HLP News and Events

Published on: October 21, 2015

Recent Increase in NCI ZPIC Audit Activity

In the last few weeks, we have seen a flurry of activity in Zone Program Integrity Contractor (“ZPIC”) audits for the Centers of Medicare and Medicaid Services (“CMS”). Recently, many providers – and home health agencies, in particular – have received ZPIC audit notifications from NCI, Inc. (“NCI”) In April 2015, CMS awarded NCI the ZPIC contract for Zone 3, which covers Illinois, Indiana, Kentucky, Michigan, Minnesota, Ohio and Wisconsin. NCI is charged with performing program integrity investigations, making coverage and coding determinations, implementing administrative actions, coordinating fraud and abuse mitigation activities, developing a list of entities requiring monitoring, and assisting in the investigation and prosecution of fraud and abuse cases.
Home health agencies are under major scrutiny, and it appears that NCI has turned its attention to combating fraud and abuse in the home health arena. Any providers and suppliers who have received a ZPIC audit notification should contact an experienced healthcare attorney to assist you with the process. The Health Law Partners are experienced in working with providers and suppliers through the ZPIC audit process. For more information, please contact Adrienne Dresevic, Esq., at adresevic@thehlp.com or (248) 996-8510.

Published on: August 31, 2015

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

By The Health Law Partners

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 →

Published on: August 25, 2015

Moratoria on Enrollment of Ambulance Suppliers and Home Health Agencies Extended

By The Health Law Partners

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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Published on: August 19, 2015

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

By The Health Law Partners

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.
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Published on: August 17, 2015

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

By The Health Law Partners

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.
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Published on: July 9, 2015

Major Stark Provisions in 2016 Proposed Medicare Physician Fee Schedule

By The Health Law Partners

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.
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Published on: July 9, 2015

OCR Announces Consolidation of Kansas City and Chicago Branches

By The Health Law Partners

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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Published on: May 11, 2015

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

By The Health Law Partners

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.

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Published on: June 20, 2014

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

By The Health Law Partners

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 http://www.regulations.gov.
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Published on: May 21, 2014

CMS Considering Potential Alternatives to “Two-Midnight Rule”

By The Health Law Partners

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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