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August 31, 2015

Florida Compounding Pharmacy Settles False Claims Act Allegations Involving Telemedicine Prescriptions for $8 Million

On July 15, 2015, the U.S. Attorney's Office for the Middle District of Florida announced that it settled False Claims Act allegations against Blanding Health Mart Pharmacy for more than $8 million. Blanding Health Mart Pharmacy is a compounding pharmacy based in Jacksonville, Florida. The settlement stems from allegations that the pharmacy "knowingly billed the government for improper and medically unnecessary compounding pain prescriptions" that were "written by physicians that had never actually seen the patients [i.e., telemedicine prescriptions]." It appears that the allegations involved TRICARE beneficiaries.
This settlement comes on the heels of increased regulatory scrutiny in the compounding pharmacy arena. In fact, U.S. Attorney A. Lee Bentley, III, said that pharmacies that have abused the TRICARE program have been the focus of his office since the beginning of the year. Special Agent in Charge John F. Khin stated that "[f]raud and abuse by pharmacies and medical providers which bill for compounded pain prescriptions is a significant threat to the [Department of Defense] health care system. TRICARE beneficiaries must be made aware that any medications that are not individually prescribed or dispensed by a bona fide treating physician for a specific medical condition can be ineffective or unsafe." The office's press release is available here.
Compounding pharmacies should carefully review any telemedicine prescriptions they receive. In particular, compounding pharmacies should review, or consult healthcare legal counsel with regard to, the laws of the state in which the patient resides and in which the physician practices. Many states have laws that require that an existing physician-patient relationship exist prior to prescribing via telemedicine. Some states have "face-to-face" requirements for prescribing certain medications. Pharmacies may also want to consider requesting an attestation from the prescribing physician that states all appropriate standards of care and state law have been met and complied with in writing the prescription. If there is any doubt, pharmacies should not fill the prescription and should contact healthcare legal counsel.
Lastly, pharmacies should also consider how the prescription ended up in their hands. For example, what is the relationship between the pharmacy and the physician? Was the prescription sent as the result of marketing directed at the physician or patient? Depending on the answers to these questions, the analysis may become more complex

Continue reading "Florida Compounding Pharmacy Settles False Claims Act Allegations Involving Telemedicine Prescriptions for $8 Million" »

August 25, 2015

Moratoria on Enrollment of Ambulance Suppliers and Home Health Agencies Extended

On July 29, 2015 the Centers for Medicare & Medicaid Services ("CMS") announced that it is extending the temporary moratoria on the enrollment of new home health agencies, subunits, and branch locations ("HHA") and part B ambulance suppliers for an additional six months.
Section 6401(a) of the Affordable Care Act added section 1866(j)(7) to the Social Security Act (the "Act") to provide the Secretary with authority to impose a temporary moratorium on the enrollment of new Medicare, Medicaid, or CHIP providers and suppliers if the Secretary determines a moratorium is necessary to prevent or combat fraud, waste, or abuse under these programs.
Based on this authority CMS initially imposed a moratoria on the enrollment of new HHA and part B ambulance suppliers in a notice issued on July 31, 2013 (78 FR 46339). This was subsequently extended and expanded in a notice issued on February 4, 2014 (79 FR 6475). Additional extensions of the moratoria by notices issued on August 1, 2014 (79 FR 44702) and February 2, 2015 (80 FR 5551).
The initial July 31, 2013 moratoria applied to HHAs in Miami-Dade County, Florida and Cook County, Illinois, as well as surrounding counties, and part B ambulance suppliers in Harris County, Texas and surrounding counties. The February 4, 2014 notice expanded the HHA moratoria to Broward County, Florida; Dallas County, Texas; Harris County, Texas; and Wayne County, Michigan and surrounding counties. The moratoria on the enrollment of part B ambulance suppliers was also expanded in the February 4, 2014 notice to Philadelphia, Pennsylvania and surrounding counties.
In deciding to impose and extend the moratoria, CMS considered "qualitative and quantitative factors suggesting a high risk of fraud, waste, or abuse" within these geographic locations. CMS relied on law enforcement experience with "ongoing and emerging fraud trends and activities through civil, criminal, and administrative investigations and prosecutions." CMS also consulted with HHS-OIG regarding the extension of the moratoria. Prior to imposing the moratoria, CMS reviewed Medicare data and found no concerns related to beneficiaries accessing HHAs or ambulance suppliers within these geographic locations. State Medicaid agencies and other CMS state partners determined that the moratoria would not create issues related to access to care for Medicaid or Children's Health Insurance Program ("CHIP") beneficiaries.
CMS will determine whether to extend or lift the moratorium before extending the moratorium further. If the moratoria is extended or lifted, CMS will publish notice in the Federal Register. Once a moratorium is lifted, the providers or suppliers types that were unable to enroll because of the moratorium will be designated to CMS' high screening level for 6 months from the date the moratorium is lifted.
The attorneys at The Health Law Partners have a significant amount of experience counseling home health agencies, ambulance suppliers and other medical providers throughout the United States on moratoria and enrollment issues, as well as how to maintain compliance with applicable regulations once enrollment screening begins.

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August 19, 2015

OIG Scrutinizes Overlap Between Physician-Owned Hospitals and Physician-Owned Distributors

The government does not like Physician-Owned Hospitals ("POH"). The government also does not like Physician-Owned Distributors ("POD"). The Centers for Medicare and Medicaid Services ("CMS") and the Office of Inspector General ("OIG") have taken several steps recently to crack down on what it views as abusive PODs and POHs. In a brand new memorandum report, the OIG reviewed twelve physician owned hospitals to determine the overlap between POHs and PODs of spinal devices. This study was completed as a follow up to the 2013 Spinal Devices Supplied by Physician-Owned Distributors: Overview of Prevalence and Use report. CMS expressed interest in the ownership overlap following discussion related to the 2013 report.

The OIG used publicly available information and information from CMS's Provider Enrollment Chain and Ownership System ("PECOS") to determine whether a physician had an ownership interest in both a hospital and a POD that sold spinal devices to the same hospital. The OIG found one physician who had an ownership interest in both a hospital and a POD selling spinal devices to the same hospital. The OIG admits to the possibility of more overlapping ownership than the one instance found, but they state that none were found using the methods applied here.
The limited information available to determine common ownership between hospitals and PODS purportedly raises concerns of transparency among Medicare providers and vendors who sell implantable devices to providers. The government wants transparency to make sure providers do not violate referral and billing prohibitions under the Physician Self-Referral Law (Stark). Transparency also contributes to ensuring providers comply with OIG exclusions and the Anti-Kickback Statute. The OIG states that transparency can also implicate patient safety and quality of care because ownership can impact the clinical decision making of a physician.

Surgical implants, such as the spinal devices manufactured by the PODS in this report, are most commonly physician preference items. Physician preference items are items where the choice of brand and type of device are determined, or strongly influenced, by the physician rather than the hospital where the surgery takes place.

In a March 26, 2013 Special Fraud Alert, the OIG, citing physicians as the gatekeeper as to the brand and type of device, stated that there is a "strong potential for improper inducements between and among the physician investors, entities, device vendors, and device purchasers." This issue was cited in the 2011 Congressional report titled,Physician Owned Distributors (PODs): An Overview of Key Issues and Potential Areas for Congressional Oversight which stated that "[t]he very nature of PODs seem to create financial incentives for physician investors to use those devices that give them the greatest financial return and that, in the process, patient treatment decisions may be based on personal financial gain."

In conclusion, the OIG believes that there is limited transparency as to the ownership of PODs and, to a lesser extent, hospitals. The OIG believes that CMS's Physician Payments Sunshine Act ("Sunshine Act") (42 CFR §§ 403.900 - 403.914) will increase the availability of information to permit the identification of POD owners. The Sunshine Act requires manufacturers and group purchasing organizations to report ownership and investment interests held by physicians to CMS.

The attorneys at The Health Law Partners have a significant amount of experience counseling physicians, hospitals and medical device manufacturers throughout the United States on the Physician Self-Referral Law, the Anti-Kickback Statute, and the Sunshine Act, among many other state and federal regulations applicable to the field of health care law. We have the experience and knowledge to ensure compliance with these sophisticated health care regulations so as to remedy any issues that may come from the common ownership examined in this OIG report.

Continue reading "OIG Scrutinizes Overlap Between Physician-Owned Hospitals and Physician-Owned Distributors " »

August 17, 2015

OIG Issues Two Reports on Fraud and Abuse in Medicare Part D

In June, the Office of Inspector General ("OIG") issued two new reports on Medicare Part D titled: Ensuring the Integrity of Medicare Part D (available here) and Questionable Billing and Geographic Hotspots Point to Potential Fraud and Abuse in Medicare Part D (available here).
In the Ensuring the Integrity of Medicare Part D report, the OIG outlines the progress it has made in addressing - and the work still needed to protect against - fraud in the Medicare Part D program. According to the OIG, Part D fraud relates to two main issues: "1) the need to more effectively collect and analyze program data to proactively identify and resolve program vulnerabilities, and prevent fraud, waste, and abuse before it occurs; and (2) the need to more fully implement robust oversight to ensure appropriate payments, prevent fraud, and protect beneficiaries." The OIG recommends that CMS take the following steps to combat fraud and abuse:
(1) require plan sponsors to report all potential fraud and abuse to CMS and/or the MEDIC;
(2) require plan sponsors to report data on the inquiries and corrective actions they take in response to fraud and abuse;
(3) expand drug utilization review programs to include additional drugs susceptible to fraud, waste, and abuse;
(4) implement an edit to reject prescriptions written by excluded providers;
(5) exclude Schedule II drug refills when calculating final payments to plan sponsors at the end of each year;
(6) seek authority to restrict certain beneficiaries to a limited number of pharmacies or prescribers;
(7) develop and implement a mechanism to recover payments from plan sponsors when law enforcement agencies do not accept case referrals;
(8) determine the effectiveness of plan sponsors' fraud and abuse detection programs; and
(9) ensure that plan sponsors' compliance plans address all regulatory requirements and CMS guidance.
In the Questionable Billing and Geographic Hotspots Point to Potential Fraud and Abuse in Medicare Part D report, the OIG addresses drug abuse in the Part D Program, including controlled substance abuse and the diversion of non-controlled substances for illegal purposes. The OIG analyzed prescription drug event records from 2006-2014. The study found that:
• Since 2006, Medicare spending for commonly abused opioids has grown faster than spending for all Part D drugs;
• Pharmacies with questionable billing raise concerns about pharmacy-related fraud schemes; and
• Geographic hotspots for certain non-controlled drugs point to possible fraud and abuse.
The OIG recommends that the Centers for Medicare and Medicaid continue "to conduct investigations of pharmacies with questionable billing when warranted and to monitor pharmacy billing" and to fully implement OIG's previous recommendations."
The publication of these two reports highlights the government's continued scrutiny on pharmacies and prescribing physicians. Pharmacies and physicians should ensure that they have effective compliance programs in place to internally combat fraud and abuse.

Continue reading "OIG Issues Two Reports on Fraud and Abuse in Medicare Part D " »

July 9, 2015

Major Stark Provisions in 2016 Proposed Medicare Physician Fee Schedule

On July 8, 2015, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule containing major provisions relating to the Physician Self-Referral Law (i.e., the Stark Law) and its exceptions. CMS states that the purpose of the Stark proposals is: "to accommodate delivery and payment system reform, to reduce burden, and to facilitate compliance," as well as to "expand access to needed health care services." CMS also states that it realizes that "additional clarification" of Stark would help.

Below is a brief summary of the proposals affecting the Stark Law:

a) Proposes new Stark exception for recruitment assistance and retention payments from hospitals, federally-qualified health centers (FQHCs), and rural hospital clinics (RHCs to physicians to assist them in employing non-physician practitioners (NPPs) in the geographical area served by the hospital, FQHC, or RHC providing the remuneration.
• The exception would not apply to remuneration flowing to a group practice or other type of physician practice (i.e., physician organizations). But, the exception would protect physicians from being considered to be "standing in the shoes of the physician organization" when determining a direct compensation arrangement.
• The exception would only apply where the NPP is a bona fide employee of the physician (or physician's practice).
• The exception would only apply to NPP services that are primary care services (i.e., family practice, internal medicine, pediatrics, geriatrics, and OB-GYN).
• Additional proposals seek to limit or "cap" the remuneration allowed under this exception.

b) Proposes adding a definition of the geographical area served by FQHs and RHCs under 42 CFR 411.357(e).

c) Proposes to standardize the various terms (e.g., "based on" or "without regard to") used for the principle of "takes into account" referrals to clarify that there are not different volume or value of referral standards in the Stark exceptions.

d) Proposes revisions to clarify that the policy stated in the Stark Phase III regulations regarding retention payments in underserved areas (42 CFR 411.357(t)) is correct and remains CMS's policy.

e) Proposes revisions to clarify that the Stark exceptions requiring that a lease or arrangement be set out in writing do not require a single formal contract. Rather, "a collection of documents, including contemporaneous documents evidencing the course of conduct between the parties, may satisfy the writing requirement." Additionally, the proposed rule clarifies that the one-year term requirement is satisfied "as long as the arrangement clearly establishes a business relationship that will last for at least 1 year."

f) Proposes to extend the "holdover" arrangements permitted by 42 CFR 411.357(a), (b) and (d) from six months to indefinitely (or, alternatively, a longer but definite period), provided that the holdover continues on the same terms and conditions and that it meets the fair market value requirements. Additionally, CMS proposes to revise the fair market value compensation exception "to permit renewals of arrangements of any length of time, including arrangements for 1 year or greater."

g) Proposes to revise the definition of remuneration to clarify that if one of the six statutory exceptions to remuneration applies, then the term "used solely" does not mean that the exception does not apply if the item, device or supply is used for more than one of the six statutorily allowed purposes.

h) CMS clarifies 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). Additionally, CMS proposes to remove the phrase "stands in the shoes" from the definition of "locum tenens physician."

i) Proposes to expand the exception for ownership of publicly traded securities to include protection for "trading on an electronic stock market or OTC quotation system in which quotations are published on a daily basis and trades are standardized and publicly transparent."

j) Proposes a new exception for timeshare leasing "that would protect timeshare arrangements that meet certain criteria," including, but not limited to, that "the arrangement is between a hospital or physician organization (licensor) and a physician (licensee) for the use of the licensor's premises, equipment, personnel, items, supplies, or services...used predominantly to furnish evaluation and management services." This exception would not apply to independent diagnostic testing facilities or clinical laboratories.

k) CMS provides further guidance to physician-owned hospitals on the disclosure of its ownership interests, including that social media websites are not considered to be public websites for the hospital.

l) CMS also solicits comments on the affect that the Stark Law may have on Accountable Care Organizations.

In addition to the above-noted Stark provisions, the proposed rule contains a number of other proposals, including provisions on appropriate use criteria for advanced imaging services, telehealth, self-referral disclosure protocol, and more. More information on these provisions will be coming soon.

Continue reading "Major Stark Provisions in 2016 Proposed Medicare Physician Fee Schedule" »

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:

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May 11, 2015

Proposed Legislation Would change Michigan CRNA Supervision Requirements and Increase Access to Anesthesia Care

On May 7, 2015, Michigan Senator Mike Kowall (R-White Lake) introduced legislation that would allow hospitals more flexibility in determining the best anesthesia delivery model for their patient's needs. While certified registered nurse anesthetists ("CRNAs") provide the anesthesia care during most patient procedures - staying with the patient throughout the entire procedure - Michigan law still requires physician supervision of CRNAs. However, Michigan law does not even require the supervising physician to be an anesthesiologist or surgeon.

The proposed legislation would change this model and increase access to anesthesia care for Michigan patients in medically underserved rural and urban areas, while also containing anesthesia-related costs statewide. Under S.B. 320, Michigan hospitals could choose to keep the current physician-supervision model or move to a model that allows CRNAs to practice without mandatory physician supervision. If enacted, Michigan would join 40 other states that do not require physician supervision for CRNAs to administer anesthesia. The bill is currently in the Michigan Senate awaiting testimony before the Senate Health Policy Committee. More information on S.B. 320 may be found on the Michigan Legislature's website, available here.

Continue reading "Proposed Legislation Would change Michigan CRNA Supervision Requirements and Increase Access to Anesthesia Care" »

June 20, 2014

HHS Proposed Rules Would Expand Authority to Exclude Providers and Impose Monetary Penalties

On May 9 and May 12, 2014, the United States Department of Health and Human Services ("HHS") published two proposed rules that would significantly expand the authority of the Office of Inspector General ("OIG") to exclude providers from participation in federal health care payor programs and impose civil monetary penalties. The proposed rules are authorized pursuant to the Affordable Care Act of 2010 ("ACA") as the ACA expanded the authority of OIG to protect federal health care programs from fraud and abuse.

The May 9, 2014 proposed rule would expand the OIG's current powers to include permissive exclusion where an individual or entity is convicted of an offense that involves obstruction of an audit. Currently, the OIG's exclusion authority only extends to convictions for obstructing an investigation into any criminal offense described under the mandatory exclusion authorities and certain permissive exclusion authorities.

In addition, the May 9, 2014 proposed rule would expand the OIG's permissive exclusion authority regarding the failure to provide certain payment information. The OIG currently has authority to exclude only entities and individuals who directly provide services and fail to provide required payment information for those services. The proposed rule would expand this authority to include not only the individual or entity directly providing the services, but also any individual or entity ordering, referring, or certifying the need for such services.

The May 9, 2014 proposed rule also adds new exclusion authority for instances where an individual or entity knowingly makes, or causes to be made, a false statement, omission, or misrepresentation of a material fact in any application or contract to participate as a provider in a federal health care program.

HHS also proposes to remove the six-year statute of limitations for exclusions. This means that, under the proposed rule, an individual or entity could be subject to exclusion for actions that occurred at any time, including several years after any alleged wrongdoing has ended or been corrected.

Under the May 14, 2014 proposed rule, the OIG would be granted expanded authority to impose civil monetary penalties on providers and suppliers of federal healthcare. The proposed rule would allow a $10,000 per day penalty on providers and suppliers who fail to timely report and return an identified overpayment. The proposed rule also seeks to add a $15,000 per day penalty for failing to grant timely access to records. False statements, omissions, or misrepresentations of a material fact in any application, bid, or contract to participate or enroll as a provider under a federal health care program would be punishable with a fine up to $50,000 under the proposed rule.

Moreover, the May 14, 2014 proposed rule would also expand existing monetary penalties for arranging or contracting for the provision of services with an excluded individual or entity. A penalty of up to $10,000 is possible under the proposed rule for each separately billable item or service provided, furnished, ordered, or prescribed by an excluded individual, plus an assessment of not more than three times the amount billed for the item or service. If an item or service is not separately billable, the OIG will determine the penalty based on the number of days the excluded person was employed or contracted, and the person's total compensation.

The May 9, 2014 proposed rule can be viewed here. The May 12, 2014 proposed rule can be viewed here. Both proposed rules are open to public comment. The deadline for public comments for the May 9, 2014 proposed rule is July 8, 2014. The deadline for the May 12 2014 proposed rule is July 11, 2014. Public comments can be submitted online at

Continue reading "HHS Proposed Rules Would Expand Authority to Exclude Providers and Impose Monetary Penalties" »

May 21, 2014

CMS Considering Potential Alternatives to "Two-Midnight Rule"

On May 19, 2014, Centers for Medicare and Medicaid Services ("CMS") announced that it is considering new ways to define and pay for hospital short-stays. In October 2013, CMS implemented the "Two-Midnight Rule" with the goal of bringing clarity to billing for Part A inpatient hospital admissions. However, the Rule has been faced with ongoing criticism and significant pushback from hospitals.

The Two-Midnight Rule was intended to provide clear guidelines regarding when hospitals should bill for inpatient versus outpatient services, such as observation. The rule provides that at the time of admission, the admitting physician must document an expectation that a patient receive 2 midnights or more of hospital care. The medical record must contain sufficient information to support this expectation as a condition of payment. Dr. Ann Sheehy testified at the House Health Subcommittee May 20, 2014 that the rule "does not distinguish between clinical populations because it is a time based policy with no basis in sound clinical judgment."

The distinction between inpatient and outpatient hospital services can significantly impact how much Medicare pays a hospital for the services it provides to beneficiaries. In fact, Medicare has historically paid nearly 3 times more for a short inpatient stay than an observation stay on average. The House Health Subcommittee heard testimony from HHS Regional Inspector General Jodi Nudelman that differing payment rates have resulted in some hospitals admitting short-stay inpatients more than others. In fact, she testified that some hospitals attribute over 70% of their inpatient stays to short stay admissions while others admit short-stay inpatients less than 10% of the time.

Growing confusion surrounding the rule and potential unintended consequences have made it clear that the Two Midnight Rule must be carefully reevaluated. Now CMS is considering new alternatives and is seeking comments on an alternate pay system. According to CMS Deputy Administrator, Sean Cavanaugh, one potential alternative could be modeled after the per-day payment system that is already used for patients who transfer from one hospital to another during an episode of care. Additionally, CMS is soliciting comments on whether reimbursement rates for specific inpatient services should be capped at the outpatient rate for the equivalent service.

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May 21, 2014

2014 PEPPER Guidelines add Target Areas to Identify Improper Billing for Short Stays May 19, 2014

The Program for Evaluating Payment Patterns Electronic Report ("PEPPER") is an electronic data report under contract with the Centers for Medicare & Medicaid Services ("CMS") that helps guide hospital's auditing and monitoring services.

In 2014, PEPPER published new target areas for Short-Term Acute Care hospitals that were identified as prone to improper Medicare payments. Significantly, 6 new target areas related to patient "status" were established (i.e., to determine whether a beneficiary was appropriately admitted as an "inpatient"). Of note, while 4 of these target areas focus on hospital stays that did not cross 2 midnights, two of the target areas focus on 2 day hospital stays. Thus, it is clear that even if a hospital stay crosses 2 midnights, hospitals will be called upon to establish that the hospitalization itself was medically necessary.

Although the Recovery Auditors (i.e., "RACs") presently are prohibited from conducting patient status reviews, Medicare Administrative Contractors ("MACs") have been tasked to conduct "Probe and Educate" medical reviews, for the purposes of determining whether CMS' new 2 midnight rule was satisfied.

Continue reading "2014 PEPPER Guidelines add Target Areas to Identify Improper Billing for Short Stays May 19, 2014" »

May 16, 2014

90 Individuals Charged with $260 Million False Medicare Billings in National Takedown by Medicare Fraud Strike Force

On Tuesday, May 13, 2014, the Department of Justice ("DOJ") and Department of Health and Human Services ("DHHS") held a joint news conference to announce that the Medicare Fraud Strike Force had conducted a nationwide takedown of 90 individuals involving approximately $260 million in fraudulent Medicare billings. The nationwide takedown marked the seventh such takedown in Medicare Fraud Strike Force history. Since the Strike Force's inception in March 2007, operations in nine locations have charged nearly 1,900 defendants and include allegations of falsely Medicare billings of almost $6 billion. Additionally, CMS, working in conjunction with the DHHS Office of Inspector General, has suspended the enrollments of high-risk providers in five Strike force locations and has removed over 17,000 providers from the Medicare program since 2011.

The Medicare Fraud Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing. Almost 400 law enforcement agents from the FBI, HHS-OIG, multiple Medicaid Fraud Control Units and other federal, state and local law enforcement agencies participated in the takedown.

The recent takedown involved six locations, including Miami, Tampa, Houston, Detroit, Los Angeles, and New York. The charges included allegations that the defendants committed various health care fraud-related crimes, including conspiracy to commit health care fraud, violations of the anti-kickback statute and money laundering. The charges are based on a variety of alleged fraud schemes involving various medical treatments and services, including home health care, mental health services, psychotherapy, physical and occupational therapy, durable medical equipment and pharmacy fraud. Of the 90 individuals charged, 27 were health care professionals, including 16 physicians.

Continue reading "90 Individuals Charged with $260 Million False Medicare Billings in National Takedown by Medicare Fraud Strike Force" »

May 16, 2014

GCI Federal, Inc. Issues Suit against HHS Regarding New RAC Contracts

In December of 2013, the Centers for Medicare & Medicaid Services (CMS) issued a Request for Quotes for new Recovery Auditor (RAC) contracts. The new contracts include significant changes to payment terms. Whereas the current contracts allow payment to RACs after the first level of appeal has been exhausted (120 days), the new contracts do not allow payment until after the second level of appeal has been exhausted (120 - over 400 days).

In opposition of the modification on payment terms, CGI Federal, Inc., the Region B Recovery Auditor, submitted pre-award protests to the federal Government Accountability Office (GAO) asking for a change to the new payment terms. The GAO denied the protests on April 23, 2014.

On May 1, 2014, CGI elevated its case to the Court of Federal Claims. The suit requested the Court to order an injunction against the US Department of Health and Human Services' (HHS) implementation of the new RAC contracts and remove the delay in compensation. GCI argues that the new payment terms are inconsistent with customary commercial practices and unfairly restrict competition for the contract, rendering it "commercially impracticable" for CGI to submit a quote.

The first hearing is scheduled for June 6, 2014. The judge will grant an injunction if he or she determines that irreparable harm would be done if the contracts are awarded. If the judge does not grant injunctive relief, CGI may still proceed with its case. The A/B contract awards were expected in May or June, but could be delayed as a result of the suit.

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May 9, 2014

New York Presbyterian Hospital & Columbia University Pay $4.8 Million to Settle Alleged HIPAA Violations

On May 7, 2014, the Department of Health and Human Services ("HHS"), New York-Presbyterian Hospital ("NYP") and Columbia University ("CU") agreed to collectively pay $4.8 million to settle charges of alleged violations of the HIPAA Privacy and Security Rule marking the largest HIPAA settlement to date.

OCR initiated an investigation of NYP and CU after receiving a joint breach report in September 2010 regarding the disclosure of the electronic protected health information ("ePHI") of 6,800 individuals. Due to a lack of technical safeguards, protected health information including patient status, vital signs, medications, and laboratory results were made publically accessible using Internet search engines.

At the close of the investigation, OCR determined that neither NYP nor CU had conducted an accurate and thorough risk analysis or developed an adequate risk management pan. OCR further determined that NYP failed to implement appropriate policies and procedures for authorizing access to its databases and failed to comply with its own policies on information access management.

In addition the $4.8 million settlement (NYP to pay $3.3 million and CU to pay $1.5 million), both parties will also be required to implement a substantive corrective action plan to correct deficiencies in their HIPAA compliance programs including:

• Undertaking a thorough risk analysis;
• Developing and implementing a risk management plan;
• Reviewing and revising policies and procedures on information access management and device and media controls;
• Training staff that have access to ePHI; and
• Providing progress reports

Notably, this settlement highlights the significance of conducting routine risk and vulnerability assessments, having adequate written policies in place, and conducting workforce training on HIPAA privacy and security policies. It is imperative that all covered entities and business associates proactively review the mandatory requirements under HIPAA and carefully evaluate and monitor to compliance.

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April 9, 2014

NYS Final Budget Out of Network Reform

The final budget bill was recently passed in New York State containing several provisions for Out-of-Network ("OON") reforms. The major changes related to OON reform include: 1) transparency provisions requiring the reestablishment of "usual, customary and reasonable" or "UCR" charges to determine reimbursement rates; 2) adding protections allowing patients to go OON for specialty care; 3) requiring insurers to "make available" OON options reimbursed at 80% UCR; 4) creating a new independent dispute resolution ("IDR") process to resolve disputed claims between insurers and providers; and 5) formation of an OON reimbursement rate workgroup to analyze the effect of the reforms. These reforms not only ensure greater patient choice and access to care, but help protect physician practices that have, for decades, struggled to be adequately reimbursed by insurers for legitimate services provided to patients OON. The following is a brief synopsis of each reform:

Reestablishment of UCR:
Beginning in 2015, insurers must be transparent in regards to their rates of reimbursement for services as a percentage of UCR. UCR will be reestablished and defined as "the 80th percentile of all charges for the particular service in the same or similar specialty and same geographic area as reported in the benchmarking database maintained by FAIR Health."

Increasing OON Access and Coverage: Protections have been added, allowing patients to seek OON physicians when their network does not have providers with proper training and expertise for their treatment. Patients will have the option to purchase UCR-based OON products and may request such options from companies that issue comprehensive policies in the group market that cover OON. Such companies must "make available" at least one option for at least 80% of UCR. If no OON coverage option is available in a particular region in New York State, the Superintendent of the Department of Financial Services ("Superintendent") may require insurers selling in the group market of that region to "make available" a similar option.

Independent Dispute Resolution Process (IDR):
Greater consumer protections will be enacted against "surprise medical bills." An additional "hold harmless" protection will be in place for consumers who receive care from an OON provider as a result of an emergency situation or through no fault of their own and without notice. Instead, insurers and providers will be allowed to utilize the new IDR process to dispute claims. Rulings through IDR are required to be issued within 30 days of receipt of the request for dispute, ensuring expeditious resolution for providers. To determine a reasonable fee, the IDR entity will consider factors including:

• The physician's usual charges for the same or similar services;
• Fees paid by the insurer to reimburse similarly qualified OON physicians for the same services;
• Level of training, education and experience of the physician;
• Circumstances and complexity of the particular case, including time and place of the service; individual patient characteristics; and
• The usual and customary cost of the service.

OON Reimbursement Rate Workgroup:
A workgroup will be formed, aimed at improving access and adequacy of OON services and coverage options. Consisting of two physicians, two insurance representatives, and three consumers and co-chaired by the Superintendent and the Commission of the Department of Health, the workgroup will produce a findings report by January 1, 2016. The workgroup will review and make recommendations regarding the following:

• Current OON reimbursement rates used by insurers and FAIR Health's rate methodology;
• Availability and adequacy of the OON coverage in individual and small group markets in every region; and
• Prevalence of coverage based on UCR or other reimbursement methodologies, such as Medicare.

Continue reading "NYS Final Budget Out of Network Reform" »

April 8, 2014

CMS Establishing a Hospice Quality Reporting Program

The Centers for Medicare & Medicaid Services ("CMS") announced in a Federal Register notice that it is creating a new data-collection program for hospice quality reporting called the Hospice Item Set ("HIS") System.

The HIS System, which is mandated under Section 3004(c) of the Patient Protection and Affordable Care Act of 2010 ("ACA"), establishes a new system of records for patient-level data collection. CMS states that the data will confirm whether the appropriate assessments were made, and whether inquiries and concerns were addressed, for each hospice patient. The data CMS plans to collect for each patient includes:

• Pain,
• Respiratory status,
• Medications,
• Patient preferences, and
• Beliefs and values.

Under the program, which hospices must begin using by July 1, 2014, hospices will submit information to the system at the time of admission (and at the time of discharge if a patient does not die).

CMS plans to use strict time limits regarding submission of the information. Hospices must complete admission forms within 14 days of entry, and where applicable, complete discharge forms within 7 days of discharge. The forms must be submitted to the CMS system within 30 days of admission or discharge. Failure to timely report the information could result in cuts to CMS reimbursements.

Notably, under the new information system, information will be collected on all hospice patients, not just patients who are Medicare beneficiaries.

The hospice quality reporting program announcement can be viewed here.

Continue reading "CMS Establishing a Hospice Quality Reporting Program" »