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In a speech at the American Bar Association’s Physician Legal Issues Conference on June 11, 2105, a representative from the Office of Inspector General (OIG) noted that the OIG is currently hiring attorneys to gear up to pursue claims against physicians under the OIG’s administrative penalty authorities. This means that the OIG will not wait for whistleblowers to pursue qui tam actions. Instead, the OIG will target physicians on its own. These comments come on the heels of the OIG issuing a Fraud Alert titled “Physician Compensation Arrangements May Result in Significant Liability. (For more information, visit our recent blog on this Fraud Alert, available here. Physicians should review their relationships with vendors and other entities to which they refer for compliance.

During the same speech, a representative of the U.S. Department of Justice offered practical guidance for physicians and their legal counsel. He discussed seven factors to consider when determining if these physician-vendor relationships are compliant. The seven factors include:

1) Physician Selection: How were the physicians selected by the vendor? Were they selected because of the physicians’ ability to refer patients to the vendor?
2) Purpose of the Relationship: Is the inducement of referrals one purpose of the relationship – even if there are other reasons for the relationship?
3) Referrals: What was the referral relationship between the physician and the vendor before, during and after the relationship? Does the physician track his or her referrals to the vendor? If so, why? Does the arrangement include consequences for a low volumes referrals or bonuses for a high volume of referrals?
4) Business Structure: Is the vendor a shell entity, is business actually transacted, does the entity even own equipment? What kind of capital contribution was made to get the entity up and running?
5) Compensation: Is the physician’s compensation fair-market value, does it vary with the volume or value of referrals, was it negotiated in an arm’s length transaction? If multiple physicians are involved, how is each physician compensated relative to the other physicians? If the compensation is not the same for all physicians but their responsibilities are the same, then why is, for example, Physician A being paid more than Physician B?
6) Capital Contribution and Risk: Is the physician’s investment nominal? Is the return on investment proportional to the ignition investment contribution? Is the physician’s level of risk proportionate?
7) Disclosure: Are patients informed of the relationship? Even within the joint venture itself, is everything transparent to the parties involved?
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On June 9, 2015, the Office of Inspector General (OIG) issued a Fraud Alert titled “Physician Compensation Arrangements May Result in Significant Liability,” which is available here. In the Fraud Alert, the OIG warns physicians of the dangers of entering into compensation arrangements with health care entities, such as medical directorships or office staff arrangements, that do not reflect fair-market value or are not for bona fide services that the physicians actually provide. These compensation arrangements will violate the Federal Anti-Kickback Statute and expose the physicians to civil monetary penalties if not properly structured. Additionally, the OIG reminds physicians that the Anti-Kickback Statute will be violated “if even one purpose of the arrangement is to compensate a physician for his or her past or future referrals of Federal health care program business.”

While the Fraud Alert does not include any guidance that has not been promulgated previously by the government, it does evidence the OIG’s intent to target physicians (as opposed to larger health care entities). In fact, the OIG references 12 recent settlements with physicians who entered into questionable medical directorship and office staff arrangements. In these cases, the OIG states that the medical directorship arrangements took into account the physicians’ referrals, did not reflect fair-market value and, in some cases, the physician did not even provide the medical directorship services contemplated under the arrangement. Some of the arrangements even involved the health care entity paying the salaries of the physicians’ office staff. Such arrangements are highly suspect and likely constitute a transfer of remuneration to the physician because the physicians are relieved of the financial burden of paying their employee salaries.

However, any medical directorship arrangements may be structured to comply with the Anti-Kickback Statute. In addition to structuring the arrangement to meet the fair-market value and bona fide services requirements, physicians can protect themselves by ensuring that there is an actual need for the services they are to provide and by documenting the performance of those services. In light of the recent government scrutiny on these arrangements, physicians should have their medical directorship agreements reviewed by healthcare compliance counsel.
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On June 9, 2015, the U.S. Department of Health and Human Services Office of Inspector General (OIG) issued a fraud alert warning physicians of significant liability for entering into medical directorships that are non-compliant with the federal Anti-Kickback Statute (AKS). Medical directorships must reflect fair market value for bona fide services that the physicians actually provide. The OIG warns that if one purpose of the arrangement is to compensate a physician for his or her past or future referrals of Federal health care program business such as Medicare or Medicaid patients then such arrangement could be deemed in violation of the AKS and therefore subject the parties to the arrangement to significant liabilities including but not limited to civil monetary penalties.
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As expected, the U.S. Department of Health and Human Services (“HHS“) officially set the ICD-10 compliance date for October 1, 2015. Previously, providers and payors had until October 1, 2014 to transition from the ICD-9 to the ICD-10 Procedure Coding System. However, the Protecting Access to Medicare Act of 2014 prevents HHS from adopting ICD-10 before October 1, 2015, and a final rule (here) published by HHS on August 4, 2014, set the official compliance date.

The one-year delay allows providers and payors additional time to prepare for the implementation of the costly ICD-10 coding system. The American Medical Association (“AMA“) reported, for example, that a small physician practice can expect to spend anywhere from $56,639 to $226,105 to prepare for ICD-10 implementation. While the AMA continues to urge regulators to ease this burden on providers, the compliance date has been set, and providers and payors must use this year to properly prepare for the transition in the hopes of minimizing cash-flow interruptions that could hinder the provision of patient care.
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In the recently released Federal Register, The Office of Inspector General (OIG) informed the public that that it intends to update the Provider Self-Disclosure Protocol (the Protocol) and is soliciting input. The Protocol, which was first introduced in 1998, is the process that health care providers can take in order to disclose potential fraud involving the Federal health care programs. The Protocol includes guidance on how to investigate this conduct, quantify damages, and report the conduct to the OIG. The OIG is soliciting any comments, recommendations, and other suggestions in order to provide guidance to the health care industry and to revise the current Protocol.
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The House and Senate passed a revised version of H.R. 3630, the Middle Class Tax Relief and Job Creation Act of 2012, which guarantees that physicians will avoid a 27.4 percent cut in Medicare reimbursement for an additional ten months. Instead of the schedule cuts which were expected to be enacted on March 1, physician payment rates will be frozen at their current level through December 31, 2012. In addition to addressing the latest cuts accredited to the flawed Sustainable Growth Rate (SGR) formula, the 20 members of Congress participating in the Conference Committee were tasked with developing a bill to extend unemployment insurance benefits and the payroll tax holiday. The total cost of the proposal is estimated at $150 billion with the “doc fix” portion of the legislation expected to cost approximately $18 billion.

Recognizing the key role Radiology plays in the health care delivery process, federal lawmakers did not include any cuts to diagnostic imaging services within H.R. 3630. Lawmakers ultimately settled on another, short-term SGR “patch” because the high cost of a permanently repealing the flawed formula is estimated to cost $319 billion.

Ultimately, the members of the Conference Committee chose to keep the scope of H.R. 3630 focused on preventing the SGR cuts, as well as extending unemployment insurance benefits and the payroll tax holiday. As a result, H.R. 3269, the Diagnostic Imaging Services Access Protection Act, was not added to the final legislation passed by the House and Senate on Friday, Feb. 17. Yet, H.R. 3269 and the effort to block the 25 percent multiple procedure payment reduction (MPPR) to the professional component (PC) of advanced diagnostic imaging services continues to gain tremendous momentum in the House of Representatives and now has generated 196 bipartisan cosponsors.

Continue reading more on SGR cuts…
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On February 7, 2012, The Centers for Medicare and Medicaid Services (CMS) released a Request for Comments regarding two demonstration programs it intends to conduct.

The first, the Recovery Audit Prepayment Review Demonstration, will allow CMS and its agents to request additional documentation, including medical records, to support submitted claims. In Chapter 3 of the Program Integrity Manual, additional documentation includes any medical documentation, beyond what is included on the face of the claim that supports the item or service billed. When a contractor conducts a complex medical review, they specify the documentation they require in accordance with Medicare’s rules and policies. This supporting information and documentation may be requested by CMS and its agents on a routine basis in instances where diagnoses on a claim do not clearly indicate medical necessity, or if there is suspicion of fraud.

The second, Prior Authorization of Power Mobility Devices (PMD) Demonstration, will allow the applicable documentation that supports a claim to be submitted prior to delivery of the item. Relevant documentation for review will be submitted before the item is delivered or services rendered. This demonstration will be conducted in California, Florida, Illinois, Michigan, New York, North Carolina and Texas. A prior authorization request can be completed by the ordering physician or treating practitioner and submitted to the appropriate Durable Medical Equipment Medical Administration Contractor (DME MAC) for initial decision. The supplier may also submit the request on behalf of the physician or treating practitioner. The “submitter” will submit to DME MAC a request for prior authorization and all relevant documentation to support Medicare coverage of the PMD item.
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WPS, the Legacy Part B Medicare Administrative Contractor for Illinois, Michigan, Wisconsin and Minnesota, has issued recent guidance regarding documentation of discard or waste for drugs and biologicals as well as missing information on the Medicare CMS-855 provider enrollment applications. Notably, WPS voices CMS’ direction that physicians, hospitals, and other providers “make good faith efforts to minimize the unused portion of a drug/biological product by ordering, scheduling, and storing in a manner in which the provider can use drugs/biologicals most efficiently in a clinically appropriate manner. Drug wastage or discard must be documented in the patient’s medical record with date, time, amount wasted, and reason for wastage.” CMS may deny an amount billed as non-rendered if there is a discrepancy between the amount administered and the amount billed, unless the waste is properly documented. Finally, the wasted amount must not be administered to another patient and, subsequently, re-billed.

In its other guidance, WPS indicates CMS is beginning to decrease its dependence on standard mail communication and, instead, is turning its efforts toward e-mail communication for the majority of instances for missing information on a CMS-855 provider enrollment application. CMS insists that contact persons listed on the 855 stay attentive to their e-mails and promptly respond to requests.
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With the onslaught of the new Patient Protection and Affordable Care Act (PPACA) provisions making it a false claim to retain known overpayments and the new CMS guidance on the newly-reinstated Voluntary Self-Referral Disclosure Protocol (SRDP), Wisconsin Physician Services (WPS)–the Medicare Part B Contractor for Illinois, Michigan, Wisconsin, and Minnesota–released its revised overpayment notification and voluntary refund forms. The forms are divided into Medicare Financial/Medicare Secondary Payer (MSP) and non-MSP. MSP forms are to be used when Medicare paid as the primary payor, but the records show that Medicare should have been the secondary payor due to Workers’ Compensation, VA, Disability, etc.

The Overpayment Notification forms (MSP/non-MSP) and the Refund forms (MSP/non-MSP) are each one-page forms. The Overpayment Notification forms are not used for sending in voluntary refunds; rather, they are merely notifications to WPS of overpayments and a request by the provider for the contractor to issue a formal demand letter to the provider for the overpayment amount. Once the overpayments have been processed and created and the provider has received the demand letter, the provider will have 30 days to refund the money without accruing interest. There are three methods in which a provider may refund the overpayment:

1. Withholding Payment – The provider has the option of having the overpayments withheld from future Medicare payments so long as the overpayment is more than $10. This option would be indicated on the Overpayment Notification form.

2. Immediate Offset – Providers have the option of filling out an Immediate Offset Request form to have the overpayments offset. WPS emphasizes that the offset does not eliminate interest payments when the accounts receivable is not offset in full within 30 days.

3. Issuing a Check – Providers that do not want payment withheld or their overpayments offset, they may send in a check to WPS for the overpayment.

For those providers that do not seek a formal demand letter prior to initiating a refund, they may submit the Refund form (MSP/non-MSP) with the check in accordance with the instructions set forth in the form.

For more information on the CMS SRDP, please visit the CMS SRDP page as well as our September 24, 2010 entry on the process of self disclosure. Please note: submitting an Overpayment Notification form or a Refund form does not constitute voluntary disclosure as provided in the SRDP.
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