July 2010 Archives

July 28, 2010

Radiology Clinic Pays $647,000 to Resolve Lawsuit Alleging it Billed Medicare for Unneeded Tests

Advanced Radiology of Beverly Hills has agreed to pay the federal government $647,000 to settle allegations that they filed false claims with Medicare for unnecessary radiological tests. The United States civil lawsuit alleged that Advanced Radiology engaged in a scheme to bill Medicare for unnecessary tests performed at Advanced Radiology from 1999 through 2002. As part of the scheme, an Advanced Radiology contractor would recruit Medicare beneficiaries to undergo diagnostic tests, even though they were not needed.

The settlement resolves allegations initially made against Advanced Radiology in a "whistleblower" lawsuit filed pursuant to the qui tam provisions of the False Claims Act, which allow a private party to file a civil action on behalf of the United States and receive a portion of the recovery.

The HLP recommends that you take a careful look at your documentation practices as regulatory compliance continues to take on critical importance in this health care environment.

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July 28, 2010

Rite Aid Agrees to Pay $1 Million to Settle HIPAA Privacy Case

For those providers and entities that think HIPAA violations are no big deal or that have yet to implement required policies and procedures, they are well advised to review the Department of Health and Human Services July 27, 2010 press release announcing a $1 million dollar settlement related to allegations of violations of HIPAA.

Rite Aid Corporation and its 40 affiliated entities (RAC) agreed to pay $1 million to settle violations under the HIPAA Privacy Rule. The Office of Civil Rights (OCR) which enforces the HIPAA Privacy and Security Rules opened its investigation of RAC after a television media station reported on incidents where pharmacies were shown to have disposed of prescriptions and labeled pills bottles that contained individuals' identifiable information in trash containers accessible to the public.

Such an act of disposing of individuals' health information in places that is accessible to an unauthorized person is in violation of several requirements found in the HIPAA Privacy Rule. The HIPAA Privacy Rule requires health plans, health care clearinghouses and most health care providers including pharmacies, to protect the privacy of patient information, including such information during its disposal.

As part of the settlement agreement, Rite Aid also agreed to take the following corrective action to improve its policies and procedures to safeguard the privacy of its customers: (1) revise and distribute policies and procedures regarding disposal of protected health information and sanction workers who do not follow them; (2) train employees on the new requirements; (3) conduct internal monitoring; and (4) engage a qualified and independent third-party to conduct compliance reviews and render report to HHS.

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July 27, 2010

Hospice Proposed Rule Includes Important changes to Hospice Certification Requirements

The Medicare hospice benefit is a fully reimbursable Medicare Part A benefit option, which covers the multidisciplinary services addressing the physical and emotional pain associated with terminal illness through palliative treatment. To be eligible to elect hospice care under Medicare, an individual must be entitled to Part A of Medicare, and be certified as being terminally ill (i.e., the individual must be certified as having a limited life expectancy of six months or less if the terminal illness were to take its normal course).

Significantly, CMS recognizes that terminal illnesses do not have entirely predictable courses, and despite the best clinical judgment of the certifying physician, some individuals receiving hospice care survive longer than six months. The Medicare hospice benefit is not a six month benefit. The Medicare hospice benefit is provided for specified amounts of time known as "election periods." Pursuant to Section 1812 (a) (4) of the Social Security Act and 42 C.F.R ยง 418.21 of the federal regulations, a physician may certify a patient for hospice care coverage for two initial 90-day election periods, followed by an unlimited number of 60-day election periods. Each election period requires that the physician certify a terminal illness.

The Patient Protection and Affordable Care Act of 2010 ("PPACA") included important changes to the hospice certification requirements. Pursuant to Section 3132 of PPACA, Section 1814 (a) (7) of the Social Security Act will be amended to require that on and after January 1, 2011, a hospice physician or nurse practitioner must have a face-to-face encounter with every hospice patient to determine continued eligibility of the patient prior to the 180-day recertification and prior to each subsequent certification. PPACA also requires that the hospice physician or NP attest that such visit took place. A Proposed Rule that would serve to implement provisions of PPACA was published on July 23, 2010.

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July 26, 2010

Gov. Paterson Orders Lawmakers Back To Discuss Budget, Medicaid

Governor David Paterson has called for a mandatory session with the state legislature to address the remaining portion of the state budget. This comes after local governments around New York threatened to suspend their Medicaid payments to the state as a consequence of New York's chronic cash shortage. The special session will focus on passing a revenue bill, along with a contingency plan for the possible loss of more than $1 billion in federal Medicaid money.

While the state Senate remains hopeful that they will pass the revenue bill, the final bill requires reaching an agreement on a Medicaid contingency plan, SUNY empowerment and property tax relief. The Senate has thus far struggled to pull its members together to reach an agreement on the three proposals.

Further, while Paterson has used his power to call the Senate back for the special session, he cannot enforce them to act on any of his agenda items. If either chamber wants to ignore the governor, they can simply gavel in and gavel out in the space of a few minutes.

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July 21, 2010

Hospice Providers Face Claims Scrutiny

Hospice providers are facing ongoing claims scrutiny, highlighting the importance of compliance. On June 8, 2010, the Centers for Medicare and Medicaid Services ("CMS") held a national outreach session to educate hospice providers regarding specific vulnerabilities involving hospice services, with specific emphasis on the provision of hospice services to beneficiaries residing in nursing facilities.

Two recent Office of Inspector General ("OIG") documents highlight this important issue. First, in September 2009, the OIG published a report entitled, "Medicare Hospice Care for Beneficiaries in Nursing Facilities: Compliance with Medicare Coverage Requirements." This OIG report concludes that 82 percent of hospice services provided to beneficiaries in nursing facilities in 2006 failed to meet Medicare coverage requirements. The report found that most deficiencies were related to the hospice's failure to comply with provisions of the hospice plan of care, failure to obtain valid hospice election statements, and failure to comply with hospice certification requirements. The report states that the information contained therein would be shared with the Recovery Audit Contractors ("RACs"); accordingly, providers may expect that the RACs may target hospices in conducting claims reviews.

A second OIG document entitled, "Medicare Hospice Care: Services Provided to Beneficiaries Residing in Nursing Homes," details the increase in hospice services provided to beneficiaries residing in nursing homes over time. The document further notes the high percentage of hospice patients that reside in nursing facilities who have ill-defined conditions or mental diseases (e.g., Alzheimer's disease, chronic obstructive pulmonary disease ("COPD"), unspecified heart disease, etc.).

These documents, together with the recent educational sessions put on by CMS, highlight the scrutiny under which hospice claims will be reviewed. Accordingly, it is imperative that hospice providers adopt and implement appropriate compliance procedures, not only with respect to technical issues (e.g., plan of care, election and certification requirements), but also with respect to eligibility issues (e.g., fully documenting a given patient's condition and signs and symptoms of decline to establish hospice eligibility, taking into account published Medicare policy guidance and local coverage decisions).

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July 16, 2010

$251M Medicare Bust Includes Detroit

Federal authorities conducted the largest Medicare fraud bust ever in five different states (including Michigan and New York), arresting dozens of suspects accused in scams totaling $251 million. In total, 94 suspects have been indicted and 36 were arrested this morning including doctors and nurses in Detroit, New York City, Miami, Houston and Baton Rouge, La. They are accused of billing Medicare for unnecessary equipment, physical therapy and HIV treatments that patients typically never received.

In light of President Barack Obama's proposed health care overhaul, federal authorities have promised more money and manpower will go to fighting Medicare fraud. Around the country, Medicare fraud has evolved from tiny scams into schemes involving a sophisticated network of doctors, clinic owners, patients and patient recruiters. Violent criminals and mobsters have also begun to tap into the scams, viewing Medicare fraud as more lucrative than dealing drugs.

For instance, federal agents busted a medical center in Brooklyn, N.Y., charging eight people with running a $50-million scam that submitted bogus claims for physical therapy. The clinics owners were paying patients in exchange for their Medicare numbers and a bonus fee for recruiting new patients.

This comes after Federal authorities launched a strike force in Miami in 2007 to target the Medicare Fraud. The program has since expanded to seven cities (including Detroit and Brooklyn) leading to more than 720 indictments that collectively have billed the Medicare program more than $1.6 billion.

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July 16, 2010

OIG Plans to Scrutinize Medicare Part D Drug Claims

Robert A. Vito, Acting Assistant Inspector General, CMS Audits, testified before the Subcommittees on Federal Financial Management of the Senate Homeland Security and Governmental Affairs Committee on Preventing and Recovering Government Payment Errors. In his testimony, Mr. Vito expressed concern over OIG's June 2010 report on Invalid Prescriber Identifiers on Medicare Part D Drug Claims, which revealed that CMS and its plan sponsors have not adequately performed one of the most basic oversight checks in Medicare Part D - ensuring that a drug was prescribed by a physician. The result lead to Part D sponsors and beneficiaries paying pharmacies $1.2 billion in 2007 for claims in which the prescriber identifiers listed on the claims did not correspond to practicing physicians.

One of the reasons for this vulnerability is the use of invalid prescriber identifiers on Part D claims. CMS contracts with sponsors to administer the Medicare Part D benefit and pay Part D claims. Sponsors then must submit electronic records, called prescription drug event (PDE) records, to CMS for any covered prescription that is filled, which usually requires an identifier for the drug's prescriber. However in the June 2010 report, it was found that more than 18 million PDE records contained invalid prescriber identifiers in 2007, representing 2 percent of the nearly 1 billion PDE records submitted to CMS that year.

Therefore, the OIG is proposing that Part D claims with invalid prescriber identifiers should be subjected to further review. The OIG recommends that, instead of implementing prepayment edits, CMS conduct periodic reviews to ensure the validity of prescriber identifiers used on PDE records. Additionally, CMS should require sponsors to institute procedures to flag any Part D claims with invalid identifiers in the prescriber identifier field.

The OIG therefore plans to ensure that Part D claims contain valid prescriber identifiers so that CMS and its contractors will no longer have difficulty performing oversight functions such as verifying the prescriber's licensing information, determining whether the prescriber has been the subject of disciplinary actions for inappropriate activities or tracking potential over-prescribing issues.

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July 14, 2010

Physicians' Perceptions, Preparedness for Reporting, and Experiences Related to Impaired and Incompetent Colleagues

A recent doctor survey study by the Journal of American Medical Association (JAMA) found that while physicians support the professional commitment to report all instances of impaired or incompetent colleagues, when faced with these situations, many do not report.

Conducted by a team from Massachusetts General Hospital, the study used data from 2009 national survey of close to 3,000 physicians practicing in a wide array of medical fields. The physicians were questioned in three areas: about their responsibility to report physicians who were incompetent or impaired by drugs or alcohol, their preparedness and comfort level doing so, and their experiences with colleagues with these issues.

While 70% of the physicians said they were prepared to report impaired physicians and 64% said they were prepared to report incompetent ones, more than one-third, 36%, said they do not feel obligated by professional commitment to do so.

Most states (including Michigan) impose a statutory duty on physicians to report other physicians who they know are impaired. Furthermore, for those physicians who suffer from impairment, most states (including Michigan) have health professional recovery programs which support the recovery of its participants so they may safely return to practice while protecting the safety of the general public. By contacting such programs voluntarily and participating in the program, the physician can often avoid a disciplinary action. However, such programs are not necessarily appropriate in every circumstance. The decision as to whether to self-report to such a program is an important one with many potential ramifications and should be made only after careful consideration. Consultation with an experienced health care attorney is also a prudent course of action in such matters.

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July 14, 2010

RAC Vulnerabilities Highlighted in CMS Release

CMS just released its first in a series of articles that will disseminate information on Recovery Audit Contractor (RAC) high-dollar improper payment vulnerabilities. The objective of such articles is to provide education regarding RAC demonstration-identified vulnerabilities to prevent the same problems from happening in the future.

CMS notes two high-risk vulnerabilities identified during the RAC demonstration: provider non-compliance with timely submission of requested medical documentation and insufficient documentation that did not justify that the services billed were covered, medically necessary, or correctly coded.

According to CMS, due to the implementation of the permanent RAC program and the initiation of complex medical review, including coding and medical necessity, it is now more important than ever for providers to understand and implement the lessons learned from the RAC demonstration. CMS is therefore encouraging all providers who submit fee-for-service claims to Medicare fiscal intermediaries (FIs) or Part A/B Medicare administrative contractors (A/B MACs) are urged to review the article and take steps, if necessary, to meet Medicare's documentation requirements to avoid unnecessary denial of claims.

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July 13, 2010

Secretary Sebelius Announces Final Rules to Support Meaningful Use of Electronic Health Records

The U.S. Department of Health and Human Services announced its plan to expand the use of electronic health records (EHR) through incentives payments, to improve Americans' health, increase safety and reduce health care costs. Under the Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009, health care professionals and hospitals can qualify for Medicare and Medicaid incentive payments when they adopt EHR technology and achieve specified objectives. As much as $27 billion will be expended through this incentives program over the next ten years. Professionals who are eligible may receive as much as $44,000 under Medicare and $63,750 under Medicaid, and hospitals may receive millions of dollars for implementation and meaningful use of certified EHRs under both Medicare and Medicaid.

HHS announced the requirements for professionals who wish to participate with the EHR incentive payment program. The first of two regulations announced today defines the "meaningful use" objectives that providers must meet to qualify for the bonus payments while the other regulation identifies the technical capabilities required for certified EHR technology. With the "meaningful use" definition now in place, EHR system vendors can ensure that their systems deliver the required capabilities, providers can be assured that the system they acquire will support achievement of "meaningful use" objectives, and a concentrated five-year national initiative to adopt and use electronic records in health care can begin.

Two other companion rules were also announced today. One issued by CMS, defines the minimum requirements that providers must meet through their use of EHR technology and the other rule, issued by the Office of National Coordinator for Health Information Technology, identifies the standards and certification criteria of EHR technology.

The requirements for the "meaningful use" incentive payments will be implemented over a multi-year period, phasing in additional requirements that will continue to expand the quality objectives the EHR incentives program are supposed to meet.

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July 12, 2010

AMA: 20% of Medical Claims Processed Incorrectly by Health Insurers

Despite all the scrutiny upon providers in terms of submitting accurate claims, a recent study by the American Medical Association (AMA) shows health insurance companies should also be held responsible for improper processing of claims. In the study, the AMA found that one in five medical claims is processed incorrectly by health insurers. Health insurers had an accuracy rate for processing and paying claims of 80% overall.

About $777.6 million in administrative costs could be saved if the health insurers improved their claims payment accuracy by a mere 1 percentage point. Getting to 100% claims payment accuracy could save up $15.5 billion annually. The AMA believes that these deficiencies could be corrected by creating a single transparent systemwide set of processing and payment rules which would create systemwide savings while allowing physicians to direct time to patient care instead of excess paperwork.

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July 9, 2010

New HIPAA Rules Will Require Covered Entities To Issue New Notice of Privacy Practices

In addition to the many aspects of the new HIPAA rules modifying the existing HIPAA Privacy and Security Rules, if the proposed rules are finalized, covered entities will be required to make "material modifications" to their Notice of Privacy Practices ("Notice") therefore triggering obligations to revise and distribute the "new" Notices. For example, covered entities will have to revise their Notices consistent with new changes to the patient rights portion of the rule. Specifically, although the current rules allow a covered entity to decline to accept a patient's request for restrictions as stated in the Notice, the proposed rules require a covered entity to agree to a patient's request not to disclose protected health information ("PHI") to a health plan if the purpose of the disclosure to the plan is for carrying out payment or health care operations and the PHI pertains solely to health care services for which the patient or, another person on behalf of the patient, has paid the covered entity in full. In other words, a patient can restrict a health care provider from disclosing PHI to the patient's health plan as long as the patient pays out of pocket for the service in full. Importantly, if the patient's payment is not honored (e.g., the check bounces), the provider is permitted to submit the PHI to the health plan in order to be paid for the service. The health care provider need only comply with the restriction for services in which the provider is paid in full. The Office of Civil Rights ("OCR") makes clear that it does not believe that the intent of the HITECH ACT was to allow patients to avoid their payment obligations to health care providers. The proposed regulations also would require changes to the Notice regarding notifying patients which uses and disclosures require an authorization. The proposed rules would also require covered entities to disclose to patients that most disclosures for PHI for which the covered entity receives remuneration require authorization. The Notice will also have to be revised to reflect the new requirements concerning marketing and subsidized treatment communications. The OCR is also soliciting comments on whether the Privacy Rule should require that the Notice contain a required statement advising patients of the new breach notification obligations with respect to breaches of unsecure information.

Notably, the OCR states that the change to the existing patient rights rule and other changes noted above are "material" thus requiring all covered entities who have Notice obligations to revise their Notices and reissue them. This means that although the handing out of a Notice to a patient is typically a one-time obligation (i.e., continuing patients need not be offered a Notice at every visit), the provider will now have to ensure that all patients are provided a new Notice at their next visit and maintain a copy of the patient's acknowledgment that they have been given a copy of the new Notice. Many providers have not revised their Notices since inception of the Privacy Rule and thus have not had the burden of providing all existing and continuing patients with new Notices. Importantly for health plans, the OCR recognizes that revising and redistributing Notices within 60 days of material changes for health plans is a costly process and thus the OCR is seeking comments on ways in which plans could inform individuals of the changes without imposing a large burden. The OCR is considering many options such as replacing the current 60 day requirement with a requirement that the plan redistribute the new Notice in the next annual mailing such as at the beginning of the plan year or during the open enrollment period and is also considering whether it should make no changes. Obviously, it is in the best interest of plans to proactively comment to the OCR on this important issue.

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July 8, 2010

OIG Enters Into $7.3 Million Civil Monetary Penalty Settlement With Physician-Owned Enterprise

The OIG for the Department of Health and Human Services entered into a Civil Monetary Penalty (CMP) settlement agreement for $7.3 million with United Shockwave Services, United Prostate Centers, and United Urology Centers (collectively, United), all of which are based in the Chicago, Illinois area.

This agreement settles charges by OIG alleging that United, and certain of its physician-owners, leveraged patient referrals to obtain contract business from hospitals in Illinois, Indiana, and Iowa, therefore violating Federal anti-kickback laws. OIG also alleged that United caused certain hospitals to submit claims for designated health services that resulted from prohibited referrals in violation of the Physician Self-Referral Law (Stark law).

Along with the $7.3 million settlement, United entered into a 5-year Corporate Integrity Agreement (CIA), which requires United to hire an Independent Review Organization that will monitor United and any hospital in Illinois, Indiana or Iowa that recieves referrals from United or its physician investors. Further, United is also required to create a comprehensive training program to educate its employees and corporate members on Stark law and kickback issues.

This settlement underscores the importance of taking proactive measures to have health care business relationships analyzed for compliance with the myriad of fraud abuse laws and regulations prior to the initiation of any government audit or investigation and to seek experienced, learned health care legal counsel upon receipt of any inquiry by the government or any third party payor into business relationships to attempt to avoid the matter escalating into a civil or even criminal matter.

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July 8, 2010

Health Information Privacy and Security Strengthened through New Proposed Rule

The Department of Health and Human Services ("HHS") today announced a notice of proposed rulemaking regarding HIPAA Privacy and Security. The proposed rule is issued in connection with the amendments and expansion to HIPAA made as part of the Health Information Technology and Economic Clinical Health Act (the "HITECH Act"), enacted as part of the American Recovery and Reinvestment Act of 2009.

The proposed rule is intended to strengthen and expand enforcement of HIPAA Privacy, Security and Enforcement Rules by granting broader patient rights and stronger protections when business associates handle individually identifiable health information.

HHS also launched today a privacy website, designed to inform the public regarding existing HHS health information privacy efforts and policies. HHS also announced that its website for HIPAA breach notifications is to be updated and will now include a search function and summaries of past health information privacy breaches.

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July 7, 2010

Michigan Health Care Reform Opt-Out Falls Short

In a news conference today, organizers of the Michigan Health care reform opt-out announced their petition drive fell short of collecting enough signatures to put the issue before the voters. Wendy Day, one of the organizers for Michigan Citizens for Healthcare Freedom estimated the group's signature collectors gathered between 145,000-170,000 signatures, well short of the 381,000 needed to place the proposed constitutional amendment on the November ballot.

The proposed amendment would have given Michiganders a constitutional right to opt-out of participation in the health care program approved by Congress in March. While the petition failed, a pair of state lawmakers who attended the event said they will introduce legislation mirroring the language in the proposed amendment when the Legislature reconvenes later this month.

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July 6, 2010

FTC delays enforcement of Red Flag Rules against Physicians

The Federal Trade Commission recently issued a press release delaying the compliance deadline of the red flag rules until December 31, 2010. Then, on June 25, 2010, the FTC and several medical groups stipulated that the FTC will not enforce its red flag rules against physicians who are members of the American Medical Association, American Osteopathic Association, and the Medical Society of the District of Columbia until the D.C. Circuit issues a decision in American Bar Ass'n v. FTC (in which the American Bar Association sought a declaration that the FTC's application of the red flag rules to lawyers was unlawful).

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July 5, 2010

Proposed Medicare Physician Fee Schedule Contemplates A 6.1% Cut In Physician Reimbursement Rates

Under the proposed Medicare physician fee schedule rule (the "Proposed MPFS") released by the Centers for Medicare and Medicaid Services (CMS) on June 25th, physician reimbursement rates would decrease by 6.1% as of January 1, 2011. On the day that CMS issued the Proposed MPFS, the 21% cut in physician reimbursement was deferred until at least November 30, 2010 by operation of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (H.R. 3962) being signed into law. Under H.R. 3962, physicians were designed to receive a 2.2% positive adjustment to rates, retroactive to June 1, 2010, the date upon which the 21% reduction became effective. Clearly, the vicissitudes in the Medicare physician reimbursement landscape are the cause of significant consternation in the physician provider community, leading substantial numbers of physicians to critically evaluate their continued participation in the program ... or, at a minimum, whether to admit any new Medicare patients into their practices. Note that the Proposed MFPS's focus is not confined to the payment update, and also operates to implement a number of initiatives contemplated under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act. Please see The HLP Blog for coverage of other aspects of the Proposed MPFS, which is scheduled to be published in the July 13 Federal Register, with comments due by August 24.

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