Recently in Compliance Category

March 22, 2016

OCR Launches Phase 2 of HIPAA Audit Program

The HHS Office for Civil Rights ("OCR") has announced that it will begin the 2016 Phase 2 HIPAA Audit Program, the next phase of audits of covered entities and their business associates. In Phase 2, OCR will review the policies and procedures adopted and employed by covered entities and their business associates to satisfy standards and implementation specifications of the Privacy, Security, and Breach Notification Rules. Phase 2 audits will primarily be desk audits, however, some on site audits will occur. OCR will evaluate the results and procedures used in the Phase 2 audits to develop a permanent audit program.
The Phase 2 audit process begins with OCR sending an email to covered entities and business associates requesting verification of an entity's address and contact information. OCR will then send pre-audit questionnaires to obtain information about the size, type, and operations of covered entities and business associates. This information will be used in conjunction with other information to create potential audit subject pools.
If a covered entity or business associate does not respond to OCR's email request to verify contact information or the pre-audit questionnaire, OCR will use publically available information to verify contact information or respond to the questionnaire. Thus, covered entities and business associates should be aware that ignoring OCR's emails will not keep them from being part of potential audit subject pools.
OCR will post updated audit protocols on its website closer to when it will begin to conduct the 2016 audits. The audit protocol will be updated to reflect HIPAA Omnibus Rulemaking.

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March 14, 2016

"Physician Contracting Workshop," presented by Robert S. Iwrey, Esq.

"Physician Contracting Workshop," presented by Robert S. Iwrey, Esq., Oakland County Medical Society, March 2, 2016, Bloomfield Hills, MI.

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March 14, 2016

6th Circuit Court Ruling May Significantly Reduce Recoverable FCA Damages by Feds

In U.S. ex rel. Wall v. Circle C. Construction, Case #14-6150, 2016 WL 423750 (6th Cir. Feb. 4, 2016), the 6th Circuit Court held that damages in false certification cases should be based on the difference between the value of the items or services the government should have received and the value of the items or services the government actually received. The holding, which arose in the non-healthcare context of a construction contract, arguably applies in healthcare matters where medically necessary items or services were furnished pursuant to referrals that violated AKS or Stark laws and thus the government did not sustain any actual damages. A court could then find that the treble damage provision under the False Claims Act is not applicable and the government's damage recovery is limited to the $5,500-11,000 per claim penalty.

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November 30, 2015

Michigan Physicians Beware of Self-Prescribing & Prescribing for Family Members

Although there is no federal or state law barring physicians from providing health care services to themselves or their immediate family members including prescribing medication, there are limitations imposed by both applicable ethical rules and third party payor billing policies. For example, the American Medical Association ("AMA") has Ethics Opinion 8.19 which provides, in pertinent part, that: "physicians generally should not treat themselves or members of their immediate families" since their "professional objectivity may be compromised" and they may fail to: "probe sensitive areas when taking the medical history" or "perform intimate parts of a physical examination." AMA Ethics Opinion 8.19 does indicate that self-treatment or immediate family treatment may be appropriate in emergency circumstances or isolated settings where there is no other available qualified physician, however, it warns that controlled substance prescribing for themselves or immediate family members should only be done in emergencies. Michigan physicians should be aware that a violation of the AMA Ethics Opinion 8.19 could give rise to an administrative action against the physician's medical license under MCL 333.16221(b)(vi) which authorizes such action for lack of good moral character as evidenced by violation of the ethics opinion. It should also be noted that many third party payors have policies that bar claims for reimbursement for services rendered by physicians to themselves or their immediate family members. For examples, Blue Cross Blue Shield of Michigan does not cover services that health care providers render to themselves or any first-degree relatives, including parents, siblings, spouse and children. This bar covers not only controlled substances but all care services and does not provide for any exceptions. Thus, in the rare event that a Michigan physician does provide self-treatment or immediate family treatment, he or she should document the treatment using a S.O.A.P. format and indicate the emergency reason (which is required if prescribing a controlled substance) and/or isolated circumstances (if not prescribing a controlled substance). Moreover, in either case, the physician should not bill a third party payor for his/her services unless such payor allows such claims (which is unlikely).

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November 23, 2015

Providers Likely To Face Higher Penalties For Fraud and Regulatory Violations

On November 2, 2015 the President signed The Bipartisan Budget Act of 2015, requiring that civil monetary penalties must be raised to account for inflation, followed by an annual review for further increases. Providers accused of False Claims Act (FCA) violations are likely to see an increase as high as 40% over the current penalty ranging from $5,500 to $11,000. Higher penalties may add up quickly in FCA cases, which generally involve hundreds of alleged tainted claims.

This could potentially have a negative impact on providers that have earmarked monies for quality of care improvement efforts who must now spend the money on paying higher penalties. The threat of higher penalties might also influence a provider's decision to settle FCA cases due to the risk of astronomical penalties that may be imposed.

Budget Deal Raises Stakes for False Claims, Civil Monetary Penalties [link]

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November 9, 2015

Investigations Mounting Against Widespread Pharmacy Fraud Claims to Military Health Program

The Wall Street Journal has reported that Federal prosecutors are investigating widespread fraud, in at least four states, by compounding pharmacies in claims submitted to TRICARE--the health-insurance program that insures over 9 million U.S. military members (active, guard/reserve and retired) and their families. Some of the allegations include: false billings, physicians writing prescriptions despite not meeting the beneficiaries in person, and improper kickbacks being received in exchange for referring business to a government agency.

"U.S. Targets Pharmacies Over Soaring Claims to Military Health Program" [link]

The major increase in spending on compounded drugs is believed to be the primary reason behind a $1.3 billion deficiency in the military's health-care budget earlier this year. As a result, funds had to be redirected from other programs to compensate for the shortage and Prosecutors are considering and pursuing civil and criminal charges against the pharmacies, physicians and drug marketers.

This action by Federal prosecutors is yet another example of the increased enforcement by federal authorities against the pharmaceutical industry seen in the last six months.

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November 4, 2015

Congress Considering Additional Legislation to Help Curb Medicare Prescription Drug Abuse

It was just released that Congress is contemplating whether Medicare will be able to restrict at-risk drug abuse beneficiaries to a limited number of pharmacies and providers when they seek narcotics. Currently, Medicaid and the Veterans Affairs (VA) are able to impose these restrictions, but Medicare is not.

If successful, this action will help prevent opioid abuse by averting doctor shopping and encouraging physicians and insurers to aid patients battling drug abuse.

"Congress Looks to Curb Medicare Prescription Drug Abuse"

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November 3, 2015

The U.S. Department of Health and Human Services Office of Inspector General has released their Work Plan for Fiscal Year 2016

The United States Department of Health and Human Services Office of Inspector General ("HHS-OIG") has released its Work Plan for Fiscal Year 2016. This plan summarizes new and continuing areas of review and activities that HHS-OIG plans to pursue as well as describing its primary objectives. The newest additions to the work plan are:

• Medical device credits for replaced medical devices
• Medicare payments during Medicare Severity Diagnosis Related Groups (MS-DRG) payment window
• Content Management System (CMS) validation of hospital-submitted quality reporting data
• Skilled nursing facility prospective payment system requirements
• Orthotic braces-reasonableness of Medicare payments compared to amounts paid by other payers
• Osteogenesis stimulators-lump-sum purchase versus rental
• Orthotic braces-supplier compliance with payment requirements
• Increased billing for ventilators
• Ambulatory surgical centers-quality oversight
• Physicians-referring/ordering Medicare services and supplies
• Anesthesia services-non covered services
• Physician home visits-reasonableness of services
• Prolonged (E & M) services-reasonableness of services
• Histocompatibility laboratories-supplier compliance with payment requirements
• Accountable Care Organizations: Strategies and Promising Practices
• Medicare payments for unlawfully present beneficiaries in the United States-mandated review
• Medicare payments for incarcerated beneficiaries-mandated review
• Content Management System (CMS) management of ICD-10 implementation
• Medicare Advantage organization practices in Puerto Rico
• Medicare Part D beneficiaries' exposure to inappropriate drug pairs
• Medicare Part D Eligibility Verification transactions
• Part D Pharmacy Enrollment
• Increase in prices for brand-name drugs under Part D
• Specialty drug pricing and reimbursement in Medicaid
• Express Lane Eligibility
• State agency verification of deficiency corrections
• Medical loss ratio-recoveries of MCO rebates from profit-limiting arrangements
• Review of States' methodologies for assigning Managed Care organization payments to different Medicaid FMAPs
• Managed long-term-care reimbursements
• Center for Disease Control (CDC)-oversight of the Select Agent Program
• Controls over networked medical devices at hospitals
• Food and Drug Administration (FDA)-tobacco establishment compliance with the Family Smoking Prevention and Tobacco Control Act
• Health Resources and Services Administration (HRSA)-compliance with Maternal, Infant, and Early Childhood Home Visiting (MIECHV) Requirements
• IHS-change card program review
• NIH-controls over subcontracting of NIH grant and contract work
• Controls over the preparation and receipt of select agent shipments
• Review of Office for Human Research Protections compliance evaluations to ensure human subject protection
• Foster Care-States' protocols for the use and monitoring of psychotropic medications for children in foster care
• States' implementation of guardian ad litem requirements
• Consumer Operated and Oriented Plan Loan Program-CO-OP compliance with requirements and CMS monitoring activities
• Allowability of contract expenditures
• Rollup of State-based marketplace eligibility determination audits and Content Management System (CMS) oversight
• Health Resources and Services Administration (HRSA)-compliance with Maternal, Infant, and Early Childhood Home Visiting (MIECHV) requirements

The U.S. Department of Health and Human Services Office of Inspector General has released their Work Plan for Fiscal Year 2016

The HHS-OIG expects significant recoveries in audit receivables, investigative receivables and non-HHS investigative receivables resulting from their Work Plan, as well as tremendous savings in legislative, regulatory, and/or administrative actions.

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November 2, 2015

Significant Changes to Stark Regulations Finalized in 2016 Medicare Physician Fee Schedule

In July, we blogged about the major Stark Law provisions in the 2016 Proposed Medicare Physician Fee Schedule (the "Proposed Rule"). On October 29, 2015, the Centers for Medicare & Medicaid Services ("CMS") released the final 2016 Medicare Physician Fee Schedule (the "Final Rule") (available here), with few changes between the proposed rule and final rule as it related to the Stark provisions. The Final Rule will be published in the Federal Register on November 5, 2015. These are the first major changes to the Physician Self-Referral Rule (Stark Law) since 2009.

CMS stated that the Stark Law updates are meant to accommodate health care delivery/payment system reform, reduce burdens, facilitate compliance, clarify certain applications of the Stark Law, and issue new Stark exceptions. Below is a brief summary of the provisions adopted in the Final Rule:

(a) CMS adopted the proposed Stark exception for recruitment assistance and retention payments from hospitals, federally-qualified health centers (FQHCs), and rural hospital clinics (RHCs) to physicians to assist with employing non-physician practitioners (NPPs) in their geographical area. The only change from the Proposed Rule is the addition of a definition for the geographical area serviced by the FQHCs and RHCs, which is:

The "geographic area served" by a federally qualified health center or a rural health clinic is the area composed of the lowest number of contiguous or noncontiguous zip codes from which the federally qualified health center or rural health clinic draws at least 90 percent of its patients, as determined on an encounter basis. The geographic area served by the federally qualified health center or rural health clinic may include one or more zip codes from which the federally qualified health center or rural health clinic draws no patients, provided that such zip codes are entirely surrounded by zip codes in the geographic area described above from which the federally qualified health center or rural health clinic draws at least 90 percent of its patients.

(b) CMS standardized the various terms used for the principle of "takes into account" referrals (e.g., variations include "based on" or "without regard to"). CMS settled on standardizing the language to "takes into account" the volume or value of referrals.

(c) CMS clarified that the regulations in 42 CFR 411.357(t) regarding retention payments in underserved areas is correct. The Final Rule clarifies that the retention payment must not exceed the lesser of an amount equal to 25 percent of the physician's current annual income averaged over the previous 24 months.

(d) CMS clarified that the Stark exception requiring that a lease arrangement be set out in writing does not require a single formal contract, but a collection of documents may satisfy the "writing" requirement. CMS did so by replacing the term "agreement" with the term "lease arrangement" throughout the regulation.

(e) CMS extended the "holdover" lease arrangement provision from six months to indefinitely (as opposed to a definite, but longer than six-month period as contemplated in the Proposed Rule). The new holdover lease language is applicable so long as the lease arrangement met the conditions of the exception prior to its expiration, the holdover is on the same terms and conditions as the immediately preceding arrangement, and that the holdover continues to satisfy the requirements of the exception.

(f) CMS revised the language of the exception to the definition of "remuneration" for items/devices/supplies that are used solely for one or more of the six purposes (i.e., collection, transportation, processing, storing, ordering, or communicating the specimen/results). The revision clarifies that the item can be used for more than one of the six purposes, so long as it is used solely for one or more of those purposes.

(g) CMS adopted the language in the Proposed Rule with regard to the clarification that employees or independent contractors do not "stand in the shoes" of their physician organization's arrangements "unless they voluntarily stand in the shoes of the physician organization as permitted under 42 CFR 411.354(c)(1)(iii) or (c)(2)(iv)(B).

(h) CMS expanded the exception for ownership of publicly traded securities with the language from the Proposed Rule to include protection for "trading on an electronic stock market or over-the-counter quotation system in which quotations are published on a daily basis and trades are standardized and publicly transparent."

(i) CMS added a new exception for timeshare lease arrangements between a physician and a hospital or unrelated physician organization for the use of premises, equipment, personnel, items, supplies, or services if certain conditions are met. The exception does not apply to advanced imaging, radiation therapy, or clinical/pathology laboratory equipment (other than equipment used to perform CLIA-waived laboratory testing).

(j) CMS added language to clarify that the physician-owned hospital disclosure requirements are not met by posting the ownership interest disclosure on a social media website, electronic patient payment portal, electronic patient care portal, or an electronic health information exchange.

Continue reading "Significant Changes to Stark Regulations Finalized in 2016 Medicare Physician Fee Schedule" »

October 23, 2015

President Obama Announces New Steps to Fight Opioid Abuse Epidemic

On October 21, 2015, President Obama announced new initiatives to fight the nation's opioid abuse epidemic. The President discussed several plans for doing so, such as: expanding access to drug treatment, increasing the number of physicians who can prescribe a drug used to treat opiate addiction, doubling the number of providers that can prescribe a drug to reverse the effects of an opioid overdose, and directing the Centers for Disease Control and Prevention to invest $8.5 million in opioid addiction prevention.

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In Michigan and New York, prescription drug abuse has become a high priority for law enforcement officials including enforcement actions directly targeting physicians, dentists and other prescribers as well as dispensers such as pharmacies and pharmacists. Such health care providers are well advised to take appropriate care to prevent the abuse and misuse of controlled substances and to maintain proper documentation of the medical necessity and legitimacy of such prescriptions.

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July 9, 2015

OCR Announces Consolidation of Kansas City and Chicago Branches


On April 20, 2015, the Department of Health and Human Services' Office of Inspector General, in partnership with the American Health Lawyers Association and the Association of Healthcare Internal Auditors, published Practical Guidance for Health Care Governing Boards on Compliance Oversight, which describes the OIG's expectations of the compliance oversight role healthcare governing boards (e.g., Board of Directors of a hospital) should play in a healthcare organization. For a summary of this guidance, please visit: http://www.americanbar.org/publications/aba_health_esource/2014-2015/June/oig.html

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May 22, 2015

PHARMACIES ARE RECEIVING LETTERS FROM THE DOJ REGARDING BILLING FRAUD AND FALSE CLAIMS ACT INVESTIGATIONS.

Recently, pharmacies (specifically compounding pharmacies) across the country have begun receiving letters from the U.S. Department of Justice (DOJ) notifying them that the pharmacy is being investigated for fraud under the False Claims Act for knowingly billing for drugs that were not medically necessary. Industry insiders have reported that, just yesterday (on 5/21/2015), at least four pharmacies received these investigation notices from the DOJ. The industry insiders also reported that the letters were hand-delivered on Thursday, May 21, 2015, by U.S. Navy CIS agents, were signed by the U.S. Attorney General, and demanded that the pharmacies respond to the billing fraud allegations within twenty (20) days.

Further, pharmacies are being investigated and receiving DOJ letters specifically related to their contacts with patients, and allegations of impropriety regarding the same. These actions/letters are, of course, somewhat related to major recent developments related to Tricare's scrutiny of compounding pharmacies. For more information, please see the Enhanced Compound Ingredient Screening Notice issued by the Department of Defense's Pharmacy Operations Division on May 11, 2015, which is available here.

Letters from the DOJ alleging billing fraud, False Claims Act violations, or referencing a DOJ investigation are extremely time-sensitive. False Claims Act fines and penalties can be crippling for a pharmacy. A pharmacy that receives such a letter must act quickly to engage experienced healthcare legal counsel to defend it against these allegations and to represent them during the investigation.

The Health Law Partners, P.C. (HLP), is a full-service healthcare law firm representing pharmacies and other healthcare entities across the country. Healthcare regulatory matters are extremely complex and frequently evolving, and healthcare investigations require representation by attorneys experienced in such matters. The attorneys at HLP specialize in healthcare fraud and abuse matters, including government investigations. HLP has experience defending pharmacies in DOJ investigations and understands the defenses available to fight allegations of billing fraud and False Claims Act violations.

If you received a letter from the DOJ regarding an investigation, or for more information, please contact Adrienne Dresevic, Esq., adresevic@thehlp.com, or Clinton Mikel, Esq., cmikel@thehlp.com, at (248) 996-8510.

February 4, 2015

Outpatient "Observation" Battle Continues

On January 22, 2015, in the case of Barrows v. Burwell, No. 3:11-cv-1703, 2015 WL 264727 (2nd Cir., January 22, 2015), the United States Court of Appeals for the Second Circuit ruled that Medicare beneficiaries be granted the opportunity to demonstrate a Constitutionally-protected property interest to challenge their patient status designations as hospital outpatients rather than inpatients.

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August 29, 2014

BCBSM Places Limits on Quantity of Highly Abused Narcotics

With the fight against prescription drug abuse reaching an all-time high, health insurance plans are now taking a proactive role in attempting to reduce the quantity of some of the most abused drugs in the marketplace. As of September 2, 2014, Blue Cross Blue Shield of Michigan (BCBSM) commercial plans (non-Medicare) will implement new quantity limits for Oxycodone immediate release tablets and capsules (sold under the brand names of Roxicodone an OxyIR) and Oxymorphone immediate release tablets (sold under the brand name of Opana) of 180 per 30 days. These new limits apply to all strengths of the generic and brand-name versions of these drugs. Some pain management physicians have expressed concern that such limitations are an attempt by the health insurance companies to usurp the medical judgment of treating physicians due to cost containment measures while others believe that such limitations are helpful in reducing the potential for unsupervised use, misuse or abuse of prescription painkillers that can lead to addiction, hospitalization and even death. BCBSM will entertain a written request from a prescriber for an override of the limitation that includes documentation that the amount prescribed is medically necessary. A quantity limit override form is available from BCBSM on its website.
The attorneys at The Health Law Partners have a significant amount of experience in the defense of health care fraud investigations and pharmacy legal matters. For more information regarding such matters, please contact Robert S. Iwrey, Esq. at (248) 996-8510 or riwrey@thehlp.com.

August 14, 2014

OIG Posts New Guidance for Submitting a Contractor Self-Disclosure

On August 12, 2014, the Office of Inspector General ("OIG") posted new guidance for contractors self-disclosing violations of federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations or violations of the civil False Claims Act in connection with U.S. Department of Health and Human Services contracts or subcontracts. The Federal Acquisition Regulation ("FAR") requires federal contractors with contracts valued over $5 million to disclose to the OIG when they have credible evidence of one of these violations. The FAR contractor self-disclosure rule provides, in part:

(3)(i) The Contractor shall timely disclose, in writing, to the agency Office of the Inspector General (OIG), with a copy to the Contracting Officer, whenever, in connection with the award, performance, or closeout of this contract or any subcontract thereunder, the Contractor has credible evidence that a principal, employee, agent, or subcontractor of the Contractor has committed-- (A) A violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 of the United States Code; or (B) A violation of the civil False Claims Act (31 U.S.C. 3729-3733). (See, 48 CFR 52.203-13(b)(3)(i).)

The newly posted guidance instructs that self-disclosure made under the rule "are made with no advance agreement regarding possible OIG resolution of the matter and with no promises regarding potential civil or criminal actions by the U.S. Department of Justice." However, the guidance states that prompt disclosure, along with full cooperation, completed access to necessary records, restitution, and adequate corrective actions indicate an attitude of integrity even when self-disclosing potential criminal conduct.

The Guidance for Submitting a Contractor Self-Disclosure, the Contractor Self-Disclosure Form, and Frequently Asked Questions regarding the self-disclosure program are available on the OIG's website at https://oig.hhs.gov/compliance/self-disclosure-info/contractor.asp.

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