Health Law Attorney Blog

On May 13, 2013, the American Orthotic and Prosthetic Association ("AOPA") filed suit in the federal district court for the District of Columbia against the Centers for Medicare and Medicaid ("CMS"), alleging that payment denials by CMS and its Recovery Audit Contractors ("RAC") are invalid. The lawsuit states that CMS rules call for denial of payment for a prosthetic device if specific documentation from the prescribing physician is not obtained by the supplier of the prosthetic device, despite the fact that other documentation shows that the device is medically necessary.

The complaint alleges that new standards issued on CMS' contractor websites in a "Dear Physician" format are void because they did not go through the rulemaking process with a public notice and comment period. The complaint also argues that CMS changed its standard - where before records of prosthetists (deemed professionals) were accepted to show medical necessity with the same deference given as that afforded to other medical records, including physician records. Further, the complaint alleges that the posting of the "Dear Physician" Letter and subsequent enforcement of it is arbitrary and capricious. Additionally, the AOPA expresses frustration with CMS' inaction and lack of enforcement against physicians who do not provide prosthetists with the required documentation. In essence, the complaint argues, the physician has no skin in the game as no incentive exists for him to provide appropriate documentation.

The full complaint can be found here.

Continue reading "American Orthotic and Prosthetic Association Files Lawsuit Alleging Unlawful Changes in Medicare Standards Resulting in Unfair RAC/Prepayment Audits" »

On April 30, 2013, the Department of Health and Human Services ("HHS") Office for Civil Rights ("OCR") announced the availability of new tools to educate health care providers and consumers about the Health Insurance Portability and Accountability Act ("HIPAA") Privacy and Security Rules. Specifically for health care providers, three HIPAA education modules (offering free CME credits) have been made available with a free account through Medscape. These include:

• Patient Privacy: A Guide for Providers
• HIPAA and You: Building a Culture of Compliance
• Examining Compliance with the HIPAA Privacy Rule

The OCR has also produced a video, entitled "HIPAA Security Rule", designed for providers in small practices. Additional videos and materials related to consumer education about HIPAA are available through the OCR's YouTube site and the OCR Consumer Guidance website.

Continue reading "OCR Releases HIPAA Privacy and Security Education Tools" »

The state of Michigan joined more than two dozen states in passing legislation to permit reporting of unsafe drivers by healthcare providers. Pursuant to Michigan Public Acts 354 and 355 of 2012, signed into law in late December of 2012, physicians and optometrists may now report information regarding a patient's mental or physical qualifications to operate a motor vehicle to the Secretary of State. The new law, codified at MCL 333.5139 (and correlating with MCL 257.362 which includes Michigan driver's license qualifications), is summarized below.

Episodes Affecting Safe Motor Vehicle Operation

The purpose of the law is to allow for reporting of a patient's mental or physical qualifications that may affect his/her ability to safely operate a motor vehicle. Specifically, the report should specify an "episode" that affects a patient's mental or physical qualifications to operate a vehicle. An episode includes:

o A condition causing or contributing to loss of consciousness, blackout, seizure, fainting spell, syncope, or other impairment of level of consciousness;
o An experience causing impairment of an individual's driving judgment; and
o Impairment of vision.

No Affirmative Obligation to Report or Warn

Physicians and optometrists have no affirmative obligation to report or warn under the statute. All reporting is voluntary. Physicians and optometrists who choose not to report under this statute are specifically immune from any criminal or civil liability to the patient or a third party injured by the patient's actions. The same immunity applies to any report under the statute made to the secretary of state.

Reporting and Minimum Recommendations

Reports made to the secretary of state may be made for the purpose of initiating or contributing to an examination of a patient's mental or physical qualifications to drive. In the report the physician or optometrist must recommend a period of suspension of at least 6 months (12 months for a commercial license). Thus, a reporter should consider whether the medical condition or "episode" underlying the report merits a suspension of at least 6 months because any report submitted under the statute must recommend at least a 6 month suspension.

Privacy Considerations

Public Act 355 explicitly states that reports submitted to the secretary of state are confidential. For purposes of reporting under this statute, regulations promulgated under the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") permit such disclosure if the reporter believes in good faith that the disclosure is necessary to prevent or lessen a serious and imminent threat to the health and safety of a person or the public and the disclosure is to a person or persons reasonably able to prevent or lessen the threat. See 45 CFR 164.512(f).

Note that the statute allows for reporting to the secretary of state and warning third parties. While reporting to the secretary of state seems to fit within the permitted disclosure for a threat to health or safety, a physician or optometrist should ensure prior to disclosing protected health information to third parties under the Michigan statute that such a disclosure complies with HIPAA as well.

Continue reading "New Michigan Law Permits Reporting of Unsafe Drivers by Physicians and Optometrists" »

The Department of Health and Human Services Office of Inspector General ("OIG") issued an Updated Provider Self-Disclosure Protocol ("SDP") on April 17, 2013 which supersedes the original SDP published in 1998 and three later-released open letters that provided additional guidance. The SDP clarifies that it is only available for "all health care providers, suppliers, or other individuals or entities who are subject to OIG's Civil Monetary Penalties ("CMP"). The notable exclusion is violation of the Physician Self-Referral Law (a.k.a. "Stark Law") - self-disclosure of Stark Law violations can instead be disclosed through a similar Self-Referral Disclosure Protocol through the Centers for Medicare and Medicaid Services ("CMS"). The OIG also notes that the self-disclosure process is not an alternative means for seeking an OIG opinion regarding whether an actual or potential violation has occurred.

Importantly, because good faith disclosure of potential fraud through the SDP is a sign of a "robust and effective compliance program," the OIG has instituted a presumption against requiring integrity agreement obligations in exchange for a release of the OIG's permissive exclusion authorities.

When the SDP is used, the disclosing party must agree to waive pleading of statute of limitations, laches, and other similar defenses, so as not to simply use the self-disclosure process as a device to delay OIG investigation past the statute of limitations. The disclosing party must also ensure that corrective action is taken to resolve any impropriety. The SDP outlines 11 core requirements for all disclosures and then sets out specific subsets of requirements for false billing disclosures, conduct involving excluded persons, and conduct involving the Anti-Kickback Statute or Stark Law.

The SDP states that self-disclosing parties should expect to repay more than single damages, and that the OIG's general practice is 1.5 times single damages. A minimum $50,000 settlement is required for any case accepted into the SDP. If a self-disclosing party does not believe it can afford the penalties, it must disclose pertinent financial information to support its belief.

The full Updated OIG's Provider Self-Disclosure Protocol is available here. In addition, the OIG updated its SDP training video and issued a new podcast explaining the changes. These are available through the OIG website.

Continue reading "UPDATE TO OIG's PROVIDER SELF-DISCLOSURE PROTOCOL" »

On April 25, 2013, the Centers for Medicare and Medicaid ("CMS") announced the release of additional information for states on implementation of the Affordable Care Act ("ACA"), part of a series of FAQs addressing the subject. The new FAQ provides information on three topics:

1. The availability of the federal match (75%) for maintenance and operations, and conditions for receiving funding;

2. Issues regarding communication between Medicaid and the "Federally-facilitated Marketplace", including eligibility decisions, and enrollment registers; and

3. Section 1115 demonstrations guidance.
The FAQ, as well as previously released FAQs in the series are available here.

Continue reading "CMS Announces Release of Additional FAQs Regarding the State Implementation of the ACA" »

On Thursday, April 25, 2013, the Centers for Medicare and Medicaid Services announced that it would delay implementing Phase 2 of its Ordering and Referring Physician Claims Editing program due to technical difficulties. CMS has delayed implementing phase 2 of the program before and it is unclear when it will resolve the technical issues.

The Ordering and Referring Provider program is designed to ensure that claims from Laboratories; Imaging Centers; Durable Medical Equipment, Prosthetics, and Orthotics Suppliers ("DMEPOS"); and Home Health Agencies were appropriately referred or ordered by an eligible provider. Once Phase 2 is implemented, claims from the providers and suppliers listed above will be reviewed to ensure that they include:

1. The name and National Provider Identifier ("NPI") of a referring physician/non-physician provider;
2. That the referring/ordering provider is registered with the Internet-based Provider Enrolment, Chain and Ownership System ("PECOS"); and
3. That the ordering/referring provider is eligible to refer/order the supplies or service at issue in the claim.

If a claim does not meet the requirements, the claim will be denied.

As a result of the announced delay in Phase 2 implementation, CMS has instructed its Contractors to continue providing educational edits to inform providers/suppliers when a claim lacks the appropriate information or when the referring/ordering provider is not eligible to order/refer that particular service or supply.

This delay in implementation is a good time for referring and ordering providers to verify that they are properly enrolled in PECOS, and, likewise, for the entities listed above to review their billing practices to ensure they are capturing the required information from the referring and/or ordering providers.

The Health Law Partners will continue to monitor CMS for updates on Phase 2 implementation and will provide an update in this blog.

Continue reading "CMS Announces Delay to PECOS Phase 2 Ordering or Referring Provider Denial Edits" »

On Thursday, April 11, 2013, the Obama Administration released its Budget Request for Fiscal Year 2014 ("FY 2014") that begins at the beginning of October. If implemented, the Budget Proposal would include approximately $1.8 trillion in savings over the next ten years, enough to replace the automatic sequestration that took effect last month and was imposed as part of the Budget Control Act of 2011.

To achieve these savings, the Administration's Budget Request includes nearly $401 billion in Healthcare reductions that would likely affect all providers. While it is nearly impossible that the budget will pass Congress, some of the proposals are likely to make it into law in one form or another.

One of the numerous proposals from the Centers for Medicare and Medicaid Services ("CMS") is beginning in 2015, to exclude radiation therapy, outpatient therapy, and advanced imaging services from the Stark Law's exception for In-Office Ancillary Services ("IOAS") except in cases where a practice meets certain accountability standards, as defined by the Secretary. The IOAS exception to the Stark Law's prohibition on physician self-referrals was intended to allow physicians to provide beneficiaries with certain services that were a natural extension of their core practices and to lawfully bill for such services; however, CMS takes the position that radiation therapy, outpatient therapy, and advanced imaging services, in a significant number of cases, do not fit within the rationale underlying the IOAS exception insofar as they are "rarely performed on the same day as the related office visit." In addition, CMS cites evidence suggesting that allowing these services to fit the IOAS exception has led to overutilization and rapid growth of these services. By excluding the services from the exception, CMS believes that the government will save nearly $6.1 billion over the next 10 years.

CMS has also proposed to begin requiring prior authorization for advanced imaging services on the theory that the rapid growth in the number and intensity of services in the last decade is the result of inappropriate use of the services. In its summary of the proposal, CMS notes that this proposal would bring the program in line with private payers, which typically require prior authorization. Furthermore, the proposal satisfies a request from the Government Accountability Office ("GAO") that CMS implement prior authorizations or attempt other methods to limit growth in spending for advanced imaging services. However, at this time, CMS does not believe this will have an effect on the budget.

Continue reading "Obama Administration Budget Request for Fiscal Year 2014 Proposal Would Exclude Certain Services from the In-Office Ancillary Services Exception to Stark and Require Prior Authorization for Advanced Imaging Services" »

Jessica Gustafson, Esq. and Abby Pendleton, Esq., co-chairs of the firm's Medicare and RAC department authored an ABA Health eSource article titled "CMS Acquiesces to Hospital Pressure, Allows Part B Billing of Hospital Services Following Part A Denial of Inpatient Hospital Claims for Medical Necessity: Is It Enough?" To view this article click here.

Continue reading "CMS Acquiesces to Hospital Pressure, Allows Part B Billing of Hospital Services Following Part A Denial of Inpatient Hospital Claims for Medical Necessity: Is It Enough?" »

On March 26, 2013, the Office of Inspector General ("OIG") of the United States Department of Health and Human Services ("HHS") issued a Special Fraud Alert ("SFA") regarding the potential for Physician-Owned Distributorships ("PODs") to violate the federal Anti-Kickback Statute ("AKS"). While the OIG has provided guidance previously on the potential for physician-owned entities to create AKS and other fraud and abuse issues, this SFA focuses on the "specific attributes of PODs" that the OIG believes makes these entities "inherently suspect under the anti-kickback statute. With the increase in prevalence of these types of entities, this is an important development that has even piqued the interest of the Wall Street Journal.

At the heart of the OIG's new SFA is the agency's belief that any "opportunity for a referring physician to earn a profit" could be unlawful remuneration under the AKS. Previously, the OIG's has highlighted a number of questionable features for physician-owned entities, such as:

1. Selecting investors for their potential to generate business;
2. Requiring investors that retire or move from the service area to divest their ownership; and
3. Distributing outsized returns compared to the level of risk in the investment.

In particular, the OIG believes that physician-owned entities, particularly PODs, with these features may lead to issues including:

• Corruption of medical judgment;
• Overutilization;
• Increased costs to Federal and State Medical Programs; and
• Unfair competition.

In this new SFA, the OIG, recognizing that whether an entity is lawful under the AKS is dependent on the intent of the parties involved, includes a number of features that the agency believes provide evidence of the intent to induce illegal remuneration.

• The size of the investment offered to each physician varies with the expected or actual volume or value of devices used by the physician.
• Distributions are not made in proportion to ownership interest, or physician-owners pay different prices for their ownership interests, because of the expected or actual volume or value of devices used by the physicians.
• Physician-owners condition their referrals to hospitals or ASCs on their purchase of the POD's devices through coercion or promises, for example, by stating or implying they will perform surgeries or refer patients elsewhere if a hospital or an ASC does not purchase devices from the POD, by promising or implying they will move surgeries to the hospital or ASC if it purchases devices from the POD, or by requiring a hospital or an ASC to enter into an exclusive purchase arrangement with the POD.
• Physician-owners are required, pressured, or actively encouraged to refer, recommend, or arrange for the purchase of the devices sold by the POD or, conversely, are threatened with, or experience, negative repercussions (e.g., decreased distributions, required divestiture) for failing to use the POD's devices for their patients.
• The POD retains the right to repurchase a physician-owner's interest for the physician's failure or inability (through relocation, retirement, or otherwise) to refer, recommend, or arrange for the purchase of the POD's devices.
• The POD is a shell entity that does not conduct appropriate product evaluations, maintain or manage sufficient inventory in its own facility, or employ or otherwise contract with personnel necessary for operations.
• The POD does not maintain continuous oversight of all distribution functions.
• When a hospital or an ASC requires physicians to disclose conflicts of interest, the POD's physician-owners either fail to inform the hospital or ASC of, or actively conceal through misrepresentations, their ownership interest in the POD.

While the OIG considers the factors above evidence of intent, the agency does not consider the list a "blueprint for how to structure a lawful POD" and other PODs without these characteristics may violate the AKS. In particular, the OIG mentions concerns with PODs that:

• Exclusively serve its physician-owners rather than a POD that also sells to Ambulatory Surgical Centers ("ASCs") and Hospitals and
• Purport to designs and sell their own devices, particularly when the physician-owners are the sole users of the device.
Because both sides of a transaction are liable for violations of the AKS, the SFA indicates Hospitals and ASCs that have arrangements with PODs to provide devices are also at risk if one purpose of the arrangement is to secure physician referrals to the facilities.

Following OIG's release of this SFA, the Physician-owners, managers, and partners of existing PODs, as well as individuals and/or entities considering forming a new POD, should contact their legal counsel to begin to examine the structure of their entities in order to, at minimum, ensure the entities do not include any of the features the OIG highlight above. Likewise, hospitals and ASCs should examine agreements with PODs to ensure they are not structured to generate referrals from the physician-owners.

Continue reading "HHS Office of Inspector General Issues Special Fraud Alert Regarding Physician Owned Distributorships" »

On March 8, 2013, the Centers for Medicare and Medicaid Services ("CMS") issued Transmittal 2668 (Change Request 8180) to Publication 100-04 (Medicare Claims Processing), rescinding and replacing Transmittal 2634 (January 11, 2013). Transmittal 2634 provided clarifications in the manual language to reflect revisions to 42 C.F.R. § 410.69. The newly-released Transmittal 2668 maintained all changes made by Transmittal 2634, but deleted two inadvertently retained sections: 140.1.1 and 140.1.2.

42 C.F.R. § 410.69, which went into effect January 1, 2013, defines and sets forth the requirements for certified registered nurse anesthetists ("CRNAs") and anesthesiologist's assistants ("AAs"). § 410.69 defines "Anesthesia and related care" as "those services that a certified registered nurse anesthetist is legally authorized to perform in the state in which the services are furnished." An "Anesthetist" encompasses both CRNAs and AAs.

Transmittal 2634 amended Chapter 12 Section 140 and its subsections as follows:

• Defined "Anesthetist" consistent with 42 C.F.R. § 410.69, including CRNAs and AAs
• Added "nonphysician" as clarification to the term anesthetist
• Removed the applicable CRNA conversion factor from the calculation of the anesthesia services fee schedule for services on or after January 1, 1996 (i.e. after that date, the applicable CRNA conversion factor is no longer used in determining the fee schedule)
• Added "reasonable and necessary" to the medical or surgical services performed by CRNAs which will be paid for by CMS

Transmittal 2668 replaced Transmittal 2634, keeping all changes, but removing Sections 140.1.1 and 140.1.2, which were inadvertently retained by Transmittal 2634. These sections related to notifications/verifications of certification and renewal of certification of CRNAs and AAs by and between CMS, employers of CRNAs/AAs, and carriers. All other changes made by 2634 were retained by 2668.

Continue reading "CMS Updates Manual Regarding Payment for Medical or Surgical Services Furnished by CRNAs" »

The Department of Health and Human Services ("HHS" or the "Department") has marginally raised the interest rate on overpayment debts owed to the Department. HHS published notice of the newly certified interest rate for the quarter ended December 31, 2012 in the Federal Register on March 5, 2013. The new rate, 105/8%, represents a ¼% increase from the previous quarter, ending September 30, 2012. 45 C.F.R. §30.18 directs HHS to charge a rate of interest as determined and fixed by the Secretary of the Treasury, but allows for variation by statute, contract, or repayment agreement. The rate applied by HHS tends to trail the Treasury rate from the previous quarter. Notably, 42 C.F.R. § 405.378, which governs interest charges also imposes the same interest rate on underpayments owed to providers. CMS Transmittal 217 (Change Request 8201) to Publication 100-06, published January 11, 2013) applies the same 105/8% rate to underpayments as well as overpayments, effective January 17, 2013.

Continue reading "HHS Slightly Increases Interest Rate on Overpayment Debts/Underpayments Owed Providers" »

Abby Pendleton, Esq. will be co-speaking with Jack Bert, M.D. and Ranjan Sachdev, M.D. MBA, CHC on March 19, 2013 at the American Academy of Orthopaedic Surgeons Annual Meeting in Chicago. They will be presenting on the topic "Compliance 2013- What You Need to Know".

Continue reading "Abby Pendleton, Esq to Speak at The American Academy of Orthopaedic Surgeons Annual Meeting" »

To view this article, please click here.

Continue reading " Highlights From Leon Rodriguez, Executive Director of OCR's, Speech at ABA's EMI Conference in Miami" »

On February 19, 2013, the Department of Health and Human Services ("HHS") Office of Inspector General ("OIG") published OIG Report A-05-11-00071 (the "Report"), detailing the results of an audit to determine the adequacy of CMS' collection of Medicaid overpayments identified in certain OIG audit reports.

Under federal regulations (specifically 42 C.F.R. § 433.304), the Secretary of HHS is required to recover the federal share of any Medicaid overpayment from the responsible state - this responsibility has been delegated to CMS. The process is as follows:

• The OIG performs audits of CMS' expenditures, in this case specifically CMS' Medicaid payments
• The OIG identifies overpayments made by CMS through the Medicaid program
• Audit results are reviewed by CMS and OIG. When an audit resolution is agreed upon, CMS then takes corrective action - in the case of overpayments, often by a refund from the state or (if necessary) a negative grant award - an offset against that state's quarterly Medicaid grant

OIG Report A-05-11-00071 focuses on 152 OIG audit reports issued to 11 states (selected for their high amounts of overpayments) between the years 2000 and 2009. Five of these, handled by the Department of Justice, were excluded. The remaining 147 reports recommended an aggregate refund of overpayments totaling $1,213,085,167. Specifically, the Report reviewed CMS' collection efforts on the 147 audit reports. The report found that CMS had collected $987,481,600 in overpayments, leaving $225,603,567 outstanding. The OIG noted this was because CMS had not pursued collection in a timely manner. Notably, the uncollected amount stemmed from 10 audit reports where the states involved did not agree to refund. The discrepancy also accounted for more than $7 million reported as collected, but without adequate supporting documentation by CMS.

In its Report, the OIG made specific recommendations that, in addition to collecting the remaining overpayment, CMS act more promptly on OIG audit recommendations and implementation of corrective actions. The Report also highlighted the need for CMS to maintain better supporting documentation of its collection of overpayments in accordance with the Office of Budget Management ("OMB") Circular A-50 and CMS Standard Operating Procedures. Finally, the Report recommended educating states on properly reporting and documenting overpayments to CMS. This would involve improvement in CMS oversight as well.

CMS concurred in large part to the recommendations of OIG Report A-05-11-00071. However, it noted that the reason for delay in the 10 outstanding audit reports was due to continued review by CMS, including consideration of additional information supplied by the states involved, review of OIG supporting documentation, and internal deliberation. The OIG responded by arguing that delays of 3 to 7 years after initially concurring with the OIG's recommendations were contrary to federal statutes, regulations, and circulars, as well as CMS' own policies, in requiring timely collection of overpayments.

Continue reading "OIG Report Discusses Inadequacy of CMS' Collection of Medicaid Overpayments" »

On February 1, 2013, 50-year-old Canton pharmacist, BABUBHAI "Bob" PATEL, was sentenced today to 17 years in prison for his 26 convictions for health care fraud conspiracy, drug conspiracy, and related fraud and drug violations. During his 6-week trial which ended in August 2012, Mr. Patel's pharmacies were found to have billed Medicare, Medicaid and BCBSM for drugs that were medically unnecessary and/or never dispensed. The pharmacies also engaged in the payment of kickbacks to physicians for writing prescriptions for expensive and often medically unnecessary drugs. Numerous other defendants charged in the original indictment have either pleaded guilty or been convicted at trial with a small number of physicians and pharmacists awaiting trial. In addition to incarceration, Mr. Patel was ordered to pay$17.3 million to Medicaid and Medicare and $1.5 million to BCBSM in restitution.

Continue reading "Michigan Pharmacist Sentenced to 17 years for Medicare Fraud" »