June 2011 Archives

June 30, 2011

RAC DRG Coding Vulnerabilities Identified, Guidance for Inpatient Hospitals Addressed by New CMS Article

By correcting vulnerabilities identified by Recovery Audit Contractors ("RACs") and similar Medicare contractors, the Centers for Medicare and Medicaid Services ("CMS") hopes to reduce the rate of mistakes uncovered by the Comprehensive Error Rate Testing ("CERT") program. Diagnosis Related Group ("DRG") Validation review is one of the processes RACs utilize to review Medicare claims submitted in the Fee-for-Service ("FFS") program. CMS recently published a MLN Matters article intended for all Inpatient Hospital providers who submit FFS claims to Part A/B Medicare Administrative Contractors ("MACs") or Medicare Fiscal Intermediaries ("FIs"), addressing frequently encountered DRG coding issues.

The principal and secondary diagnoses and procedures indicated on a Medicare claim submitted by a hospital are scrutinized during a DRG Validation review, and a large number of incorrect principal diagnoses have been discovered on the reviewed claims. Although hospitals may elect to code before the patients' medical records are complete (e.g., prior to receiving the discharge summaries), CMS warns that hospitals utilizing this approach do so at their own risk. Hospitals are responsible for accurate records which properly reflect the patients' procedures and conditions. Without the opportunity to review entire medical records when coding, hospitals raise the possibility of coding errors. RACs, in comparison, have access to complete medical records when reviewing the hospitals' claims.

When coding claims with conflicting or contradictory information in the record, the coder should clarify the discrepancy with the attending physician. In the alternative, if the coder fails to seek clarification from the attending physician, hospitals are encouraged to code the version of the record documented by the attending physician per "Coding Clinic, First Quarter 2004." Note, however, that the failure of an attending physician to indicate a consultant's diagnosis in the record is not a conflict. In other words, if the consultant indicates a diagnosis in the record and the attending physician does not, coding the consultant's diagnosis is acceptable. Actual coding discrepancies occur when physicians name the identical condition different things (e.g., sprained ankle and fracture).

It is vital that clinical evidence is present in the medical record to justify coding. CMS states that, the "Uniform Hospital Discharge Data Set (UHDDS) Guidelines for coding and reporting secondary diagnosis allow the reporting of any condition that is clinically evaluated, diagnostically tested for, therapeutically treated, or increases nursing care or the length of stay of the patient." The article further reads that, "[w]hen determining the principal diagnosis, all documentation by licensed, treating physicians in the medical record must be considered."

The ICD-9-CM Guidelines for Coding and Reporting may be accessed here.

Continue reading "RAC DRG Coding Vulnerabilities Identified, Guidance for Inpatient Hospitals Addressed by New CMS Article" »

June 30, 2011

6th Circuit Court of Appeals Panel Upholds the Health Reform Law's Individual Mandate

On June 29, 2011, the 6th Circuit Court of Appeals upheld a lower court's ruling on the health reform law's requirement that nearly all Americans buy insurance. The three-judge panel, including two Republican nominees, ruled 2-1 in favor of the mandate. The original suit was brought by the Thomas More Law Center, which argued that Congress has no legal right to impose the mandate.

Judge Boyce F. Martin Jr. wrote for the majority stating that the "minimum coverage provision is a valid exercise of legislative power by Congress under the Commerce Clause." The court ruled that the mandate regulates economic activity with a substantial effect on interstate commerce, and thus is legal. The court also agreed with the federal government that Congress had reason to think that allowing people to go uninsured would allow for "free riders" to take advantage of the system - and other taxpayers.

The 6th Circuit is one of three appeals panels that heard oral arguments in suits over the mandate this spring and is the first to issue a ruling. Two more rulings are expected this summer by the 4th Circuit, which heard two cases brought by the Commonwealth of Virginia and Liberty University, and the 11th Circuit, which heard a high-profile case brought by 26 governors and attorneys general.

The most likely next step for the group is to petition the Supreme Court to overturn the 6th Circuit's decision. The speed in which the 6th Circuit issued its ruling could ensure that the Supreme Court will have the opportunity to take up one of the health reform cases in the fall. If this happens, the high court's ruling on the constitutionality of the law could come as early as next summer.

Opponents of the health reform law now need one of the other circuits to strike down the law, which would result in split circuit decisions and increase pressure for the Supreme Court to take on the issue.

For more information about health care reform or the ever-evolving healthcare landscape, please contact The Health Law Partners at (248) 996-8510 or (212) 734-0128, or visit the HLP website.

June 29, 2011

Administration Places Health "Mystery Shopper" Initiative on Hold

A shortage of primary care doctors has long concerned health policy experts, and the deficiency could grow even more severe if health insurance coverage is extended to more than 30 million Americans as expected under the new health care law.

In response to the issue, the Obama administration began recruiting individuals to become "mystery shoppers" in its new survey initiative. The plan called for individuals who would contact physicians' offices to request medical appointments and gauge the availability of the needed health care. Besides determining primary care availability, the government hoped to find out if the type of insurance coverage carried by the patient (i.e., public v. private) poses a barrier to care access. The initial survey planned to sample over 4,000 doctors in nine states and was expected to cost $347,370.

The new plan quickly prompted protests from many doctors and lawmakers. Since the program did not intend for callers to identify themselves as government workers, many believed that the survey signified the government's lack of trust in doctors and could pose potential privacy issues. Some also expressed concerns regarding the need for and cost of the program.

Initially, the government stoutly defended the plan. In defense of the program, the administration stated that all data would be kept confidential and was needed to better understand the shortage problem and take necessary steps to solve it. Within a matter of days, however, the administration announced that the survey has been put on hold in the wake of the criticism. The Department of Health and Human Services ("HHS") announced that, "we have determined that now is not the time to move forward with this research project." Some speculate politics could have played a role in the decision although HHS officials deny the claim.

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June 28, 2011

Michigan Health Claims Tax Proposed, Relied On in State Budget

The 2012 Michigan state budget, signed into law by Governor Rick Snyder on June 21, 2011, assumes the passage of the Health Insurance Claims Assessment Act. The proposed law involves a new 1 percent tax on paid health care claims and was introduced by the legislature as Senate Bill No. 348. The potential tax would be used to help support, both directly and by drawing down matching funds from the federal government, Michigan's Medicaid program which provides health care to almost 1.9 million low-income Michiganders. The tax would impact every health insurer and self-funded employer plan in Michigan.

Currently, Michigan imposes a 6 percent use tax on Medicaid health maintenance organizations and Prepaid Inpatient Health Plans ("Use Tax"). The Use Tax generates almost $400 million. However, the Centers for Medicare & Medicaid Services ("CMS") is considering passing rules which would bar the state from receiving federal Medicaid matching funds based on revenue earned from the Use Tax. The proposed health care claims tax is the state's solution in anticipation of the potential loss of funds. Since the newly proposed tax is more broad-based, it carries a lesser risk of CMS disapproval while raising a comparable amount of funds.

The proposed tax, however, would most likely shift the financial burden of funding health care for low-income Michigan residents to Michigan consumers. Since the proposed tax would decrease insurers' profitability, health insurance rates would likely increase accordingly. Manufacturers argue that the tax would bring hiring to a halt and also reduce employee benefits. Hospitals, on the other hand, point out that the loss of a substantial percentage of Medicaid funding would lead to job losses, service closures, and even potential hospital closures.

State Senator Roger Kahn, who introduced the bill, plans to propose a substitute bill which will address some of the concerns expressed by businesses. Subsequently, the bill is likely to be discussed by the Senate Appropriations Committee later this month.

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June 27, 2011

Another Medicare Defrauder Sentenced in Metro Detroit

On June 21, 2011, the Departments of Justice and Health and Human Services ("HHS") announced that Maria Haber, an owner of a medical clinic based in Metro Detroit, was sentenced for her involvement in a $1.12 million Medicare fraud scheme. Haber's penalty includes 15 months in prison, 3 years of supervised release, and over $1 million in restitution to be paid jointly and severally with her co-defendants.

Haber pled guilty to one count conspiracy to commit health care fraud in October 2010. Previously, nine co-defendants pled guilty in connection with their involvement in the matter.

Court documents reveal that Haber incorporated CompleteHealth, a limited liability company purporting to provide primary care services, in 2007. She signed the company's provider application for Medicare enrollment and admitted to helping operate the clinic. Haber also admitted to billing Medicare for medically unnecessary services and tests along with her co-conspirators and paying kickbacks to driver recruiters and patients to carry out the fraudulent scheme. This conduct continued after CompleteHealth merged with Ritecare in 2008.

Haber is one of 1,000 defendants indicted in nine districts with the assistance of Medicare Fraud Strike Force operations since March 2007.

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June 24, 2011

Predictive Modeling Technology to Assist CMS in Detecting Medicare Fraud

On June 17, 2011, the Centers for Medicare & Medicaid Services ("CMS") announced that beginning July 1, 2011 it will start to utilize an innovative predictive modeling technology to aid the prevention of Medicare fraud. This CMS announcement comes in the wake of Obama's Campaign to Cut Waste launch.

The predictive modeling technology should help spot potentially fraudulent claims submitted to Medicare and resembles tools currently used by companies in the private sector to detect fraud. Northrop Grumman, an international provider of information solutions, was selected to develop this technology. The company will use algorithms and an analytical process to review real-time claims data based on patterns (e.g., provider, beneficiary, and service origin). The potentially problematic claims will be assigned "alerts" and "risk scores". The alerts will be more thoroughly reviewed to prioritize claims for CMS for additional review and to determine the need for further actions. Along with other anti-fraud devices provided by the Affordable Care Act, the predictive modeling technology should allow CMS to displace its "pay & chase" operation model with a preventative fraud and abuse system.

CMS Administrator Donald Berwick, M.D. stated that "this new technology will help us better identify and prevent fraud and abuse before it happens and helps to ensure the solvency of the Medicare Trust Fund."

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June 23, 2011

Regulators Toughen Up on Doctors

Large commercial companies have never fared well when offering kickbacks to physicians. Historically, regulators have aggressively pursued such wrongdoers for their attempts to interfere with sound medical judgment. Physicians, on the other hand, have often gone unprosecuted for their involvement in kickback schemes.

However, according to the general counsel to the Department of Health and Human Services inspector general, Lewis Morris, the tide has turned as more doctors are beginning to receive greater scrutiny from regulators. Some of the arrangements coming under examination include medical directorships, consultancies, and ownership stakes in side businesses. Morris noted that, "one of the things we think is a truism is that it takes two to have a kickback." In order to justly penalize all parties involved, regulators have begun basing their settlements with the wrongdoing companies on the entities' agreements to cooperate with the government in the prosecution of payment-seeking physicians.

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June 22, 2011

OIG Addresses CPAP Set-Up Service Arrangements between a DME Supplier and a Sleep Test Provider under the Federal Anti-Kickback Law

On June 21, 2011, the Office of Inspector General of the U.S. Department of Health and Human Services ("OIG") posted Advisory Opinion No. 11-08. This Opinion addresses possible federal Anti-Kickback Statute sanctions for payments made by a Medicare DME Supplier to a Medicare sleep test provider for storing the Supplier's PAP equipment and supplies and setting up the Supplier's patients on PAP billed in the Supplier's name.

The OIG concluded that, depending on the parties' intent to generate referrals, the arrangements potentially generate prohibited remuneration under the federal Anti-Kickback Statute. Depending on the parties' intent, the OIG said it could potentially impose administrative sanctions in connection with the arrangements - even on an arrangement involving "commercial-only" patients.

A. The Arrangements. The OIG considered two arrangements. One involves commercial-only patients and the other involves both Medicare and commercial patients. A Medicare-enrolled DME Supplier who requested the opinion (the "Requestor") described the two arrangements as follows.

1. Commercial-Only Arrangement. From time to time the Requestor has entered into contracts with IDTF sleep labs. In some cases physicians who refer PAP to the Requestor have a financial interest in the IDTF sleep lab.

Under the commercial-only arrangement, the Requestor DME Supplier consigns PAP equipment and supplies to the IDTF sleep lab. The IDTF staff may stock PAP from suppliers other than the Requestor as well.

The non-government patient will interact with the IDTF's staff during the performance of the sleep test. The patient may also interact with the physician who refers the PAP for the patient's obstructive sleep apnea if OSA is present.

If the non-government patient needs PAP therapy, then the IDTF staff will provide the patient with a so-called "freedom of choice" form. The freedom of choice form may or may not include a direct or tacit endorsement of the Requestor's products and services.

If the patient selects the Requestor to provide the PAP therapy, then IDTF staff will pull PAP from the Requestor's inventory stored at the IDTF and set the patient up on the PAP at the IDTF sleep lab or some other mutually agreed location. The Requestor represents that the individual IDTF staff members who perform the PAP set-up services are properly licensed under state law. The Requestor also represents that the Requestor's services are compliant with accreditation, quality assurance processes, Medicare Quality Standards and local laws.

In consideration for providing the storage and set-up services, Requestor pays the IDTF (or an IDTF staff member directly) a fair-market rate service fee on a per-patient basis. It appears that the Requestor and the IDTF sleep labs have been operating the commercial-only arrangement for some time.

2. Proposed Arrangement with Medicare Patients. The second arrangement described by Requestor is identical to the existing arrangement above except that it would be expanded to include federal health care program patients and the service fee would be paid on a flat rate rather than a "per-click" basis. In addition, the Requestor would have the option to terminate the contract if the Requestor was not satisfied with the number of patients receiving PAP services (ie, CPAP set-up's) from the IDTF staff. Finally, the Requestor could not certify that the fees to be paid to the IDTF would reflect the fair market value of the services provided.

B. The OIG's Analysis. In reaching its conclusions, the OIG looked at (i) the Requestor's existing commercial-only arrangement, (ii) applicable Anti-Kickback Safe Harbors, (iii) the lack of sufficient safeguards for abusive activity, and (iv) the lack of rental payments for PAP storage in the two arrangements.

1. Commercial-Only Carve Out. The OIG has often expressed concern that "commercial-only" carve out arrangements may implicate or even violate the Anti-Kickback Statute if the payments made to the referral sources for their commercial work influence or drive referrals of government services. In other words, if the Requestor here made PAP service payments to the IDTF for commercial patients, and if the ITDF or IDTF staff referred wheelchairs, blood monitoring equipment, PAP or other DME equipment reimbursed by a federal health care program to Requestor, then the "commercial-only" service payments would impact the Anti-Kickback law. Thus, these commercial-only payments would need to fit within an applicable Anti-Kickback Safe Harbor or otherwise include sufficient safeguards to minimize the risk of fraudulent or abusive activity.

2. Safe Harbor Protection. The OIG Opinion found that the service fees payable or to be payable by the Requestor to the IDTF under the arrangements would not fit under any Anti-Kickback Safe Harbor. That is because the payments do not and would not meet the Personal Services Safe Harbor condition that the contracts provide the exact times, length and charge for the periodic, sporadic, and part-time services contemplated by the arrangements.

3. Safeguards Against Fraud and Abuse. Failure to obtain Anti-Kickback Safe Harbor protection does not mean that the arrangement is per se illegal. A determination of the parties' intent to violate the statute and induce referrals is required for that step.

In these situations the OIG will assess the risk that the arrangement promotes or mitigates the kind of behavior made illegal by the Anti-Kickback Statute. Here the OIG concluded that the arrangements may promote aggressive marketing by DME suppliers by involving the IDTF's licensed health care professionals. That is because the IDTF staff and physicians may, by personal contact, tacitly or directly influence the patient's selection of Requestor as the DME provider of choice in light of the trust that patients place in health care professionals.

Thus, the OIG said the Requestor's payments to the IDTF might be characterized as payments to obtain in-person contacts between the IDTF staff and its patients before the patient selects his or her DME supplier. Such contacts could increase the risk that IDTF staff and, in some instances, physicians with financial interests in the IDTF, could inappropriately influence a beneficiary's selection of the Requestor as his or her DME supplier.

4. Lack of Rental Payments for Consignment Storage. The OIG noted with some concern that the arrangements failed to make reference to rental payments for the consignment arrangements. The OIG reasoned that at least some of the service fee payments would presumably be allocated to the consignment component because the consignment component is part of the total package of services provided by the IDTF to the Requestor. Along these lines the OIG notes that consignment arrangements can pose fraud and abuse risks in some instances. Note, however, that CMS has not completely outlawed DME consignment closet arrangements, even though they should comply with the Anti-Kickback Law if used.

C. Conclusion. In the end, the OIG said that the arrangements potentially generate, or could potentially generate, prohibited remuneration under the Anti-Kickback Law. Any definitive conclusion regarding the violation of the Act would require a determination of the parties' intent. Thus, the OIG could not say that the arrangements are or could be immune from prosecution under the Anti-Kickback Law.

Note that Opinion No. 11-08 does not examine any aspect of the arrangements under the federal Stark self-referral law. Also, Opinion 11-08 is issued only to the Requestor and has no application to, and cannot be relied upon by, any person or entity other than the Requestor.

Continue reading "OIG Addresses CPAP Set-Up Service Arrangements between a DME Supplier and a Sleep Test Provider under the Federal Anti-Kickback Law" »

June 21, 2011

MedPAC Proposes Prior-Authorization Program

MedPAC released its highly anticipated proposal calling for a reduction in the use of imaging services, including MRIs, CT scans and nuclear medicine, and, in particular, recommended pre-authorization for medical imaging services as a means to accomplish this objective. The MedPAC report focuses, in particular, on physicians who order an inordinately high volume of imaging tests, concluding that Medicare's costs for such tests are surging partially because physicians increasingly are purchasing their own high-tech equipment and providing such services to their own groups. When physicians can perform diagnostic tests in their own offices, they are able to capture the revenue stream from such testing services. While MedPAC acknowledged that having equipment in close proximity permits physicians to diagnose and treat patients with greater speed and precision, it argues that these physicians have a substantially greater penchant to order a greater amount of such services than those who send patients to unrelated facilities.

The proposed prior-authorization program would require CMS to compare physicians' use of imaging services to identify "outliers" whose use exceeds evidence-based clinical guidelines. The "outlier" physicians would be notified by CMS. If such physicians' imaging use does not decline following such notification, Medicare would require those clinicians to obtain prior-authorization from either CMS or a contractor. Alternatively, MedPAC supported the use of "clinical-decision support systems," or programs that suggest course treatments based on each patient's data, as long as the system used CMS guidelines and transmitted data to federal administrators.

MedPAC's proposal for prior-authorization continues to be met with strong opposition by physicians and politicians who argue that prior authorization will delay necessary medical care and would have an inappreciable effect on Medicare expenditures. HLP will continue to update our Blog on MedPAC's proposal, as Congress begins to assess the merits of prior authorization for imaging services.

For more information on government regulation of imaging services or for professional assistance navigating the ever-evolving healthcare landscape, please contact Carey F. Kalmowitz, Esq. or Adrienne Dresevic, Esq. at (248) 996-8510 or (212) 734-0128, or visit the HLP website.

June 16, 2011

Responding to RAC ADRs

In reviewing certain inpatient hospital claims, the RAC for Region B (covering the Midwestern states), CGI, and its subcontractor, PRG Schultz, are now requesting that nursing notes not be included in response to additional documentation requests ("ADRs"). Note that this directive is not consistent across all ADRs, as other ADRs specifically ask for nursing records.

All documents proving medical necessity (including nursing notes) should be submitted to the RAC by the health care provider, whether or not such documentation is requested. Nursing notes, in many cases, assist to establish the medical necessity for an inpatient hospital admission. Although the decision to admit a patient to the hospital as an inpatient can only be made by the physician, nursing notes, in many cases, detail relevant factors supporting a physician's decision.

When RACs request medical documentation in support of a Medicare claim, PPS providers and Long Term Care providers are entitled to reimbursement for the production of the medical records. (The current reimbursement rate is 12 cents per page). CGI and PRG have indicated that reimbursement is available for all "requested" pages which are sent, whether or not these pages are used in the actual audit. Some providers are now experiencing difficulty in receiving reimbursement for costs related to producing nursing records, as such records are no longer "requested."

The cost of not submitting all documentation proving medical necessity may prove greater than the cost of producing extra documents, even if the RAC ultimately does not reimburse the provider for this documentation. Concerns related to reimbursement for the production of medical records can be brought to the RAC or to CMS. State provider organizations also may be in a strong position to assist providers to receive appropriate reimbursement for records provided in response to ADRs.

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June 16, 2011

MGMA Physician Compensation Survey Highlights Released

The Medical Group Management Association ("MGMA") recently released the result highlights of the largest physician compensation survey in the United States. The survey is based on 2010 data from 60,000 providers in more than 150 specialties; the publically reported figures focus on 15 specialties.

According to the selected specialties data, orthopedic surgeons were the highest earners, with a median salary of $514,659. Invasive cardiology ($500,993) and diagnostic radiology ($471,253) were also among the highest paid specialties.

Primary-care physicians earned least based on the data. Family practice (without obstetrics), pediatric/adolescent medicine, and internal medicine recorded median salaries ranging from $189,402 to $205,379.

Emergency medicine physicians experienced the highest level of salary increase (5.65%). Neurologists (5.02%) and internists (4.21%) rounded out the top three salary gainers. On the other end of the spectrum, the largest median salary decrease was seen by urologists (-4.66%). In comparison, the 2010 rate of inflation, as indicated by the Consumer Price Index, was 1.5%.

Regional data revealed that primary care physicians and specialists earned least in the Eastern region and most in the Southern region.

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June 16, 2011

Medicare Probe Review Guidance

In addition to the multitude of auditing activities and programs that exist, the Medicare Carriers/Medicare Administrative Contractors also conduct medical reviews. Like many other auditing programs, these probe reviews are data driven and are conducted for the purpose of validating potential provider billing errors. The process may include either provider or service specific reviews. The health care providers involved in the reviews will be notified of the review results and will receive possible education. WPS, the Medicare contractor for Illinois, Michigan, Minnesota and Wisconsin, recently published information on its probe reviews. Service-specific probe review results may be accessed on the WPS MR Webpage.

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June 15, 2011

MedPAC Recommendation for Reduction in Imaging Services is Being Met with Strong Opposition

The Medical Payment Advisory Commission (MedPAC) plans to release a recommendation calling for a reduction in the use of imaging services, including MRIs, CT scans and nuclear medicine. MedPAC's advisory opinion would require some physicians and their patients to obtain pre-approval from Medicare for advanced imaging services. The proposal, if implemented without modification, would apply to physicians determined to have higher-than-average rates of inappropriate use of such imaging.

Imaging is one of the fastest-growing Medicare costs, rising from $6.5 billion to $11.7 between 2000 and 2009. CMS believes such restrictions "could add more front-end approaches to better ensure appropriate payments, such as requiring physicians to obtain prior authorization from Medicare before ordering an imaging service."

Detractors of MedPAC's recommendations argue that such restrictions on imaging services are premature on account of the regulations enacted in recent years to slow the growth of imaging expenditures. In response to the recommendation, a coalition of imaging manufactures, medical providers and patient groups urged MedPAC to reconsider, warning that implementation of the recommendation would limit access to life-saving diagnostic imaging services, which has the potential to impact the delivery of care to nearly 48 million Medicare beneficiaries.

The MedPAC proposal has also been met by opposition from lawmakers. House Energy and Commerce Health Subcommittee Chairman Joe Pitts, R-Pa., and ranking member Frank Pallone, D-N.J., two Congressman who fought with one another over last year's health law, joined forces to oppose MedPAC's recommendation. While Congress is not required to adopt MedPAC recommendations, some Capitol Hill observers believe that Congress may seek to incorporate certain of MedPAC's proposals, especially in light of the motivation to reduce federal health care expenditures.

For more information on government regulation of imaging services or for professional assistance navigating the ever-evolving healthcare landscape, please contact Carey F. Kalmowitz, Esq. or Adrienne Dresevic, Esq. at (248) 996-8510 or (212) 734-0128, or visit the HLP website.

June 14, 2011

AMA Submits Comments to CMS Regarding ACO Proposed Rule

On Friday, June 3, the American Medical Association ("AMA") submitted its comments concerning the Accountable Care Organizations ("ACOs") Proposed Rule (the "Proposed Rule") to Donald Berwick, the Centers for Medicare and Medicaid Services ("CMS") Administrator. The Proposed Rule was issued by CMS on March 31, 2011. In its comments, AMA provided its views and recommendations regarding the Proposed Rule while reiterating its belief that a successful ACO model "can be an effective tool to improve quality, manage care coordination, reduce health care costs, and create a supportive environment for practicing physicians." However, AMA urged CMS to issue an interim final rule to allow for the flexibility to change and improve the regulations as more information about the ACO model becomes available.

AMA addressed a number of issues in its extensive comments. First, AMA suggested changes to the proposed ACO payment and risk structure. AMA recommended the inclusion of at least one shared savings only option which would not include a mandatory shared loss provision in order to encourage participation by a greater variety of practices. AMA believes that without such an option participation could be unnecessarily limited because providers already have an incentive to become more cost-effective without the down-side risk provision. In the alternative, AMA suggested that the shared savings only option should, at the very least, be extended to smaller ACOs. AMA also urged CMS to allow health care providers to bill Medicare for procedures which are not currently billable under payment options which embrace down-side risk. AMA also suggested that ACOs share in a portion of all savings that are achieved without a minimum savings threshold, and that CMS increase the savings percentage ACOs are eligible to receive, especially at the beginning of the program. AMA also urged the removal of the withholding and line of credit provision of the Proposed Rule and suggested adjustments to the expenditure benchmark based on the health status of an ACO's patients during the performance period. Lastly, AMA urged the exclusion of the care costs for outlier patients from the savings calculation.

Next, AMA urged the inclusion of a number of transitional ACO models in order to encourage small and solo practice participation in ACOs. AMA urged "CMS to allow these alternative ACOs to share in a percentage of all savings that are achieved, rather than simply sharing in the savings above the minimum savings threshold proposed in the rule."

AMA also urged CMS to accept a more flexible approach to ACO beneficiary assignment. At the very least, AMA urged CMS to strike a balance between prospective and retrospective attribution. However, AMA stated that ideally "CMS should adopt a prospective approach that allows patients to volunteer to be part of the ACO and permits the ACOs to know up-front those beneficiaries for whom the ACO will be responsible." AMA believes that these proactive efforts are crucial in order to encourage and educate beneficiaries to behave in ways which will make ACOs successful.

Next, AMA expressed its views regarding the quality measures and other reporting requirements found in the Proposed Rule. AMA urged CMS to "(1) align quality measure domains and quality measures across its programs (including the ACO, Electronic Health Record [EHR] Incentive Program, and PQRS) and reduce the number of required measures in the initial years; (2) provide ACOs with some flexibility of measure selection; (3) reconsider data submission methods; and (4) support clinical quality registries as a significant data submission method." Among the numerous specific suggestions, AMA urged that CMS publish the required quality measures at least 90 days prior to the initial effective date of the ACO program and modify the 100 percent reporting on all measures requirement which is currently necessary under the proposed rule to qualify providers for a share of the savings.

AMA went on to address a number of other issues. AMA was pleased with the overall ACO governance structure proposal, but suggested some differing requirements for oversight of ACOs. AMA went on to disagree with the exclusion of rural health clinics from the proposed plan. Next, AMA agreed with CMS' overall attempt to propose waivers of federal program integrity laws in an effort to "test new payment models and methods that improve patient outcomes and promote value" and suggested a few improvements. Subsequently, AMA also urged CMS to consider its letter to the Federal Trade Commission ("FTC") and the Department of Justice ("DOJ"), which it recently wrote in response to the Statement of Antitrust Enforcement Policy, alongside the comments that AMA has provided to CMS. Lastly, AMA further urged CMS to ensure that tax-exempt ACOs may distribute the shared savings to ACO-participating providers or stakeholders without losing the ACO's tax-exempt status.

For the complete text of the comments, please click here.

Continue reading "AMA Submits Comments to CMS Regarding ACO Proposed Rule" »

June 13, 2011

Ohio Bill Impacting Pain Clinics Signed into Law

On May 20, 2011, Ohio governor, John Kasich, signed Ohio House Bill 93 into law. The bill represents an effort by Ohio to strengthen the State's regulatory framework relating to the prevention of prescription drug abuse. According to the Ohio Department of Health, since 2007, unintentional drug overdoses in the state accounted for more accidental deaths than motor vehicle crashes and suicides combined.

The new law, when it becomes effective, is expected to transform the landscape for the operation of pain management clinics in the State of Ohio. The bill mandates the State Board of Pharmacy to license pain management clinics and, further, provides for the clinics to be licensed as terminal distributors of dangerous drugs with a pain management clinic classification. Moreover, the law will prohibit the operation of a pain clinic without such a license. (The prohibition, however, will be postponed until 30 days following the bill's effective date). The bill also mandates the State Medical Board to implement rules establishing standards for physicians who provide care at pain management clinics and guidance for the physician operation of such clinics. Finally, the bill also authorizes the State Board of Pharmacy to levy fines (up to $5,000) against pain management clinics and/or the State Medical Board to impose fines (up to $20,000) for failure to comply with the rules of operation or standards for distributors of dangerous drugs with a pain management classification established under the act.

It is imperative for pain management physicians to understand the changes in the regulations that directly govern their practice, especially with the ever-evolving regulatory framework that applies to this area. For more information, please visit THE HEALTH LAW PARTNERS' Anesthesia and Pain specialty page or contact Abby Pendleton, Esq., Carey Kalmowitz, Esq., or Jessica L. Gustafson, Esq. at (248) 996-8510 or (212) 734-0128, or visit the HLP website.

June 13, 2011

Health Insurers Diversify in Wake of Industry Reform

The national health care reform, the implementation of which effectively requires a shift of health insurer spending more heavily towards medical care, is projected to reduce insurance profit margins to approximately 3% to 5%. This is a substantial decline considering these margins historically averaged around 7% to 8%. As a result, major health insurers in the United States are diversifying their businesses to include new partnerships and acquisitions that allow the companies to provide health information technology ("HIT"), take part in accountable care organizations ("ACOs"), and employ doctors directly.

The HIT market, in particular, is alluring to health insurers. Approximately 20% of managed-care business deals since 2010 involved HIT firms. Large profit margins reported by some companies with a presence in the HIT market (in excess of 20% in some instances), brought about by relatively low overhead, contribute to the appeal of these acquisitions. Interest in HIT businesses is fueled even further by the $27 billion available to doctors and hospitals for record computerization from the federal government.

Further, health insurers are participating in ACO formation projects and the direct employment of physicians. Their participation in creating ACOs seems a natural complement to plans' core business considering that under the ACO plan the financial risk of patient care is partly transferred from the insurers to doctors and hospitals. Absent a change in the federal ACO proposed regulations, however, the 25% cap on ownership by non-providers might militate against ownership in ACOs. The direct employment of physicians, on the other hand, might prove financially beneficial to insurers while reducing patient costs, especially if the predicted shortage of primary-care doctors is not meaningfully addressed.

The recent health insurer diversification triggers concerns among certain health care policy makers, namely as a result of the possibility that such efforts will take attention from the core of each insurer's business. This, however, has not deterred a number of major U.S. health insurers from attempting to diversify, and the expectation is that the trend will continue.

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June 10, 2011

False Claims Act Allegations Resulted in Florida Radiology Clinic and Others to Pay $3 Million Settlement

A Florida radiology clinic, Midtown Imaging LLC, and its former owners--Midtown Imaging PA and PBC Medical Imaging--have agreed to pay $3 million to settle allegations that Midtown Imaging LLC submitted false claims to Medicare between 2000 and 2008. The allegations arose from Midtown Imaging LLC's lease and professional services agreements with referral sources that were in violation of the Anti-Kickback Statute (AKS) and Stark Law (Stark), according to a Department of Justice press release. The whistleblowers, Dr. Teresa M. Cortinas and Dr. Walter E. Wojcicki, will receive $600,000.

Since January 2009, the Justice Department has recovered over $7.3 billion in False Claims Act cases.

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June 10, 2011

Senators Request Investigation into the Legality of PODs

Five U.S. senators requested an investigation by the Inspector General of the Department of Health and Human Services ("HHS") into the legality of physician-owned distributorships ("PODs"). The legality of the PODs is being questioned under the federal Anti-kickback Statute and other fraud and abuse laws.

Distributorships act as a link between medical device manufacturers and hospitals. In return for marketing and stocking medical devices, distributorships receive commission. In the case of PODs, this commission flows to the physicians. As a result, the POD arrangement may provide some physicians with revenue for medical devices they use on their patients.

The request for an investigation was accompanied by the Senate Finance Committee report on POD proliferation. PODs currently exist in at least twenty states and may raise the possibility of medically unnecessary surgeries, the report warns. As its evidence, the report cites some specific cases of patients undergoing multiple risky operations and increased pre-operation rates in one hospital following the creation of a POD in the area.

The senators requested that the Inspector General provide an initial report on the findings by August 12.

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June 9, 2011

Patient Recruiter Sentenced for Involvement in Detroit Medicare Fraud Scam

June 7, 2011, the Departments of Justice and Health and Human Services ("HHS") announced that Reynel Betancourt, a 51 year-old Miami resident, was sentenced for his involvement in a $9 million Medicare fraud scheme originating in metro Detroit. His penalty includes 77 months in prison and three years of supervised release. Betancourt was also ordered to repay about $6 million of restitution jointly and severally with his co-defendants.

Betancourt pled guilty in March of this year to one count of money laundering conspiracy and one count conspiracy to commit health care fraud. The plea documents reveal that in approximately March 2006, Betancourt agreed to recruit patients for Dearborn Medical Rehabilitation Center ("DMRC"), a company which falsely claimed to provide infusion and injection services to Medicare patients. Betancourt admitted to paying patients to sign documents for purported medical services and medications. He also admitted that the more than $9 million of services billed to Medicare by DMRC were not medically necessary and were not actually performed. In addition, Betancourt admitted to laundering these fraudulent proceeds through two sham corporations.

Operations of the Medicare Fraud Strike Force in nine locations have charged in excess of 1,000 defendants for falsely billing Medicare a total of more than $2.3 billion since March 2007.

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June 8, 2011

The HLP Congratulates Founding Partner Adrienne Dresevic on ABA Health Law Section Administrative Committee Appointment

The Health Law Partners, P.C. ("The HLP") is pleased to announce that founding partner Adrienne Dresevic was recently appointed to serve as Chair, ABA Health eSource; Vice Chair, Publication Committee; Vice Chair, Stark Toolkit Editorial Board; and Judge, Law Student Writing Competition. The appointment is for the 2011 - 2012 Bar Year (September 1, 2011 - August 31, 2012). As ABA Health eSource is the body within the ABA's Health Law Section responsible for the section's monthly electronic newsletter, this appointment represents an honor reserved for only the most respected members of the nation's health care bar.

Congratulations to Ms. Dresevic on her well-deserved and high-profile appointment.

June 8, 2011

New CMS Self-Disclosure Protocol Used to Resolve First Stark Matter

In February, the Centers for Medicare and Medicaid Services ("CMS") settled the first Stark matter since the publication of the CMS Voluntary Self-Referral Disclosure Protocol ("SRDP"). Although CMS spokesperson, Ellen Griffith, would not provide additional details, she confirmed that a settlement was reached.

According to other sources, however, the first Stark case involved Saints Medical Center in Lowell, Massachusetts, and the alleged violations related to night coverage, medical directorships, and stipends. The center paid $578,000 to settle the matter which could have cost the hospital as much as $14 million.

The center executives thanked two Congress members for their assistance in resolving the matter. It is unclear what impact Congressional involvement had on the settlement.

Providers who violate the Stark law may now have a choice between CMS and the Office of Inspector General ("OIG") self-disclosure protocols when the improper conduct violates the anti-kickback statute as well. However, CMS advises that, "[d]isclosing parties should not disclose the same conduct under both the SRDP and OIG's Self-Disclosure Protocol." Upon review of a provider's disclosure, if applicable, CMS will coordinate its actions with the OIG and DOJ.

Although the initial settlement result appears promising for providers looking to the CMS self-disclosure protocol to resolve their Stark matters, time will tell whether the settlement amounts under the new protocol will be similar to those previously reached with OIG assistance. So far, the CMS documentation demands appear to be a great time and financial burden on the providers. This burden, however, needs to be weighed in comparison to the potential savings the providers may gain. If a provider chooses this self-disclosure route, CMS may still decline to accept the applicant to its program.

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June 7, 2011

PCMHs Gain Momentum in New York

The patient-centered medical home ("PCMH") concept, in which a primary care physician and an interdisciplinary team coordinate the provision of patient services, continues to gain support. In April, New York State Health Commissioner Nirav Shah, M.D. promoted the state's new initiative to increase access to PCMHs during his National Public Health Week visit to Urban Health Plan's El Nuevo San Juan Health Center in the Bronx. The recently adopted New York State Budget includes an initiative to enroll 1 million Medicaid patients in PCMHs.

According to the Commissioner, among its many benefits, the team-based model of PCMHs offers "comprehensive, coordinated care, with greater emphasis on prevention and management of chronic diseases." Currently, New York's spending for avoidable hospitalizations is the highest in the country, and the PCMH plan should, over time, reduce the number of such hospitalizations.

Commissioner Shah was joined by other leaders in his quest to promote the PCMH initiative during the recent appearance in the Bronx. Urban Health Plan President and CEO Paloma Hernandez was among the leaders in attendance. Urban Health Plan's El Nuevo San Juan Health Center earned the highest level of National Committee on Quality Assurance ("NCQA") recognition and served as the Commissioner's example for a high-performing PCMH.

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June 6, 2011

HIPAA Privacy Rule Modifications Proposed by HHS

On May 31, 2011, the Department of Health and Human Services ("HHS") issued a notice of proposed rulemaking ("Proposed Rule") in relation to the Health Insurance Portability and Accountability Act ("HIPAA") Privacy Rule ("Privacy Rule"). The Proposed Rule concerns changes to the accounting disclosures requirement of the Privacy Rule.

The Proposed Rule intends to divide §164.528 of the Privacy Rule (the accounting of disclosures of protected health information provision) to provide two distinct, but complementary, rights for individuals. These rights would include an individual's expanded accounting of disclosures right and an individual's right to a report revealing who has accessed his or her protected health information contained in an electronic designated record set.

The revised accounting of disclosures right, to be modified by HHS under HIPAA authority, intends to improve the workability and effectiveness of the provision. This right would provide information about hardcopy and electronic disclosures made from a designated record set to outside persons and the covered entity's business associates for specific purposes (e.g., legal actions, workers' compensation). The full accounting of disclosures would provide more detailed information for certain disclosures that would most likely impact an individual. The information would be maintained for a three-year period (a reduction from the current six-year requirement). HHS proposes that all covered entities and business associates implement the modified requirements of the accounting of disclosures provision starting 180 days from the final date of the regulation (240 days after publication).

As part of its authority under the Health Information Technology for Economic and Clinical Health Act ("HITECH"), HHS is proposing to create the right to an access report. This right intends to give individuals information about others' access to the patients' protected health information contained in an electronic designated record set. The right would cover a three-year period as well, but it would only provide individuals with a report of who accessed the electronic record and would not include the reasons for the access. The date, time, and name of person accessing the information (or the entity if the individual's name is unavailable) would be included in the report; the description of the type of information disclosed and the user's action would also be included if available. No distinction would be made between "uses" and "disclosures" of the information in the report. HHS proposes that business associates and covered entities provide individuals with the access report right under the provision beginning January 1, 2013 (for electronic designated record set systems acquired after January 1, 2009) or January 1, 2014 (for electronic designated record set systems acquired as of January 1, 2009).

Since the rights within the provision are limited to protected health information within a designated record set, some business associates will not be affected by the requirement that covered entities include the applicable disclosures and uses of their business associates.

Public comments on the Proposed Rule will be accepted until August 1, 2011. Comments may be submitted online at http://www.regulations.gov/ (search for the Proposed Rule).

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June 6, 2011

AMA Submits Comments to CMS Regarding ACOs, Calls for Interim Final Rule

On Friday, June 3, the American Medical Association (AMA) submitted its comments to Donald Berwick of the Centers for Medicare and Medicaid Services (CMS) regarding CMS' proposed rule for Accountable Care Organizations (ACOs). In its opening remarks, the AMA states the following:

The AMA is pleased to provide our views and recommendations for revising the proposed rule so that the ACO model can be tested in a broad spectrum of physician practices. We are confident that a well-developed ACO model can be an effective tool to improve quality, manage care coordination, reduce health care costs, and create a supportive environment for practicing physicians. Since this is a completely new Medicare delivery and payment model, the AMA urges CMS to issue an interim final rule, rather than a final rule, so that CMS maintains the flexibility to modify and improve the ACO regulations as the agency learns more about this model.

In addition to calling for an interim final rule, within its 31 pages of comments, the AMA submitted comments on issues including:
• The ACO payment and risk structure,
• The need for additional payment models,
• Beneficiary assignment,
• Quality measures and other reporting requirements,
• ACO governance structure,
• Rural health clinics,
• Waivers of federal program integrity laws,
• Antitrust issues, and
• Private inurement.

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June 3, 2011

CMS Proposes New Rule Allowing Access to Medicare Data for Reports on Providers

CMS has proposed a new rule that would grant organizations that meet certain qualifications access to patient-protected Medicare data, in order to produce public reports on physicians, hospitals and other healthcare providers. These reports would be a combination of Medicare claims data and private-sector claims, identifying which physicians and hospitals provided the highest quality, cost-effective care to patients.

The data will be used solely to evaluate provider and supplier performance and generate public reports detailing those results. The CMS will only release reports that include aggregate information, which means individual patient and beneficiary information would not be shared or made available.

The proposed rule does not list any specific organizations that will have access to the data, instead giving the HHS secretary discretion to establish criteria to determine whether an entity is qualified to use the data. The proposed rule will be published in the Federal Register on June 8, and CMS will accept public comments for 60 days following that date.

For more information on how to avoid potential adverse consequences that could result from a review of your Medicare data, please contact Robert S. Iwrey at (248) 996-8510 or visit the HLP website.

June 3, 2011

Part D RAC Program Vendor Selected

The Centers for Medicare & Medicaid Services ("CMS") is taking steps in anticipation of its Medicare Part D RAC program release; this component of the RAC program is expected to begin in the third quarter of 2011. The director of the Medicare Program Integrity Group, John Spiegel, announced that CMS selected a vendor for the Part D RAC program. CMS has entered into a contract with ACLR Strategic Business Solutions, a Michigan company, to perform the recovery audits. In the near future, CMS will provide further information regarding Medicare Part C and D RAC programs through a dedicated website.

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June 3, 2011

Joint Commission PCMH Option Available in July

On May 24, 2011, the Joint Commission announced that the new Primary Care Medical Home ("PCMH") option for commission accredited ambulatory care organizations, by which a primary care clinician and an interdisciplinary team render patient services, will launch in July 2011. Applications from entities that are prepared for survey are currently being accepted.

According to the Joint Commission, the new PCMH option focuses on the effectiveness of the work among the primary care physician, interdisciplinary team, and the patient. The new accreditation's other goals include "the continuity of care and the provision of comprehensive, coordinated and patient-centered care".

The PCMH Ambulatory Care Approved Standards and Elements of Performance may be found here.

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June 2, 2011

AMA Submitted Comments on FTC/DOJ ACO Antitrust Enforcement Policy

On May 26, the American Medical Association (AMA) submitted a letter to Donald Clark--the Federal Trade Commission (FTC) Secretary--in response to the proposed FTC and Department of Justice (DOJ) Statement of Antitrust Enforcement Policy regarding accountable care organizations (ACOs). The AMA opened its letter by urging the FTC to consider its comments insofar as "the ACO requirements and antitrust clearance process could have a significant and negative impact on the ability of physicians, hospitals, and other eligible ACO entities to successfully form and participate in the ACO models." Moreover, the AMA emphasized the need to protect physician-led ACOs as the current regulations will have the "unintended consequence" of promoting hospital consolidation of physician markets through the acquisition of physician practices. According to the AMA, such a trend towards practice acquisition would thereby exert pressure on physicians to become employed or sell their practices to a hospital in order to participate in ACOs under the Shared Savings Program.

The AMA has stated it will submit its comments to the Centers for Medicare and Medicaid Services (CMS) on the ACO proposed rule on June 6. Please visit THE HEALTH LAW ATTORNEY BLOG for updates on the AMA's comments as well as other developments regarding ACOs.

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June 2, 2011

Gentiva Health Services, Inc. Settles with Government for $12.5 Million

Gentiva Health Services, Inc. (Gentiva)--one of the largest providers of home health services in the world--has settled with the government for $12.5 million. The settlement came after allegations that it fraudulently billed Medicare for non-Medicare-covered costs. According to the Department of Justice Press Release, "[a]n investigation established that, through its annual submission of cost reports to Medicare for the years 1998 through 2000. Gentiva improperly billed Medicare for salaries and other costs of employees performing sales functions that were designed to increase patient utilization." Gentiva denied the allegations.

This is, yet another, instance of the government persisting in its efforts to root out healthcare fraud. Because of the government's mission, its press releases have been filled with indictments, settlements and convictions of healthcare providers and suppliers, many of whom experience imprisonment and/or paying the government sums well into the millions.

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June 2, 2011

OIG Audit and Legal Action Recoveries Expected to Net $3.4 Billion

On June 1, the Office of Inspector General ("OIG"), Department of Health & Human Services ("HHS") announced expected recoveries of $3.4 billion from its legal actions (including investigations and other reviews, totaling about $3.2 billion) and audits (approximately $222 million). Most of the OIG reviews concerned Medicare and Medicaid. The majority of these potential receivables come from fines, restitutions, penalties, settlements, and other assessments. The announcement came in connection with OIG's Semiannual Report to Congress (October 2010 through March 2011). During the six month period, OIG also excluded 883 individuals and entities from federal health care program participation.

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June 2, 2011

Sleep Center False Claims Case Settles for $650,000

Late last month the United States Justice Department announced that Areté Sleep LLC, Areté Sleep Therapy LLC and Areté Holdings LLC ("Areté") agreed to settle false claims allegations for $650,000. The prosecution contends that from November 2002 to December 2009 Areté's medical equipment and sleep medicine facilities in Arizona and Texas presented false claims to Medicare. The entities allegedly submitted claims to Medicare for diagnostic sleep tests performed by unlicensed or uncertified technicians counter to Medicare rules and regulations.

Areté also allegedly presented false claims for medical devices, likely CPAP, dispensed pursuant to the same suspect sleep tests allegedly performed by uncertified technicians.

An individual relator, Amanda Drews, brought these charges against Areté under the False Claims Act. She will receive $107,250 from the settlement as her share of the recovery.

Areté filed for voluntary bankruptcy protection in January of this year. The parties agreed to pay the $650,000 settlement from the proceeds of Arete's bankruptcy asset sale.

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June 1, 2011

HHS Hospice Cap Regulation Held Invalid by New Mexico District Court

In Zia Hospice v. Sebelius, CV 09-0055 CG/LFG and CV 09-1108 CG/ACT, the New Mexico District Court followed the trend set by numerous other courts, including the 5th and 9th Circuit Courts, in relation to the hospice cap regulation, 42 C.F.R. §418.309(b)(1). The Court held 42 C.F.R. §418.309(b)(1) invalid because the regulation does not comply with the relevant federal statute, 42 U.S.C. §1395f(i)(2).

According to the Court, the statute requires the Department of Health and Human Services ("HHS") to "count hospice care beneficiaries proportionally over the number of years in which they received such care." The regulation, on the other hand, allows HHS to only count "hospice care recipients in the year in which they received the bulk of their hospice care." Based on the plain language of the statute, the Court determined that since Congress has spoken to the exact matter of the hospice cap calculation, no deference was due to the regulation. The Court rejected the Defendant's argument that the statute is ambiguous.

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