September 2011 Archives

September 30, 2011

Hospitalists Compensation Rose Slightly in 2010

According to a recent report from the Medical Group Management Association and the Society of Hospital Medicine, hospitalists saw increases in their median compensation in 2010.

The report, which is based on survey information from 4,633 hospitalists, found that hospitalists in adult medicine saw their compensation increase 2.6%, while pediatric hospitalists' pay rose 7.2%. The report also indicates that the amount of compensation varied by compensation structure. Adult hospitalists with 50 percent base salary or less reported median compensation of $288,154, while adult hospitalists with 51-70 percent base salary reported median compensation of $249,250. Adult hospitalists who reported 71-90 percent base salary earned $213,542 in median compensation, and those with 91 to 99 percent base salary reported $221,270 in median compensation. Adult hospitalists with 100 percent base salary earned $205,003.

In addition to earning more in 2010, hospitalists also reported higher productivity. The annual median adult hospitalist physician work relative value unit (wRVU) rate was 4,166, a 1.4% increase over last year.

Continue reading "Hospitalists Compensation Rose Slightly in 2010" »

September 28, 2011

Medicare Fraud Indictment Results in More Guilty Pleas in $25 Million Health Care Fraud Scheme

In a press release issued September 27, 2011, the United States Department of Justice, the Department of Health and Human Services, and the FBI announced that two Miami-area residents pled guilty for their roles in a $25 million home health Medicare fraud scheme. Both defendants pled guilty to conspiracy to commit health care fraud, which carries a maximum prison sentence of 10 years.

Maritza Vidal and Richard Diaz admitted their participation in a scheme to bill Medicare for expensive physical therapy and home health care services that were prescribed by doctors but were medically unnecessary and never provided. According to court documents, Vidal and Diaz worked for ABC Home Health Inc. or Florida Home Health Providers Inc., two related Miami home health care agencies, which purported to provide home health and therapy services to Medicare beneficiaries, but allegedly existed only to defraud Medicare.

Vidal and Diaz both admitted to recruiting Medicare beneficiaries who would allow ABC and Florida Home Health to bill Medicare for home health care and therapy services that were medically unnecessary and/or never provided. The defendants also solicited and received kickbacks and bribes from the owners and operators of the home health agencies in return for allowing the companies to bill on behalf of the recruited patients.

Vidal also admitted that she and other co-defendant nurses falsified patient files for Medicare beneficiaries by describing non-existent symptoms such as tremors, impaired vision, weak grip and inability to walk without assistance in an attempt to make it appear that the patients qualified for home health benefits.

Vidal and Diaz were originally charged in a February 2011 indictment, which included numerous other defendants. Including Vidal and Diaz, seventeen people have pled guilty for their roles in the fraud scheme.

This case was investigated by the FBI and HHS-OIG, and was brought as part of the Medicare Fraud Strike Force. Since their inception in March 2007, Strike Force operations in nine locations have charged more than 1,140 individuals who collectively have falsely billed the Medicare program for more than $2.9 billion.

These recently announced guilty pleas bear out the advice that we have been delivering to clients, namely that the health care enforcement landscape is evolving and thus it is even more imperative to ensure that providers take pro-active steps to mitigate the likelihood that they will become subjects of the government's more robust initiatives to prevent health care fraud

Continue reading "Medicare Fraud Indictment Results in More Guilty Pleas in $25 Million Health Care Fraud Scheme" »

September 28, 2011

2012 Amount in Controversy for Medicare Appeals Issued

Medicare Part A and Part B providers and suppliers appealing Medicare audit decisions at the administrative law judge ("ALJ") level or through a judicial review must meet an amount in controversy ("AIC") threshold amount pursuant to regulation at 42 CFR 405.1006(b) and (c). The regulations require the Secretary of the Department of Health and Human Services ("Secretary") to publish annually the AIC threshold amounts in the Federal Register; the Centers for Medicare and Medicaid Services ("CMS") published these new amounts in the September 23, 2011 Federal Register.

Requests for ALJ hearings and judicial review filed on or after January 1, 2012 require an AIC of $130 for ALJ hearings and $1, 350 for judicial review. CMS also provided the following table of AIC threshold amounts from 2005-12:

AIC Table.bmp

Continue reading "2012 Amount in Controversy for Medicare Appeals Issued" »

September 21, 2011

Medicare Electronic Submission of Medical Documentation Pilot Program Begins September 2011

As many already know, when a review contractor (e.g., Recovery Audit Contractors ("RACs"), Medicare Administrative Contractors ("MACs"), the Comprehensive Error Rate Testing ("CERT") contractor, the Program Error Rate Measurement ("PERM") contractor, and Zone Program Integrity Contractors ("ZPIC")) identifies an improper payment, the review contractor requests medical documentation from the provider or supplier to ensure the claim and supporting documentation comply with the Medicare reimbursement rules. This request is typically in the form of a paper letter to the provider or supplier wherein the provider or supplier may only submit the requested records by mail or fax.

However, recently, the Centers for Medicare and Medicaid Services ("CMS") began conducting a pilot program--the Electronic Submission of Medical Documentation ("esMD") pilot--which allows providers and suppliers to send their records to review contractors electronically. According to an MLN Matters article regarding the new esMD pilot program, "[t]he primary intent of esMD is to reduce provider costs and cycle time by minimizing and eventually eliminating paper processing and mailing of medical documentation to review contractors. A secondary goal of esMD is to reduce costs and time at review contractors." Provider and supplier participation in esMD is completely voluntary and submission of paper and/or fax documentation continues to be acceptable.

This pilot program will be conducted in two phases. During Phase 1, beginning September 15, 2011, review contractors will continue to send paper requests for medical documentation and providers or suppliers will have the option to send the medical documentation electronically in portable document format ("PDF"). During Phase 2, beginning October 2012, review contractors will send electronic requests for medical documentation. CMS provides the following graphics depicting the simplified relationship between the review contractors and the provider at each phase:
Phase 1 and 2.bmp

Providers and suppliers wanting to begin submitting their medical documentation via esMD must obtain access to a CONNECT-compatible getaway. A CONNECT-compatible gateway is the medium through which medical documentation can be exchanged using Nationwide Health Information Network specifications and standards that allow for the secure and private exchange of health information over the Internet. Providers and suppliers looking for CONNECT-compatible gateways may look to Health Information Handlers ("HIHs")--companies that handle health information on a provider or supplier's behalf. A list of HIHs that offer esMD gateway services is provided in the MLN Matters article linked above or on CMS' esMD page.

CMS provides the following more detailed graphics depicting Phases 1 and 2 in their entirety:

Phase 1:
Phase 1.bmp

Phase 2:
phase 2.bmp

CMS also provided a timeline for Phase 1 when some review contractors will be scheduled to accept esMD transactions:
Schedule.bmp
Note: CMS expects that the Region C and D RACs and the remaining MACs will begin accepting esMD transactions within the next twelve (12) months.

Continue reading "Medicare Electronic Submission of Medical Documentation Pilot Program Begins September 2011" »

September 16, 2011

Clinical Labs to Provide Patients Access to Completed Test Reports Under Proposed Rule

On September 14, 2011, the Centers for Medicare and Medicaid Services ("CMS") published in the Federal Register a proposed rule amending the Clinical Laboratory Improvement Amendments of 1988 ("CLIA") and the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") to specify that, upon request, a patient may gain access to his/her completed test reports directly from a laboratory ("Proposed Rule").

Currently, CLIA provides that a laboratory may only disclose test results to three categories of individuals: (1) an "authorized person," (2) the person responsible for using the test results in the treatment context, and (3) the referring lab (42 CFR 493.1291(f)). "Authorized person" is defined as "the individual authorized under State law to order or receive test results, or both." Moreover, even though HIPAA requires patients have access to their protected health information ("PHI"), this right of access does not extend to PHI maintained by a covered entity that is subject to CLIA or exempt from CLIA (this exception can be found at 45 CFR 164.524(a)(1)(iii)).

Under the Proposed Rule, CMS proposes to remove such restrictions in the patient-access rules thereby allowing patients to obtain the laboratory testing results directly from the laboratory. CMS proposes to amend CLIA to allow patients, upon request, to have direct access to their laboratory test reports. In the preamble to the regulations, CMS stated that it would not dictate under CLIA how patients could request such access:

[T]he CLIA regulations would not spell out the mechanism by which patient requests for access would be submitted, processed, or responded to by the laboratories. In providing this latitude, we intend to allow patients and their personal representatives' access to patient test reports in accordance with the requirements of the HIPAA Privacy Rule.

CMS likewise proposes amending the HIPAA Privacy Rule to require covered entities that are laboratories subject to CLIA and those that are CLIA-exempt to have the same obligations as other covered entities with respect to providing individuals access to their PHI in accordance with the requirements 45 CFR 164.524. In other words, CLIA laboratories and CLIA-exempt laboratories would no longer be excepted from the requirement to give patients access to their PHI upon request.

CMS also notes that even though there may be a number of state laws prohibiting laboratories from releasing test reports directly to patients, the new regulations, if adopted, would preempt such laws.

Continue reading "Clinical Labs to Provide Patients Access to Completed Test Reports Under Proposed Rule" »

September 16, 2011

CMS Reminds Providers and Suppliers to Revalidate Provider Enrollment Information

On February 2, 2011, the Centers for Medicare and Medicaid Services ("CMS") issued its final rule regarding the new provider and supplier enrollment screening criteria for Medicare, Medicaid and Children's Health Insurance Program ("CHIP") pursuant to Section 6401(a) of the Patient Protection and Affordable Care Act ("PPACA"). Included in the new enrollment processes is a requirement that providers and suppliers revalidate their enrollment pursuant to the new screening criteria. For a more detailed explanation of Medicare enrollment, including the new rule, please click here.

On August 10, 2011, CMS issued an MLN Matters article reminding providers and suppliers of the new revalidation requirements. The new revalidation rules apply only to those providers and suppliers enrolled in Medicare, Medicaid or CHIP prior to March 25, 2011. Providers and suppliers affected by the revalidation rule should await notices from the Medicare Administrative Contractors ("MACs") and then, within 60 days from the date of the notice, submit their revalidation. When notifications from their MACs to revalidate enrollment are received, CMS recommends providers and suppliers take the following steps:


Failure to revalidate enrollment within the 60-day window may result in deactivation of a provider or supplier's billing privileges. Revalidation notices will be sent to providers and suppliers until March 23, 2013.

* Note: CMS does not require online payment; payments may also be made using an electronic check, debit, or credit card.

Continue reading "CMS Reminds Providers and Suppliers to Revalidate Provider Enrollment Information" »

September 15, 2011

CMS and OIG Respond to Finance Committee's Letters Regarding PODs

In July, the HEALTH LAW ATTORNEY BLOG reported on five U.S. Senators asking the Office of Inspector General ("OIG") and the Centers for Medicare and Medicaid Services ("CMS") to issue guidance on physician owned distributorships ("PODs") (or, sometimes referred to as physician owned intermediaries ("POIs")). The OIG and CMS have issued their responses.

By way of brief background, a POD is an arrangement in which, according to the U.S. Senate Committee on Finance ("Finance Committee"), "allow physician investors to purchase ownership shares in an entity that, in turn, purchases or serves as a medical device distributor for the products the physician utilizes in surgery." Because of lack of industry guidance on the potential for fraud and abuse violations, the Finance Committee issued Physician Owned Distributors (PODs): An Overview of Key Issues and Potential Areas for Congressional Oversight wherein it recommended letters be sent to the OIG and CMS articulating its concerns and asking for guidance.

On June 9, 2011, the Finance Committee issued two letters--one to the OIG and one to CMS. In its letter to the OIG, the Finance Committee sought guidance on how PODs fit, or don't fit, within the confines of the Anti-Kickback Statute ("AKS"). In so doing, the Finance Committee insisted that

[I]t is incumbent upon the OIG to address this rapidly evolving healthcare market issue by conducting an inquiry into PODs and their current structures and activities and then reporting to us the results of such an inquiry, along with your recommendations for further action should be taken by the OIG and Congress to effectively address the patient and program risks presented by PODs.

In its letter to CMS, the Finance Committee sought guidance on the Physician Payments Sunshine Act ("Sunshine Act") and accountable care organizations ("ACOs"). In seeking guidance on these issues, the Finance Committee requested CMS
[C]losely examine the physician ownership and investment interests presented by PODs and ensure that those are addressed as you finalize the reporting requirements of the Sunshine Act. This would mean that the distribution model of these physician owned companies would need to be included as CMS develops a final definition of "applicable manufacturers" and "applicable Group Purchasing Organizations (GPOs)."

The Finance Committee continued in its letter to ask CMS to take PODs into consideration when issuing the final ACO regulations:
CMS should take into account the POD models when developing its final regulation to ensure that qualification and oversight of ACOs protect against potential abuses posed by PODs. The final rule should prohibit ACOs from purchasing products or services from entities that are owned by physicians participating in the ACO. Ownership should be deemed to exist if the physician receives any remuneration (cash, equity, options, profits, dividends, etc.) from the entity supplying the product or service. It should be made clear that waivers of Stark and Anti-Kickback laws should not extend to PODs.

On August 10, 2011, CMS replied to the Finance Committee's letter stating that it will take the Finance Committee's letter into consideration when developing the Sunshine Act's proposed regulations. CMS also stated that the period for submitting comments on the ACO Waiver Designs proposed regulations ended on June 6, 2011 and that it was reviewing the comments it received and was developing the final ACO regulations with respect to its waiver authority.

More significant, however, is the September 13, 2011 OIG response to the Finance Committee. The OIG revealed that, pursuant to a meeting with the Finance Committee on July 19, it is "initiating a review of PODs that will seek to determine the extent to which PODs provide spinal implants purchased by hospitals." The OIG stated that it will be a national study of hospitals that bill Medicare for spinal surgery. After the review, the OIG intends to establish:


  • How widespread PODs are;

  • What services PODs offer to hospitals;

  • Whether PODs save hospitals money in the acquisition of implants; and

  • Whether the PODs identified in the review are associated with high use of spinal implants.


With respect to the AKS concerns raised by the Finance Committee, the OIG reminds the Finance Committee that such determinations are extremely fact specific and, therefore, the "OIG's ability to issue guidance about the application of the statute to these business structures is limited." The OIG also reminded the Finance Committee that when it evaluates the legality of situations in which referring physicians can earn a profit--including through an investment in an entity for which s/he generates business--it considers certain factors, including:

  • The terms under which a physician may invest in the entity;

  • The terms under which a physician-owner may be required to divest his/her ownership interest;

  • The actual return or projected return on the physician's investment; and

  • The amount of revenues generated for the entity by its physician-investors.


The OIG did not state how long its review would last, but providers and suppliers should be aware that the OIG is beginning to focus its attention on this issue and that guidance will be forthcoming.

Continue reading "CMS and OIG Respond to Finance Committee's Letters Regarding PODs" »

September 15, 2011

Medicaid RACs: Final Rule Issued

Section 6411 of the Patient Protection and Affordable Care Act ("PPACA") requires states to establish a Medicaid recovery audit contractor ("Medicaid RAC") program similar to the existing Medicare RAC program. Like Medicare RACs, Medicaid RACs will be tasked with auditing claims to identify overpayments and underpayments and will be compensated on a contingency fee basis. On November 10, 2010, the Medicaid RAC proposed rule ("Proposed Rule") was published in the Federal Register. Now, the final rule ("Final Rule") has been issued finalizing the additions to 42 CFR Part 455 Subpart F, which governs Medicaid Program Integrity.

Although the initial implementation date was slated for April 1, 2011, CMS chose to delay implementation until it had issued its Final Rule. Under the Final Rule, the new implementation date for the Medicaid RAC program is January 1, 2012. Some notable aspects of the Final Rule are below:

The Final Rule requires certain specific program elements that are consistent with Medicare RAC program elements. Some of these elements include:


  • A 3-year maximum claims look-back period;

  • A State-established limit on the number and frequency of medical records requested by a RAC;

  • State coordination of recovery audit efforts with other auditing entities; and

  • Returning contingency fees within a reasonable time frame if the Medicaid RAC determination is overturned at any level of appeal.


CMS "strongly encourage[s]" States to adopt specific program elements present in the existing Medicare RAC program:

  • Medical necessity reviews;

  • Extrapolation of audit findings;

  • External validation of accuracy of RAC findings; and

  • Types of claims audited.


CMS grants States "complete flexibility" in the following areas:

  • Underpayment methodology;

  • State appeals processes;

  • Contingency fee rates (States have complete flexibility in the contingency fee rates they pay, exclusive of FFP. However, CMS will provide FFP only for amounts that do not exceed the then-highest contingency fee rate paid to Medicare RACs) ;

  • State exclusion of claims;

  • Bundling of procurements; and

  • Coordination of the collection of RAC overpayments.


With respect to contingency fee payments paid to the Medicaid RACs, States have two options to pay contingency fees to RACs: (i) States may pay RACs from amounts identified and recovered, but not fully adjudicated, but the RAC would be required to return any contingency fee that corresponded to the amount of an overpayment overturned at any level of appeal within a reasonable time frame as prescribed by the State; or (ii) the State may pay the RAC after the overpayment is fully adjudicated. According to the Final Rule, contingency payments may not exceed the total amounts recovered and payments may not be based upon amounts merely identified but not recovered, or amounts that may initially be recovered but that subsequently must be repaid due to determinations made in appeals proceedings.

CMS has left the appeals process extremely flexible for States, allowing States to maintain an existing appeals process or develop a new appeals process. Many commenters indicated that difficulties may arise in providers that practice in multiple States if each State's appeals process varies. CMS recognized the difficulty, but maintained that States will have the flexibility to design their own appeals processes.

Comparing the Proposed Rule and the Final Rule, CMS provided the following list of provisions where the Final Rule differs from the Proposed Rule:


  • States may exclude Medicaid managed care claims from review by Medicaid RACs (§455.506(a)(1)).

  • States must coordinate the recovery audit efforts of their Medicaid RACs with other auditing entities (§455.506(c)).

  • States must make referrals of suspected fraud and/or abuse to the MFCU or other appropriate law enforcement agency (§455.506(d)).

  • States must set limits on the number and frequency of medical records to be reviewed by the Medicaid RACs subject to requests for exceptions made by the RACs (§455.506(e)).

  • Each RAC must hire a minimum of 1.0 FTE Contractor Medical Director who is a Doctor of Medicine or Doctor of Osteopathy in good standing with the relevant State licensing authorities and has relevant work and educational experience. A State may seek to be excepted, in accordance with §455.516, from requiring its RAC to hire a minimum of 1.0 FTE Contractor Medical Director by submitting to CMS a written request for CMS review and approval (§455.508(b)).

  • RACs must hire certified coders unless the State determines that certified coders are not required for the effective review of Medicaid claims (§455.508(c)).

  • RACs must work with the State to develop an education and outreach program (including notification of audit policies and protocols) (§455.508(d)).

  • RACs must provide minimum customer service measures including: providing a tollfree customer service telephone number in all correspondence sent to providers, and staffing the toll-free number during normal business hours from 8:00 a.m. to 4:30 p.m. in the applicable time zone (§455.508(e)(1)); compiling and maintaining provider approved addresses and points of contact (§455.508(e)(2)); mandatory acceptance of provider submissions of electronic medical records on CD/DVD or via facsimile at the providers' request (§455.508(e)(3)); notifying providers of overpayment findings within 60 calendar days (§455.508(e)(4)).

  • RACs must not review claims that are older than 3 years from the date of the claim, unless it receives approval from the State (§455.508(f)).

  • RACs should not audit claims that have already been audited or that are currently being audited by another entity (§455.508(g)).

  • If a provider appeals a Medicaid RAC overpayment determination and the determination is reversed, at any level, then the Medicaid RAC must return its contingency within a reasonable timeframe as prescribed by the State (§455.510(b)(3)).

  • States must adequately incentivize the detection of underpayments (§455.510(c)(2)).

  • States must notify providers of underpayments that are identified by the Medicaid RACs (§455.510(c)(3)).

  • States must provide appeal rights under State law or administrative procedures to Medicaid providers that seek review of an adverse Medicaid RAC determination (§455.512).

Update: The Final Rule was published in the Federal Register on September 16.

Continue reading "Medicaid RACs: Final Rule Issued" »

September 14, 2011

The HLP Congratulates Top 14% of Joint Commission's Accredited Hospitals

The HLP would like to congratulate the following hospitals on being named in the top 14 percent of Joint Commission accredited hospitals based upon 2010 core performance measures reported for heart attack, heart failure, pneumonia, surgical, and children's asthma:

In Michigan:


  • MidMichigan Medical Center Gladwin Gladwin

  • Spectrum Health United Memorial Greenville

  • Beaumont Hospital, Grosse Pointe Grosse Pointe

  • Dickinson County Healthcare System Iron Mountain

  • Oscar G. Johnson VA Medical Center Iron Mountain

  • Aspirus Grand View Ironwood

  • Bronson LakeView Hospital Paw Paw

  • Aleda E. Lutz VA Medical Ctr. Saginaw

  • Oakwood Heritage Hospital Taylor

  • Oakwood Southshore Medical Center Trenton

In New York:


  • VA Healthcare Network Upstate New York at Bath Bath

  • Southside Hospital Bay Shore

  • North Shore University Hospital Manhasset

  • Nyack Hospital Nyack

  • Plainview Hospital Plainview

  • John T. Mather Memorial Hospital Port Jefferson

  • St. Charles Hospital Port Jefferson

  • Bon Secours Community Hospital Port Jervis

  • North Carolina

  • Roanoke-Chowan Hospital Ahoskie

  • Transylvania Regional Hospital Brevard

  • Carolinas Medical Center - Mercy & Carolinas

  • Medical Center - Pineville Charlotte

  • VA Medical Center Fayetteville

  • Gaston Memorial Hospital Gastonia

  • Sandhills Regional Medical Center Hamlet

  • Lake Norman Regional Medical Center Mooresville

  • The Outer Banks Hospital Nags Head

  • Rowan Regional Medical Center Salisbury

  • Davis Regional Medical Center Statesville

  • Heritage Hospital Tarboro

  • Thomasville Medical Center Thomasville

  • Columbus Regional Healthcare System Whiteville

  • Medical Park Hospital Winston-Salem

In Georgia:


  • Atlanta Medical Center Atlanta

  • Doctors Hospital of Augusta Augusta

  • Higgins General Hospital Bremen

  • Cartersville Medical Center Cartersville

  • Polk Medical Center Cedartown

  • Hughston Hospital Columbus

  • VA Medical Center - Atlanta Decatur

  • Coliseum Northside Hospital Macon

  • Walton Regional Medical Center Monroe

  • North Fulton Regional Medical Center, Inc. Roswell

  • East Georgia Regional Medical Center Statesboro

  • Tanner Medical Center/Villa Rica Villa Rica

  • Barrow Regional Medical Center Winder


Continue reading "The HLP Congratulates Top 14% of Joint Commission's Accredited Hospitals" »

September 13, 2011

Revised RAC Statement of Work Published


This month, the Centers for Medicare and Medicaid Services ("CMS") published a revised recovery audit contractor ("RAC" or "Auditors") statement of work ("SOW") which is, as CMS described, a "contract" between CMS and the Auditors to support CMS in its mission to "reduce Medicare improper payments through the efficient detection and collection of overpayments, the identification of underpayments and the implementation of actions that will prevent future improper payments."

While much of the SOW is a reiteration of familiar concepts, CMS has also added some new aspects. One key change incorporated into the revised Statement of Work relates to the claim review process.

Types of Review

CMS has identified three (3) types of reviews: automated reviews, complex reviews and now semi-automated reviews. While the automated and complex reviews are familiar to most providers and suppliers, it is the semi-automated review that is the newest type of review authorized by CMS.


  1. Automated Reviews - CMS describes automated reviews as "occur[ring] when a Recovery Auditor makes a claim determination at the system level without a human review of the medical record. An automated review is permissible if two (2) conditions are met: (i) there is a certainty that the service is not covered or is incorrectly coded, and (ii) there is a written Medicare policy, Medicare article or Medicare-sanction coding guideline exists.

  2. Complex Reviews - CMS describes complex reviews as "occur[ring] when a Recovery Auditor makes a claim determination utilizing human review of the medical record." Typically, complex reviews are used when there is a high probability (versus a certainty, which is required for the automated reviews) that the service is not covered or where no Medicare policy, Medicare article or Medicare-sanctioned coding guideline exists.

  3. Semi-Automated Reviews - Semi-automated reviews are two-part reviews in which there is (i) an identification of flawed billing through an automated review using claims data, and (ii) a notification letter is sent to the provider explaining the potential error identified. Once a provider receives the notification letter, the provider has forty-five (45) days to submit documentation that supports its original billing. Failure to submit the documentation, or if the documentation submitted fails to support the original billing, will result in the claim being sent to the Medicare claims processing contractor for an adjustment and a demand letter will be issued. If, on the other hand, the documentation supports the claims billed, then the claim will not be sent for adjustment and the provider will be notified that the review has been closed. While CMS has been using Semi-Automated Reviews for some time, and has published a Frequently Asked Question related to these types of reviews, the revised Statement of Work expressly authorizes the RACs to conduct Semi-Automated Reviews.

Continue reading "Revised RAC Statement of Work Published" »

September 9, 2011

OIG Views Favorably Arrangement to Provide Services Via Telemedicine Technology

On August 29, 2011, the Department of Health and Human Services Office of Inspector General ("OIG") issued Advisory Opinion 11-12 in which an operating division of a non-profit corporation ("Requestor") was seeking an opinion from the OIG regarding its "proposal to enter into arrangements to provide neuro emergency clinical protocols and immediate consultations with stroke neurologists via telemedicine technology to certain community hospitals" ("Proposed Arrangement"). Through its flagship hospital, Requestor provides neuroscience care that is nationally recognized and it aims to expand and increase patients' access to that care through the Proposed Arrangement.

The Requestor noted that "stroke is the third leading cause of death in the nation and a leading cause of serious, long-term disability." As such, it is common for community hospitals to transfer suspected stroke patients to comprehensive stroke centers ("Centers") that are able to treat those patients (this also serves to protect community hospitals legally). Requestor notes that time is of the essence when treating suspected stroke patients. Under the Proposed Arrangement, hospitals with Centers will be able to treat simple stroke cases with telemedicine technology, which will allow treatment to take place at the most effective time while also allowing the hospitals to "free up resources for patients who require the level of tertiary care that the Requestor's hospital can provide."

Initially, the Proposed Arrangement would be between the Requestor and certain community hospitals in the Requestor's service ("Participating Hospitals") Area with which the Requestor has a pre-existing, significant contractual relationship ("Affiliated Hospitals"). In other words, the initial arrangement's Participating Hospitals would be comprised solely of currently Affiliated Hospitals. The Requestor proposes to provide, at its own expense, the following to each Participating Hospital: (i) neuro emergency telemedicine technology; (ii) neuro emergency clinical consultations; (iii) acceptance of neruo emergency transfers; and (iv) neuro emergency clinical protocols, training, and medical education (collectively, "Program"). Those hospitals that do not have pre-existing, significant contractual relationships with Requestor ("Non-Affiliated Hospitals") would be included on a case-by-case basis, taking into account rational access-to-care considerations. The Requestor proposes to enter into written agreements with the Participating Hospitals, such agreements including a two-year term and an exclusivity requirement.

The OIG determined that the Proposed Arrangement adequately reduced risk of improper payments for referrals for the following reasons:


  1. The Requestor would likely not generate considerable referrals as neither the Participating Hospitals nor the physicians would be required or encouraged to refer patients to Requestor's hospital and no emergency physician would receive additional compensation under the Program. In fact, physicians are free to refer patients to facilities other than the Requestor's hospital. Moreover, one of the objectives of the Proposed Arrangements is to reduce the number of transfers of stroke patients to Requestor's hospital.

  2. Initially, the Proposed Arrangement would only be available to Affiliated Hospitals. When resources permit, Non-Affiliated Hospitals would be included in the Program based on rational access-to-care considerations.

  3. The primary beneficiaries of the Program would be the stroke patients.

  4. Neither the Requestor nor any Participating Hospital would be required to engage in any marketing activities and each would be responsible for its own marketing.

  5. It is unlikely that the Proposed Arrangement would result in increased costs to the Federal healthcare programs.

Continue reading "OIG Views Favorably Arrangement to Provide Services Via Telemedicine Technology" »

September 8, 2011

July 2011 OIG Recovery Act Oversight Monthly Report

The Department of Health and Human Services ("HHS") Office of Inspector General ("OIG") has issued its monthly Recovery Act Oversight report for July 2011. The report revealed what many already know: audits and investigations are have increased considerably since 2009, the year the American Recovery and Reinvestment Act of 2009 ("Recovery Act") was signed into law.

Comparing data from July of 2009, 2010 and 2011, it is clear that the number of active OIG investigations has been rising dramatically, with almost twice as many active investigations in July 2011 than in July 2010. We can also see an overall increase in the number of audits, inspections, evaluations and reviews in process since 2009. Even though the numbers of audits, inspections, evaluations and reviews experienced a slight dip in July 2011 versus July 2010, the overall trend has been, and will likely continue to be, an upward growth.
OIG Recovery Act.JPG

This data should be, yet another, reminder that providers and suppliers have been, and will continue to be, the focus of government scrutiny.

Continue reading "July 2011 OIG Recovery Act Oversight Monthly Report" »

September 7, 2011

WPS' Service Specific Prepayment Probe Results for Established Patient Office Visits (99213) for Illinois

Wisconsin Physician Services (WPS)--the Part B Medicare Administrative Contractor (MAC) for Iowa, Kansas, Missouri and Nebraska and the Legacy Medicare Carrier for Michigan, Illinois, Wisconsin and Minnesota--regularly conducts Service-Specific Probes (Probes) "to validate potential systematic problems with billing, utilization, and or/documentation of a specific service." In a recent Probe, 99213--the billing code for established patient office visits--became the focus, with the sample drawn from Illinois for all specialties.

In reviewing the Probe results, WPS considered 101 services from 100 randomly-selected-claims for 99213 from all specialties (with no more than 5 claims from any one provider). Of those 101 services, 48.51% were allowed as billed and 51.49% were denied.

The 51.49% denied services were attributed to three major problems:


  • Documentation Not Received (27.72%) - It is the provider's responsibility to furnish documentation upon request. The provider has 45-days in which to respond with the requested information or the claim will be denied.

  • Documentation Did Not Support the Level of Service Billed (22.77%)

  • Improper Selection of Procedure Code (0.99%)

WPS reminds providers that medical documentation must meet the following criteria to avoid claim denials:


  • Must be legible;

  • Clearly identify patient, date of service, and who performed the service;

  • Accurately report all pertinent facts, findings, and observations;

  • Include appropriate diagnosis for the service provided; and

  • Documentation must have a hand-written or an electronic signature. Stamped signatures are not acceptable.

Continue reading "WPS' Service Specific Prepayment Probe Results for Established Patient Office Visits (99213) for Illinois" »

September 6, 2011

Relying on PPACA Provision, 6th Circuit Court of Appeals Rules that Pure Research Performed in 1990s by Residents and Interns is Not Reimbursable

Henry Ford Hospital ("Hospital"), a Detroit teaching hospital, applied for Medicare reimbursement for FY 1991-96 and 1998-99 for "pure research" conducted by its residents. In an opinion dated August 18, 2011, the 6th Circuit held that the federal government is not under an obligation to reimburse teaching hospitals for the time their residents conducted pure research in the 1990s.

Generally, Medicare reimburses teaching hospitals for their direct and indirect costs of medical education. "Direct costs include education-related expenses, such as residents' salaries...Indirect costs, the ones at stake here, include costs incurred by teaching hospitals due to the 'general inefficiencies' and 'extra demands placed on other staff' that result from educating residents." Because measuring "general efficiencies" and "extra demands" was not easy, Congress developed a formula (See 42 USC §1395ww(d)(5)(B)(ii)) for these expenses that takes into account a hospital's "full-time equivalent" ("FTE"). The greater the FTE residents the hospital teaches, the greater its Medicare subsidies. However, the definition of "indirect costs" and which activities constitute indirect costs remained vague and raised the present controversy.

In 2009, the federal district court ruled in favor of the Hospital stating, residents that engaged in educational research cannot be excluded from the hospital's indirect medical education ("IME") FTE resident count. While the Secretary of Health and Human Services' ("Secretary") appeal of this decision was pending, President Obama's healthcare reform act (the Patient Protection and Affordable Care Act ("PPACA")) passed. Included in PPACA's many provisions was Section 5505, which reevaluated the rules for calculating hospitals' FTE counts. Accordingly, as described in more detail below, the 6th Circuit Court of Appeals reversed the district court's decision in reliance upon this new Section 5505.

Section 5505 provides, in part,

(b)...In determining the hospital's number of fulltime equivalent residents for purposes of this subparagraph, all the time spent by an intern or resident in an approved medical residency training program in non-patient care activities, such as didactic conferences and seminars, as such time and activities are defined by the Secretary, that occurs in the hospital shall be counted toward the determination of full-time equivalency if the hospital...

(c) EFFECTIVE DATES.--
(1) IN GENERAL.--Except as otherwise provided, the Secretary of Health and Human Services shall implement the amendments made by this section in a manner so as to apply to cost reporting periods beginning on or after January 1, 1983.

Notably, time spent on non-patient activities includes didactic conferences, seminars, and other activities the Secretary determines. On November 24, 2010, the Secretary issued a rule (42 CFR 412.105) that stated, in part, the following:

(f) Determining the total number of full-time equivalent residents for cost reporting periods beginning on or after July 1, 1991. (1) For cost reporting periods beginning on or after July 1, 1991, the count of full-time equivalent residents for the purpose of determining the indirect medical education adjustment is determined as follows:

(iii)

(B) The time spent by a resident in research that is not associated with the treatment or diagnosis of a particular patient is not countable.

(C) Effective for cost reporting periods beginning on or after January 1, 1983, except for research activities described in paragraph (f)(1)(iii)(B) of this section, the time a resident is training in an approved medical residency program in a hospital setting, as described in paragraphs (f)(1)(ii)(A) through (f)(1)(ii)(D) of this section, must be spent in either patient care activities, as defined in §413.75(b) of this subchapter, or in nonpatient care activities, such as didactic conferences and seminars, to be counted. This provision may not be applied in a manner that would require the reopening of settled cost reports, except those cost reports on which, as of March 23, 2010, there is a jurisdictionally proper appeal pending on direct GME or IME payments.

Explicitly stated in the new regulation, research not associated with treating or diagnosing a patient does not qualify as an IME FTE. Moreover, because both the statute and the regulation prescribe that the new rules apply retroactively, the court of appeals ruled that the district court's ruling be reversed and that the Hospital not be entitled to reimbursement for the time its residents spent conducting pure research in the 1990s.

Continue reading "Relying on PPACA Provision, 6th Circuit Court of Appeals Rules that Pure Research Performed in 1990s by Residents and Interns is Not Reimbursable" »

September 2, 2011

Metro Detroit Continues to be a Focus of Health Care Fraud Prosecutions

On September 1, 2011, the Department of Justice, the Department of Health and Human Services (HHS), the FBI and the HHS Office of Inspector General (HHS-OIG) jointly announced that eighteen individuals have been charged in the Eastern District of Michigan for their participation in a series of separate Medicare fraud schemes involving home health and psychotherapy services.

According to the court documents, the schemes allegedly involved a total of more than $28 million in fraudulent claims submitted to Medicare for services that were medically unnecessary and/or never provided.

Fourteen individuals are charged in one indictment with conspiracy to commit health care fraud for their roles in a $14 million scheme to defraud Medicare by submitting fraudulent claims for home health care services. The defendants include three physicians, four clinic owners and managers, two clinic employees, one nurse, and four physical therapists and physical therapy assistants. As alleged, the conspiracy was operated out of multiple home health agencies located in Livonia.

In a separate complaint, a physician and two other individuals are charged with health care fraud and the submission of false claims in connection with an approximately $11.5 million scheme to defraud the Medicare program. The scheme allegedly involved false billings for individual and group psychotherapy services at two clinics located in Detroit. According to court documents, the defendants billed Medicare for services that were medically unnecessary and/or never provided.

In another indictment, the owner of a medical clinic located in Southfield was charged with conspiracy to commit health care fraud, health care fraud and identity theft for a scheme allegedly involving $2.9 million in fraudulent billings to Medicare. The clinic owner is alleged to have used the identities of Medicare providers and beneficiaries to bill for psychotherapy services that were medically unnecessary and never performed.

Including these charges, Medicare Fraud Strike Force operations in Detroit have charged a total of 138 individuals in cases involving approximately $148 million in fraudulent billings to Medicare.

These newly announced indictments bear out the advice that we have been delivering to clients, namely that the health care enforcement landscape is evolving and thus it is even more imperative to ensure that providers take pro-active steps to mitigate the likelihood that they will become subjects of the government's more robust initiatives to prevent health care fraud.

Continue reading "Metro Detroit Continues to be a Focus of Health Care Fraud Prosecutions" »

September 2, 2011

Independent Diagnostic Testing Facilities Facing OIG Scrutiny

In two reports posted August 30, 2011, the Department of Health and Human Services, Office of Inspector General (OIG) announced that many Independent Diagnostic Testing Facilities (IDTFs) in Miami and Los Angeles failed to comply with selected Medicare standards after unannounced site visits in May and June 2010.

An IDTF offers diagnostic services and is independent of a physician's office or hospital. The selected Medicare standards which the OIG reviewed were that the IDTFs be at the location on file with CMS and to be open during business hours.

In Los Angeles, the OIG found that 46 of the 132 area IDTFs failed to comply with one of the two selected Medicare standards. 24 IDTFs were not at the location on file with CMS. 22 IDTFs were not open during business hours.

In Miami, the OIG found that 27 of the 92 area IDTFs failed to comply with one of the two selected Medicare standards. 23 IDTFs were not at the location on file with CMS. 4 IDTFs were not open during business hours.

As a result of these site visits, the OIG recommended that CMS conduct more unannounced site visits to IDTFs. CMS concurred with the OIG recommendation and stated that it anticipates increasing the frequency of unannounced site visits to IDTFs and will take appropriate administrative actions against the IDTFs identified in the OIG report.

Due to CMS' stated intention to conduct more unannounced site visits, any IDTF must ensure full compliance with Medicare standards. The attorneys at The Health Law Partners can help ensure full compliance with all Medicare standards.

Continue reading "Independent Diagnostic Testing Facilities Facing OIG Scrutiny" »

September 1, 2011

Health Care Fraud Prosecutions Continue to Rise

Statistics recently released by the Transactional Records Access Clearinghouse (TRAC), a Syracuse University Research organization, show a marked increase in federal health care fraud prosecutions. The statistics show 903 federal prosecutions for health care fraud through the first eight months of 2011, compared to 731 such prosecutions for all of 2010.

In addition to the increase in prosecutions, the federal government has also seen an increase in convictions for such fraud. Through the end of August, there have been 24 convictions, compared with 23 such convictions for all of 2010.

The increases in prosecutions and convictions come on the heels of the federal government's increased enforcement efforts. In February, the government added to health care fraud teams, which, in turn, has led to an elevated level of regulatory enforcement activity. These statistics bear out the advice that we have been delivering to clients, namely that the health care enforcement landscape is evolving and thus it is even more imperative to ensure that providers take pro-active steps to mitigate the likelihood that they will become subjects of the government's more robust initiatives to prevent health care fraud.

Continue reading "Health Care Fraud Prosecutions Continue to Rise" »