services within a Place of Service (POS) of 21, 22, or 23--either an inpatient hospital, outpatient hospital, or emergency room hospital, respectively. Furthermore, the statute explicitly states that anesthesiologists--who furnish substantially all of their Medicare-covered services in a hospital setting, using the hospital's facilities and equipment, and qualified EHRs--are not eligible to receive the incentive payments because they are not bringing their own equipment to the hospital in furtherance of the medical services they perform. If a hospital demonstrates is meaningful use of an EHR, it can qualify for incentive payments.

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February 1, 2010

CMS Initiates New Demonstration Programs in Indiana and in North Carolina

CMS announced new demonstration programs it plans to implement to "identify, develop, test, and disseminate major and multi-faceted improvements to the health care system." The Medicare Modernization Act requires that Medicare conduct a five-year demonstration program to achieve four main goals: (1) to improve patient safety; (2) to enhance quality; (3) to increase efficiency; and (4) to reduce the variations in medical practice that yield poorer quality and increased costs. The two demonstration programs to be initiated are in Indiana and in North Carolina.

The Indiana demonstration program--Indiana Health Information Exchange (IHIE)--will consist of a regional, multi-payer, pay-for-performance program that is based upon a common set of healthcare quality measures. CMS hopes that this program will provide key empirical evidence demonstrating how effective the pay-per-performance, health IT, and multi-payer initiatives are to improving quality and efficiency.

The North Carolina demonstration program--North Carolina Community Care Networks (NC-CCN)--is aimed at evaluating the organization, delivery, and financing of healthcare that are all used to increase the quality and efficiency of the healthcare system. NC-CCN is a non-profit organization that will provide a model that "combines a physician- directed care management approach with a variety of information technology applications designed to support care coordination and evidence-based practice, and a regional physician pay-for-performance program using a common set of quality measures." Currently NC-CCN only serves Medicaid beneficiaries, but the demonstration program will expand to dual eligible and Medicare-only beneficiaries, as well.

CMS posts information on these demonstration programs at its Medicare Demonstrations page.

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