July 2011 Archives

July 29, 2011

RAC Audits the Focus of Recent Congressional Hearing

On July 28, 2011, the House Oversight and Government Reform Committee held a hearing on Improper Medicare Payments. The hearing highlights the ongoing friction between providers and recovery audit contractors (RACs) and the fact that the Centers for Medicare and Medicaid Services (CMS) is continuing their effort to combat fraud through such efforts as pre-enrollment screening and predictive modeling.

Daniel R. Levinson, the Inspector General, Office of the Inspector General (OIG), Health & Human Services (HHS), began the hearing discussing the 2010 fiscal year, where there was an estimated $48 billion in Medicare improper payments. While some of the improper payments were a result of fraud, other improper payments were the result of medically unnecessary claims, miscoded claims, eligibility errors, or insufficient documentation. The OIG conducts targeted reviews to determine the scope of the improper payments for service types and makes recommendations to address them.

Michelle Snyder, CMS Deputy Chief Operating Officer, noted that most improper payments are not fraudulent but the result of documentation errors, incorrect coding, and reasonable and necessary determinations. She emphasized that CMS pays about 5 million claims per day, and that under the Comprehensive Error Rate Testing (CERT) program, CMS has done considerable outreach and education to providers, performed system edits, and used online analytic tools to correct for errors.

Additionally, Ms. Snyder discussed the new contractor solicitation for an automated provider enrollment screening solution. CMS anticipates that this new screening technology will automatically verify information provided on an enrollment application for all Medicare provider supplier types.

James Lankford (R-OK) focused the hearing on RACs and the frustration hospitals and doctors have had in feeling "guilty until proven innocent." Ms. King said there have been missteps by the RACs, and Mr. Lankford asked if CMS has added any staff for RAC oversight. Ms. Snyder stated that CMS has hired two validation contractors to give oversight of the RACs to prevent RACs from being overly aggressive with hospitals and doctors. While Mr. Levinson testified that the OIG would be releasing a report on RACs later this year, he did mention that one of the problems with RACs is that they are built on the pay and chase model of fraud enforcement.

Jim Cooper (D-TN) agreed that much of the $48 billion in improper payments actually represented overpayments by providers. He asked about fee-for-service problems versus managed care and thought it fascinating that there were no statistics yet on Part D.

Ms. Eleanor Holmes Norton (D-DC) picked up on the fact that there were no statistics yet for Part D and asked whether CMS has been ignoring fraud enforcement in this area. Ms. Snyder admitted that no statistics have been produced on Part D fraud, however CMS has been looking into it. She also proposed that CMS should have a composite rate on Part D fraud efforts this audit year.

Mr. Platt returned to the RAC audit issues identified by Mr. Lankford and asked whether the cost of appeal and the appeal process in general is fair. Ms. Snyder said there has been a robust appeals process that has resulted in edit changes. Mr. Platt also asked about recertifying all providers, and Ms. Snyder said CMS is focusing on new providers first and plans to have all providers recertified or significantly in process of recertification by January 2013. Mr. Platts thought it would be a good idea for CMS to coordinate with the U.S. Census process to conduct face-to-face recertifications while the Census collectors were out in the field.

The Congressional Hearing demonstrates that fraud will continue to be a significant area of Congressional interest. Congress and HHS plan to continue working together to root out additional areas of fraud, waste and abuse.

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July 21, 2011

Law Judge Upholds HHS OIG's Exclusion of Owner of Orlando, Florida Diagnostic Imaging Services Company

On July 21, 2011, the Office of Inspector General (OIG) of the Department of Health & Human Services (HHS) announced that Administrative Law Judge (ALJ) Steven T. Kessel upheld OIG's exclusion of Michael D. Dinkel from participation in all Federal health care programs under section 1128(b)(7) of the Social Security Act for a period of 8 years.

Dinkel is the owner and President of Drew Medical, Inc., a diagnostic imaging services provider located in Orlando, Florida, which provides outpatient radiology services. Based upon evidence presented at an administrative hearing, ALJ Kessel found that Dinkel and Drew Medical submitted false claims to the Medicare and Medicaid programs for services relating to a radiological procedure known as venography. In fact, Drew Medical had not performed any such services.

ALJ Kessel held Dinkel personally responsible for ensuring that Drew Medical claimed reimbursement appropriately and that his failure to do so "constituted reckless indifference to the propriety of the claims he caused to be presented." ALJ Kessel emphasized that point finding Dinkel had a duty "to understand Medicare and Medicaid billing requirements and to apply them scrupulously to the claims that he caused to be presented."

ALJ Kessel found that over a more than 2-year period, Dinkel caused the submission of nearly 9,500 false claims seeking more than $1.6 million in reimbursement.

The United States Department of Justice previously entered into a civil False Claims Act settlement with Dinkel, Drew Medical, and Central Florida Radiology, Inc., for $1,147,564. Prior to the civil settlement, OIG notified Dinkel that OIG intended to exclude him under section 1128(b)(7) of the Social Security Act, which provides OIG the power to exclude individuals and entities from Federal health care programs for presenting or causing to be presented claims for items or services that the individual or entity knows or should know were not provided as claimed, or are otherwise false or fraudulent.

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July 21, 2011

Associations Hail Deficit Plan's 'Doc Fix'

On Capitol Hill this week the so-called Gang of Six Senators won the praise of representatives of over 750,000 physicians for its inclusion of a 10-year "doc fix" in Medicare payments to their proposed deficit deal.

The bipartisan agreement which would slash deficits by up to $3.7 trillion over the next decade includes a 10-year, $298 billion suspension of Medicare's sustainable growth-rate formula.

The proposal by the Gang of Six also called for spending Medicare and Medicaid funds "more efficiently" without disrupting the basic structure of Medicare and Medicaid, but offered few specifics about what that means.

The proposal was praised by many physician advocates including the American Medical Association and the American Academy of Family physicians. However, the proposal's support was not unanimous, with some healthcare advocacy groups criticizing the proposal's plan to eliminate the CLASS Act, which was included in the Patient Protection and Affordable Care Act. The CLASS Act, a long-term-care insurance program, has drawn criticism that it would produce additional deficit spending.

The Senate group's deficit-reduction proposal also includes reduced tax breaks on higher-cost health plans and a review of total federal healthcare spending starting in 2020 to hold growth to GDP plus 1% per beneficiary.

For more information on government regulation or for professional assistance navigating the ever-evolving healthcare landscape, please contact Robert S. Iwrey, Esq. at (248) 996-8510 or (212) 734-0128, or visit the HLP website.

July 19, 2011

State of Georgia Investigating Its HIV Unit

State officials in Georgia have launched an investigation into suspicious contracts awarded by the Georgia Department of Public Health's HIV unit.

The internal investigation centers around $5 million in contracts issued to nonprofits that perform much of the HIV testing in Georgia. According to Georgia State Health Officer, Brenda Fitzgerald, there appears to be a wide variation in the costs of the contracts, some of which went to former state employees without competitive bidding.

Fitzgerald said the investigation by the Department of Community Health inspector general centers around the "uncertainty" of how the contracts to nonprofits were awarded, including widely disparate per-person costs to the state for HIV tests, which was found to range between $75 a person to $40 a person.

The state receives about $8 million a year from the Centers for Disease Control and Prevention for HIV prevention, about $5 million of which is handed out to nonprofit organizations in contracts ranging from $30,000 to $150,000.

The investigation has already forced the resignation of the HIV prevention program manager, after investigators probed how she doled out millions in federal funds during her 16-month tenure.

The internal investigation comes at a critical moment for the state's approach to public health. Legislation approved this year created Public Health as a standalone department as of July 1. Already the HIV unit has been criticized over its list of about 1,600 patients waiting for access to a government-funded program for HIV and AIDS drugs.

Fitzgerald and other top officials acknowledged the department has been hampered by an inefficient and overly bureaucratic culture that slowed the spending of federal HIV prevention dollars while Georgia's HIV problem got worse.

A list of contracts between the HIV unit and nonprofits showed that dozens of nonprofits waited weeks or months to receive essential money for HIV prevention that had already been awarded to them.

For more information on the Georgia Department of Public Health's HIV unit, please contact Daniel B. Brown, Esq. The attorneys of The Health Law Partners can be reached in our in our Atlanta office at (770) 804-6475, in our Detroit area office at (248) 996-8510, and in our New York office at (212) 734-0128 or through the HLP website.

July 15, 2011

RAC Recoveries Continue To Climb in FY 2011 Q3

The Centers for Medicare & Medicaid Services ("CMS") recently released the Medicare Fee-For-Service Recovery Audit Program ("RAC") statistics for the third quarter of the fiscal year ("FY") 2011. $233.4 million of overpayments was collected during that time period. In comparison, only $55.9 million of underpayments was returned during the same three month period. The latest recoveries bring the total amount of overpayments collected by the national program to $575.2 million since October 2009, while the total amount of underpayments returned since October 2009 is now at $109.6 million. Top overpayment issues during the third quarter included medical necessity, incorrect coding, and billing for bundled services separately. The CMS report may be viewed here.

RAC overpayment and underpayment corrections continue to vary between the four RAC regions. Region D correction totals ($145.9 million) were significantly higher and approximately equaled the correction totals of Regions A, B, and C combined ($143.4 million). Further details may be viewed here.

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July 13, 2011

Governor Cuomo Names New Medicaid Inspector General as the New York Legislature Passes New Legislation Governing Health Care Audits

On July 8, New York Governor Andrew Cuomo nominated James Cox, a former high-level federal auditor, as New York's new Medicaid Inspector General.

The nomination is seen as an important step in increasing New York's crackdown on Medicaid fraud. Medicaid Fraud has been a major problem for the state of New York and its $53 billion Medicaid system. Experts estimate that fraud accounts for 5 percent or more of Medicaid payments, or more than $2.5 billion.

Cox, who will take over the post pending confirmation by the Senate, previously worked for the US Health and Human Services' Office of Inspector General for 23 years, most recently as regional inspector general for Region 5, consisting of six Midwestern states.
Cox replaces James Sheehan, who became the state's first Medicaid Inspector General in 2007. Sheehan, whose office recovered over $1 billion in improper payments and fines, was dismissed by Governor Cuomo after being widely criticized by health-industry leaders for purportedly having a penchant to treat payment and billing errors as fraud and abuse, even in instances in which the errors resulted from inadvertence without fraudulent intent.

Recent legislation, S.3184-A and A.5686-A, passed by both houses of the New York Legislature, reflects the concerns of the health-industry leaders. The most substantive changes arise from the enactment of Public Health Law Sections 37 and 38. To address overly aggressive prosecutions of billing errors as fraud and abuse, Sections 37 and 38 afford health care providers with additional rights in Office of Medicaid Inspector General ("OMIG") audits and recoupment investigations.

The most important protections include:

• OMIG no longer will recover from a provider for administrative or technical defects in procedure or documentation in the absence of underlying intent to falsify or defraud, regarding claims for payment for medically necessary care, services and supplies, without first giving the provider 30 days to cure the defects.

• OMIG may not recover overpayments until at least 60 days after the issuance of a final draft report or notice of agency action.

• Any claim audited by OMIG within the last three years will not be re-audited by OMIG unless new information and good cause exists to support the position that the previous audit was erroneous or the new audit is significantly different that the previous audit.

• Irrespective of the whether an OMIG audit relates to claims arising prior to or following the effective date of the new legislation, for any audit initiated on or after October 1, 2011, OMIG will be required to apply Sections 37 and 38 (with the attendant protections to the providers thereunder).

• OMIG must provide at an audit exit conference or in any draft audit findings issued or to be issued to provider, a detailed explanation of the extrapolation method employed, including errors found in a sample of claims to a larger universe of claims, the specific claims included in the sample and the results of the sample, any assumptions made about the accuracy and reliability of the sample and the steps used by OMIG to calculate the overpayment and any applicable offset based on the sample results.

• OMIG will provide written notice of an investigation at least 5 days prior to any interview, which will include the following information: potential for referral for a criminal investigation; individual's right to be accompanied by counsel; contact information for legal services; the individual's right to decline the interview or refuse to answer any questions without loss of benefits; and the right to a fair hearing if the investigation results in a judgment of incorrect payment.

• OMIG must provide written notice upon completion of an investigation at least 30 days prior to commencing an action for recovery or adjustment, the notice must contain: the evidence relied upon; the factual conclusions; and the individual's right to request a fair hearing to challenge the outcome of the investigation.

If, as expected, Governor Cuomo signs the legislation, it will become effective on October 1, 2011 and will apply to any matter commencing as of, or pending on, such date.

For more information, please contact Adrienne Dresevic, Esq., Jessica L. Gustafson, Esq., Kathryn Hickner-Cruz, Esq., Robert S. Iwrey, Esq., Carey F. Kalmowitz, Esq. or Abby Pendleton, Esq. at (212) 734-0128 or (248) 996-8510 or visit the HLP website.

July 12, 2011

OIG Finds Majority of Wheelchairs Provided to Medicare Beneficiaries Did Not Fulfill Medical Necessity Guidelines

Medicare beneficiaries are able to obtain power wheelchairs when medically necessary under Medicare Part B. From 1999 to 2003, Medicare saw a 350 percent increase in payments for power wheelchairs. The $900 million jump raised concerns regarding the appropriateness of these Medicare payments. Although the new policies implemented in subsequent years lowered these numbers, Medicare payments for power wheelchairs remained high. As a result, the Office of Inspector General ("OIG") selected a sample of 375 claims for power wheelchairs supplied in the first half of 2007 to Medicare beneficiaries for medical record review.

The resulting OIG report states that "[s]ixty-one percent of power wheelchairs provided to Medicare beneficiaries in the first half of 2007 were medically unnecessary or had claims that lacked sufficient documentation to determine medical necessity." The errors found varied by type of power wheelchair. Further, OIG stated that "[p]rescribing physicians' records do not support the medical necessity of most power wheelchairs."

As a result of the findings, the OIG proposed that the Centers for Medicare & Medicaid Services ("CMS") follows the following recommendations:
1) Raise reenrollment screening standards for currently enrolled DMEPOS suppliers;
2) Review multiple sources to determine if the requested power wheelchairs fulfill medical necessity guidelines;
3) Further educate prescribing physicians and suppliers to ensure compliance;
4) Review the suppliers OIG found had committed errors.

CMS concurred with the second, third, and fourth recommendations, but failed to accept the first proposal.

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July 11, 2011

CMS Proposes Changes to the EHR Incentive Program for EPs

In the recently released Proposed Physician Fee Schedule for calendar year ("CY") 2012 ("Proposed Rule"), the Centers for Medicare & Medicaid Services ("CMS") proposes changes to the Electronic Health Record ("EHR") Incentive Program for eligible professionals ("EPs"). Under the Proposed Rule, CMS proposes the continuation of the attestation method of clinical quality measures ("CQM") reporting for the 2012 payment year. In addition to the current method, CMS also proposes to allow CQM reporting through the Physician Quality Reporting System ("PQRS")-Medicare EHR Incentive Pilot. Under the pilot, EPs could report the measures through the use of a PQRS "qualified" EHR data submission vendor or the direct transmission of data from an EP's certified EHR to CMS via a secure portal. In order for an EP to submit CQM data directly, however, the utilized EHR technology would need to be a qualified PQRS EHR product.

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July 11, 2011

Brooklyn Neurologist Pleads Guilty in Health Care Fraud Scheme

On July 6, 2011, Dr. Leonard Langman, a neurologist who owned and operated a Brooklyn, N.Y. medical clinic, pled guilty to one count of health care fraud for his role in a scheme to defraud Medicare, the U.S. Department of Labor, Office of Workers' Compensation Programs (OWCP), the New York State Workers' Compensation Board (NYS-WCB), the New York State Insurance Fund (SIF) and various private health insurance carriers.

According to court documents, from January 2006 to December 2009, Dr. Langman caused false and fraudulent claims to be submitted for services that were not provided; misrepresented the services he provided by billing for a level of service higher than that which he performed; double-billed different health care benefit programs for the same service provided to the same beneficiary; and billed for services purportedly performed when he was out of the country.

Dr. Langman is now facing a maximum sentence of 10 years in prison.

This case was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division's Fraud Section and the U.S. Attorney's Office for the Eastern District of New York. Since the HEAT Strike Force's inception in March 2007, operations in nine locations have charged more than 1,000 defendants who collectively have falsely billed the Medicare program for more than $2.3 billion. The action against Dr. Langman evidences that HEAT enforcement shows no signs of relenting.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT) or government investigations and litigation, please contact Robert S. Iwrey, Esq. at (248) 996-8510 or (212) 734-0128 or visit the HLP website.

July 11, 2011

CMS' Proposed Physician Fee Schedule for CY 2012 Revises Bone Density Service Codes

In recent years, the Centers for Medicare & Medicaid Services ("CMS") has taken steps to address potentially undervalued and overvalued services under the Medicare Physician Fee Schedule. In the recently released Proposed Physician Fee Schedule for calendar year ("CY") 2012, CMS specifically addresses payment codes for bone density tests. Since the payment calculation specified by Section 1848(b)(6) of the Social Security Act no longer applies for CY 2012, CMS proposes changes to the payment rate for Current Procedural Terminology ("CPT") codes 77080 and 77082 (the dual energy x-ray absorptiometry codes). The payment rate "will be based upon resource-based, rather than imputed, RVUs, and the current year's conversion factor." CMS further requests that the American Medical Association/Specialty Society Relative Value Scale Update Committee ("RUC") review these codes during CY 2012.

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July 11, 2011

CMS Proposes Telehealth Changes for CY 2012

In the recently released Proposed Physician Fee Schedule for calendar year ("CY") 2012, the Centers for Medicare & Medicaid Services ("CMS") proposes the addition of new codes to the list of Medicare telehealth services. After reviewing numerous submitted requests, CMS only proposes the addition of smoking cessation services as approved Medicare telehealth services for CY 2012. Despite submitted requests, CMS did not propose the addition of critical care services, domiciliary or rest home evaluation and management services, genetic counseling services, online evaluation and management services, data collection services, and audiology services to the list of approved Medicare telehealth services.

CMS also proposes new criteria for how additional services are added to the list of approved Medicare telehealth services in the future. The proposed changes would shift CMS' evaluation focus to the clinical benefit of a telehealth service from the current approach which focuses on whether the service has a corresponding in-person equivalent. CMS notes that the revised telehealth criteria would have no effect in CY 2012 as the criteria would only impact the evaluation of telehealth services discussed in future proposed rules.

CMS expects the proposed telehealth changes to increase access to health care, especially in rural areas of the country.

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July 11, 2011

CMS Issues Stark Advisory Opinion, Allows Non-Competition Clause in Proposed Agreement to Meet Requirements of Stark Physician Recruitment Exception

The most recent advisory opinion released by the Centers for Medicare & Medicaid Services ("CMS"), Advisory Opinion No. CMS-AO-2011-01, analyzes the acceptability of a non-competition clause in a proposed physician agreement ("Proposed Agreement") in light of the Stark Physician Recruitment Exception (42 C.F.R. 411.357(e)). Specifically, the Requestor (or "the Hospital") inquires whether the Proposed Agreement satisfies the criteria set forth at 42 C.F.R. 411.357(e)(4)(vi) which states that the "physician practice may not impose on the recruited physician practice restrictions that unreasonably restrict physician's ability to practice medicine in the geographic area served by the hospital."

In the situation presented, the Requestor and the Practice would like to execute a Proposed Agreement meant to persuade a pediatric orthopedic surgeon to relocate to the Requestor's geographic service area. The need for this physician exists because the sole orthopedic surgeon who practiced in the geographic area retired and no new pediatric orthopedic surgeons plan to move to the geographic service as far as the Requestor is aware. The Proposed Agreement would provide the Physician income guarantee and moving expense loans with repayment and forgiveness provisions in order to encourage the Physician to relocate and fulfill the need of the community. Under the Proposed Agreement, the Practice would impose a non-competition provision on the Physician which would restrict him or her "from establishing, operating, or providing professional medical services at any medical office, clinic, or other health care facility at any location within a 25-mile radius of the Hospital for a period of one year following the earlier of the termination or expiration of the Proposed Agreement." According to the Requestor, the Physician would not be restricted from practicing at one hospital within the geographic service area, three other known hospitals also exist within approximately 35 to 60 miles of the Hospital, and the non-competition provision would not violate applicable state laws.

In its analysis, the advisory opinion looks to the revised policy and conclusion reached in the Phase III rulemaking, 75 FR 51054 (Sept. 5, 2007), which revised the earlier conclusion reached in the preamble of the Phase II rulemaking, 69 Fed. Reg. 16094, 16096-97 (Mar. 26, 2004) (prohibiting all non-competition provisions from being placed on recruited physicians). The Phase III rulemaking states that non-competition provisions should not be entirely prohibited from recruitment arrangements because a categorical prohibition could have "the unintended effect of making it more difficult for hospitals to recruit physicians." Instead, such non-competition provisions are evaluated for reasonableness of the restriction. Based on the totality of the evaluated factors surrounding the non-competition provision (time period, distance, ability of the Physician to practice at hospitals within and outside the geographic service area, and compliance with state and local laws), the advisory opinion concludes that the provision does not "unreasonably restrict the Physician's ability to practice medicine." As such, the advisory opinion concludes that based on the certifications presented by the Requestor, the Proposed Agreement meets the requirements presented by the Stark Physician Recruitment Exception.

Although this advisory opinion provides some guidance regarding non-competition provisions in relation to the Stark Physician Recruitment Exception, it is limited to the specific situation presented by the Requestor. The full text of the Stark advisory opinion may be found here.

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July 11, 2011

CMS' Proposed Provision Ends Payment to Independent Laboratories for TC of Certain Physician Pathology Services Beginning CY 2012

Section 105 of the Medicare and Medicaid Extenders Act of 2010 ("MMEA") extended the payment to independent laboratories for the technical component ("TC") of certain physician pathology services through calendar year ("CY") 2011 only. In line with section 105, the Centers for Medicare & Medicaid Services' ("CMS") Proposed Physician Fee Schedule for CY 2012 revises 42 C.F.R. §415.130(d). The revised provision would state that "for services furnished after December 31, 2011, an independent laboratory may not bill the Medicare contractor for the TC of physician pathology services furnished to a hospital inpatient or outpatient." The provision would be implemented effective for TC services provided on or after January 1, 2012.

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July 8, 2011

What Happens in Vegas May Not Stay in Vegas

The Department of Justice announced on June 30, 2011 that a Las Vegas physician, Rakesh Nathu, settled False Claims Act allegations with the United States for $5.7 million plus interest. Nathu allegedly submitted false claims to Medicare, TRICARE and the Federal Employees Health Benefits Plan for various radiation oncology services from 2007 to 2009. Allegations against Nathu included double billing, billing for more expensive services when less expensive services were appropriate, and billing for medically unnecessary services.

The settlement resulted from a coordinated effort among the Justice Department's Civil Division, the U.S. Attorney's Office, and the Department of Health and Human Services' Office of Inspector General and signifies the government's emphasis on combating health care fraud.

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July 8, 2011

CMS Examines Impact of 3-Day Payment Window Policy on Wholly Owned or Wholly Operated Physician Practices

Prior to the passing of section 102(a)(1) of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 ("PACMBPRA"), the 3-day payment window policy for nondiagnostic services provided prior to admission was rarely applied to wholly owned or operated physician practices. However, the enactment of section 102(a)(1) widened the range of nondiagnostic services subject to the 3-day payment window policy. In the recent Proposed Physician Fee Schedule for calendar year ("CY") 2012, the Centers for Medicare & Medicaid Services ("CMS") examines the impact of this change on wholly owned or operated physician practices and provides further guidance on the topic.

Although CMS believes "that most hospital owned entities providing physician services will be considered part of the hospital and operating as hospital outpatient departments," some wholly owned or operated physician offices and clinics may exist which will be subject to the 3-day payment window policy. CMS proposes that in any circumstance where the payment window "applies to nondiagnostic services related to an inpatient admission furnished in a wholly owned or wholly operated physician practice" Medicare should "make payment under the physician fee schedule for the physicians' services that are subject to the 3-day payment window at the facility rate." Further, "[o]n or after January 1, 2012, [CMS proposes] that when a physician furnishes services to a beneficiary in a hospital's wholly owned or wholly operated physician practice and the beneficiary is admitted as an inpatient within 3 days (or, in the case of non-IPPS hospitals, 1 day), the payment window will apply to all diagnostic services furnished and to any nondiagnostic services that are clinically related to the reason for the patient's inpatient admission regardless of whether the reported inpatient and outpatient ICD-9-CM diagnosis codes are the same." CMS notes that the profession component ("PC") of a service will remain unchanged by the payment policy.

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July 7, 2011

CMS Retracts Requisition Signature Requirement for Clinical Diagnostic Laboratory Tests

On June 30, 2011, the Centers for Medicare & Medicaid Services ("CMS") released a proposed rule which eliminates the requirement that physicians and non-physician practitioners must sign requisition forms for clinical diagnostic laboratory tests. The original policy was established by the final 2011 Medicare Physician Fee Schedule, but it was placed on hold earlier this year while the agency reconsidered the requirement. CMS' decision to retract the requirement was based partly on opposition stakeholders expressed regarding the practical impact of the policy.

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July 6, 2011

Home Health Care Operator Indicted in Alleged Medicare Fraud Scheme Totaling $20 Million

Federal law enforcement officials announced on June 29, 2011 that Jacinto "John" Gabriel, Jr., a Chicago man responsible for operating two home health care businesses, was indicted in an alleged $20 million Medicare fraud scheme spanning five years. The 15-count indictment includes health care fraud, wire fraud, and money laundering.

According to court documents, Gabriel exercised control and ownership over Perpetual Home Health, Inc. and Legacy Home Healthcare Services in Illinois. Between 2006 and 2011, Perpetual submitted in excess of 14,000 Medicare claims and received more than $38 million in Medicare payments; the business was one of the biggest recipients of Medicare payments for home health services in Illinois. Between 2008 and 2011, Legacy submitted in excess of 2,000 Medicare claims and received more than $5 million in Medicare payments. Both businesses have recently closed and no longer receive Medicare payments.

Gabriel, with the assistance of his co-schemers, allegedly submitted false claims worth millions of dollars. The purported home health care services were inflated in price, not medically necessary, or were never provided. The illegal proceeds were used for various purposes including lavish personal uses and to perpetuate the illegal scheme. The schemers attempted to conceal the fraudulent proceeds by instructing the businesses to issue checks to factitious entities, friends and associates. The charges also allege that Gabriel cashed checks in amounts under $10,000 to avoid federal currency transaction reporting requirements.

The continuing investigation is being conducted by the Medicare Fraud Strike Force. Gabriel will be arraigned at a future date.

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July 5, 2011

CMS Releases Proposed Rule Regarding 2012 Medicare Physician Fee Schedule

The Centers for Medicare and Medicaid Services ("CMS") issued a proposed rule regarding the 2012 Medicare Physician Fee Schedule on July 1, 2011 ("Proposed Rule"). Among the potential changes found in the Proposed Rule is a 50 percent discount to the professional component ("PC") of subsequent MRI, CT, and ultrasound procedures. This proposed change mirrors the present multiple procedure payment reduction ("MPPR") policy which currently applies to the technical component ("TC"). The Proposed Rule is open for public comments until August 30, 2011.

The Proposed Rule may be viewed here.

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July 1, 2011

Senate Finance Committee Abandons Proposed Equipment Utilization Rate Increase

The Senate Finance Committee abandoned the proposed increase to the Medicare utilization rate assumption for advanced diagnostic imagining equipment priced at $1 million or more. The potential rate hike was included as a provision in a proposed free trade agreement and was meant to pay for health care benefits and job training for U.S. workers displaced as a result of the trade agreements.

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July 1, 2011

Three Brooklyn Physical Therapy Clinic Employees Plead Guilty in a $3.4 Million Health Care Fraud Scheme

On June 23, 2011, the Departments of Justice and Health and Human Services announced that, under the aegis of the inter-agency Health Care Fraud Prevention and Enforcement Action Team (HEAT) program, three employees of the Solstice Wellness Center, a Brooklyn-area clinic that purported to specialize in providing physical therapy and diagnostic tests, have pleaded guilty to one count of conspiracy to commit health care fraud, in connection with a $3.4 million Medicare fraud scheme. The Solstice employees currently are awaiting sentencing and are facing a maximum sentence of 10 years in prison.

According to the court documents, the three employees were involved in a scheme to pay cash kickbacks to Medicare beneficiaries to induce the beneficiaries to visit Solstice. The beneficiaries were transported to and from Solstice purportedly to receive physicians' services, physical therapy and diagnostic tests. During the plea hearing, the Solstice employees admitted that they paid kickbacks to the beneficiaries so that Medicare could be billed for services and diagnostic tests, notwithstanding the fact that such services were not medically necessary.

The case was brought in connection with the Medicare Fraud Strike Force, supervised by the Criminal Division's Fraud Section and the U.S. Attorney's Office for the Eastern District of New York. Since the HEAT Strike Force's inception in March 2007, operations in nine locations have charged more than 1,000 defendants who, collectively, have falsely billed the Medicare program for more than $2.3 billion. The action against Solstice evidences that HEAT enforcement shows no signs of relenting.

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