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Following a lengthy dispute process and significant delays, on October 31, 2016, CMS awarded new Medicare Fee-for-Service RAC contracts to the following contractors:

  • Region 1 – Performant Recovery, Inc.
  • Region 2 – Cotiviti, LLC
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Private practitioners who wish to remain independent, but who are struggling to survive because of decreased third-party reimbursements and increasing overhead expenses, are being aggressively courted by various business entities that will analyze-often for free-whether the concierge model of medicine, or some variation thereof, might add significant profitability to the practice’s bottom line.

The earliest concierge models generally required patients to pay an annual membership fee in order to receive enhanced accessibility to their physician. In return, the physician would agree to limit his patient base to, say, 600 patients. In this way, the physician would conceptually be able to spend more time with each individual patient, yet still maintain (if not increase) his historic revenue stream. This meant that those patients who chose not to participate in the physician’s new concierge program would be required to leave the practice in order to find another physician to care for their healthcare needs.

In the past, many patients who have been approached to transition to a physician’s concierge practice chose not to do so because they did not perceive that the enhanced accessibility to their physician was worth the cost of the annual membership fee. Oftentimes, they were already able to get same day or next day appointments, and prompt return phone calls from their doctor so, the thought went, why pay all that money? What does one get in return?

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Medicare has developed a new incentive payment framework (“MACRA”) which is intended to fundamentally change the way in which the Federal Government evaluates and pays for the healthcare services that are provided to Medicare beneficiaries. It is designed to move us away from a volume-based “fee-for-service” reimbursement system to one which emphasizes the quality of the care provided. The new reimbursement program is scheduled to begin on January 1, 2017.

To avoid penalties and qualify for bonuses under MACRA, physicians must participate in the new Merit Based Incentive Payment System (MIPS, for short) unless they have a substantial amount of their revenue at risk under a qualifying alternative payment model (“APM”) — and the vast majority of physicians do not.

Physicians were supposed to start reporting performance data next year, and many complained that smaller practices in particular wouldn’t be ready. The framework calls for them to choose from an array of measures in four categories: 1. quality; 2. resource use; 3. clinical practice improvement; and 4. meaningful use of electronic health records.

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The California state legislature passed a bill that will prevent unexpected out-of-network medical bills.

The bill declares that patients who receive non-emergency care in in-network facilities would only have to pay in-network cost sharing. This would eliminate surprise billing from out-of-network claims. Suitable provider networks will also be more strictly demanded of health plans. A similar law has been in effect in New York for more than a year, and has shown promising results. Many consider it to be a fair compromise between hospitals, doctors, and plans. Florida has also passed a comparable law, and numerous other states are discussing legislation on the issue.

Jerry Brown, the Democratic Governor of California, is expected to sign the bill. The passage of this bill in California may spur other states to pass similar legislation.

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The U.S. Senate Committee on Finance released a whitepaper, which addresses proposed reforms of the Stark law (which prohibits physicians from referring Medicare beneficiaries to an entity in which they have a financial relationship for designated health services).

The whitepaper asserts that support for reform of the Stark Law has grown tremendously in recent years, especially since the enactment of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which addresses alternative payment models, in accordance with which the Stark law needs to be reformed. The Committee notes that, while the goals and effects of the Stark law were appropriate when it was initially implemented, the “huge penalties, and the breadth, complexity, and ambiguities of the Stark law” currently create a “minefield” for the healthcare industry. The spectrum of changes to the Stark law proposed in the whitepaper range from an expansion of its exceptions to the law’s repeal.

If enacted, such changes could have revolutionize the compliance efforts of healthcare agencies. Senator Orrin Hatch stated that the Committee will attempt to take action before next year.

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The Joint Commission (which accredits and certifies healthcare organizations and programs) announced in their newsletter that they are temporarily upholding their ban on clinicians’ use of messaging and text tools.

In 2011, the Joint Commission said that it was “not acceptable for physicians or licensed independent practitioners to text orders for patient care, treatment or services to the hospital or other healthcare settings” due to security concerns. However, in May of 2016, the Joint Commission announced that it plans to lift this ban due to advancements in the security of messaging technology. The removal of this ban is being delayed as the Joint Commission collaborates with the Centers for Medicare & Medicaid Services (CMS) to ensure safe implementation and congruency with the Medicare Conditions of Participation.

In late September, the Joint Commission and CMS plan to release a “comprehensive series of Frequently Asked Questions (FAQ) documents” to assist with the implementation of secure text orders.

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On July 28th, 2016, the Department of Justice released a report stating that the Lexington County Health Services District will pay $17 million for violations of the Physician Self-Referral Law (the Stark Law) and the False Claims Act.

The Department alleged that Lexington Medical Center (“LMC”) violated the Stark Law (which prohibits physicians from referring Medicare beneficiaries to an entity in which the physicians have a financial relationship for designated health services) by providing financial incentives to  28 physicians in exchange for referrals. The physicians were purportedly provided compensation in excess of fair market value, with the volume or value of referrals taken into account. The False Claims Act (which, in pertinent part, imposes penalties on healthcare providers for submitting false claims to a government program) lawsuit was filed by whistleblower Dr. David Hammett, a former employee who claims he was fired for not providing enough referrals to LMC.

This False Claims Act case is one of many since 2009, through which the government has, in total, recovered more than $18.3 billion from healthcare agencies. The countless violations of the Stark Law alleged by the government in recent years have called into question the complexity and breadth of the law.

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Attorney General Eric T. Schneiderman and United States Attorney Preet Bharara announced a $2.95 million fraud settlement with three hospitals in the Mount Sinai Health System resulting from Medicaid overpayments.

A whistleblower alleged that Mount Sinai Beth Israel, Mount Sinai St. Luke’s, and Mount Sinai Roosevelt knowingly retained over $844,000 in Medicaid overpayments beyond the 60-day repayment window, a violation of False Claims Acts (on both the state and federal levels). The hospitals’ former partnership group, Continuum Health Partners, Inc., experienced a software error in 2009, which sent hundreds of erroneous claims to Medicaid by 2011. These overpayments were not fully reimbursed to Medicaid for nearly two years. A $2.95 million fraud settlement was determined in a qui tam lawsuit, United States and the State of New York, ex rel. Robert P. Kane v. Healthfirst, Inc., et al.

The settlement could signal the beginning of a wave of similar lawsuits, with hospitals worried due to the FCA’s extensive statute of limitations of 10 years, to which an additional 6 years may be added due to a Centers for Medicare and Medicaid Services rule finalized in February of this year.

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On July 25th, The Centers for Medicare and Medicaid Services (CMS) released a new proposed rule which could materially change the Medicare payment model for hospitals in 98 randomly selected metropolitan statistical areas.

The proposed rule contemplates the creation of new bundled payment models for cardiac care, in addition to the extension of the existing bundled payment model for hip replacements to other hip surgeries. Additionally, CMS developed a new model to encourage the implementation of cardiac rehabilitation in hospitals. The final major component of the regulation is the Quality Payment Program, which introduces payment incentive opportunities for physicians who participate appreciably in bundled payment models. The aforementioned new episode payment models (EPMs) are serve to pay for the entirety of the course of treatment for a Medicare beneficiary, as opposed to remitting separate payments to providers and suppliers for the items and services furnished.

The proposed rule is a part of CMS’s initiative to ensure that quality of care is prioritized over quantity of patients.  CMS maintains that “bundled payments support better care coordination and ultimately better outcomes for patients.” Public comments can be submitted after the proposed rule is published on the Federal Register on August 2nd.

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All healthcare organizations should maintain an emphasis on compliance not on an episodic basis (e.g., in response to an enforcement-related development). Rather, an institutional commitment to compliance should be an integral part of an organization’s culture, with appropriate resources and leadership support.

In connection, it is instructive to revisit the principles of the DOJ’s ‘Yates Memo”. In September 2015, the Department of Justice (DOJ) released the “Yates Memo”, which enumerates steps the DOJ will take “to strengthen our pursuit of individual corporate wrongdoing.”

Six “key steps” outlined thereunder are as follows:

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