September 30, 2014

Medicare to Introduce More Star Ratings to Compare Providers

CMS recently announced that it will soon be adding additional star ratings to the Medicare.gov website by 2015. CMS has already implemented the star rating system to provide consumers quality and safety information regarding nursing homes and physician groups on a five-star scale. The system is supposed to allow consumers to make informed decisions about their provider, while giving providers something to strive for. CMS Deputy Administer for Innovation and Quality, Dr. Patrick Conway, stated that the star rating system is based on scientific standards of both accuracy and rigor. Because providers differ on the quality of care and services they offer to customers, CMS touts its star rating system as giving consumers a "snap-shot" of the care an individual provider offers. By 2015, CMS plans to add hospital groups and dialysis and homecare providers to the rating system.

While advocates of the consumer-oriented star-rating system are excited about the inclusion of more provider types, many providers are speaking out against the system. According to a recent article on Modern Healthcare, after being notified of dialysis and homecare providers' inclusion, a spokesman for Kidney Care Partners--a coalition of dialysis providers--claimed that the star rating system compares apples and oranges. The spokesman argued that the inaccurate comparison results in confused patients not really understanding what the amount of stars mean. Proponents of the rating system try to rebut views like those expressed by Kidney Care Partners, by arguing that the health care community should stress transparency, rather than worry about the imperfections in the rating system. Echoing these sentiments, Dr. John Santa, the Medical Director for Consumer Reports, stated that no provider will score well on every rating system, but the abundance of ratings will eventually provide a clearer picture of providers' quality of care and safety.

Although proponents of the star rating system continue to espouse its positive aspects, many providers remain concerned. Because providers can lose accreditation for scoring poorly on certain measures of safety and quality, and even face fines, these ratings are becoming more important. Several providers urge CMS to delay the inclusion of more provider types to the rating system until it can provide a more complete performance rating. They assert that the measurement differences may result in one provider scoring high in one program and low in another and, although the system does not have to be perfect, it must be reliable. Opponents say that to allow otherwise is to misguide patients and may potentially lead to unfair financial penalties on the entities.

If you have questions regarding the Medicare five-star rating system or how the anticipated inclusion of provider-types to the rating system may impact your practice, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. We will continue to monitor the rating system and notify you of any changes. To stay updated on healthcare news, subscribe to Wachler & Associates' health law blog by adding your email address and clicking "Subscribe" in the window on the top right of this page.

September 29, 2014

Federation of State Medical Boards Releases Model Legislation to Expedite Physician Licensure in Lieu of Telemedicine Push

As the demand for telemedicine increases across the country, states continue to grapple with licensure issues arising from physicians working across state lines. In an effort to resolve the dilemma, the Federation of State Medical Boards (FSMB) published model legislation designed to assist in the implementation of a multistate compact, by which physicians from one state can be expeditiously licensed in another state to practice telemedicine.

FSMB's model legislation requires a minimum of seven states to participate, with each state providing representatives for a governing commission. When at least seven states have joined, the commission would openly share disciplinary and credentialing information in a joint effort to quickly license physicians that are already licensed in one of the other participating states. This sharing of information would allow the participating states to license physicians without being saddled with the responsibility of independently collecting the large amount of paperwork required to license a physician. The governing commission of the compact would not have any licensing power itself, but rather would serve to facilitate the quick transfer of information between participating states. As an example, if Illinois, Michigan, and Indiana joined the multi-state compact, a physician licensed in Michigan, wishing to practice telemedicine in Illinois and Indiana, would have the compact commissioner obtain the necessary credentialing information and approval from the Michigan medical board, collect the licensing fees mandated in Illinois and Indiana, and then process an expedited license.

Members of the FSMB are hopeful for support of their model legislation because it ensures that licensure remains a state right and avoids federal intervention. A multi-state compact will hopefully solve the licensure dilemma, allowing physicians, for example, to use telemedicine technologies to offer specialized care to rural communities. One such state is Wyoming, which relies on telemedicine to care for its residents. The Executive Director of the Wyoming State Board of Medicine, Kevin Bohnenblust, stated that Wyoming has approximately 3,000 licensed physicians, but only 1,200 physicians that actually live in the state. As a prominent "importer" of telemedicine, Wyoming is hopeful that the FSMB policy takes effect. Bohnenblust also notes that states with renowned hospitals like Michigan, Minnesota, and Ohio, could benefit as "exporters" of telemedicine.

Although there are few opponents of the FSMB model legislation, some are leery of establishing new governmental organizations. However, FSMB has considerable support from the American Medical Association, which recently stated that the multi-state compact legislation aligns with their efforts to modernize state licensure frameworks.

As previously addressed on this blog, with the release of the model legislation, FSMB continues to be a strong supporter of integrating telemedicine practices across state lines. Providers interested in introducing telemedicine technologies into their practices should review state licensure laws, as well as any Fraud & Abuse issues that may arise from adding a new line of business to their practice. If you or your healthcare entity needs guidance regarding the practice of telemedicine, please contact a Wachler & Associates attorney by phone at 248-544-0888 or via email at wapc@wachler.com. Our firm will continue to keep you up to date on legislative developments applicable to telemedicine, as well as all other healthcare law news. If interested, please subscribe to Wachler & Associates' health law blog by adding your email address and clicking "Subscribe" in the window on the top right of this page.

September 25, 2014

CMS Final Rule Provides Greater Flexibility for Meeting EHR Meaningful Use Requirements

On August 29, 2014, the Department of Health and Human Services (HHS) published a Centers for Medicare & Medicaid Services (CMS) final rule allowing providers more flexibility in meeting the meaningful-use requirements for the electronic health records (EHR) incentive program. The final rule, which was an adoption of the May 2014 proposed rule, aims to assist providers in utilizing Certified EHR Technology (CEHRT) by giving eligible providers another year to continue using the 2011 Edition CEHRT, or a combination of the 2011 and 2014 Edition CEHRT. However, providers should be aware that in 2015 they are required to use the 2014 Edition CEHRT software.

Additionally, the final rule extends Stage 2 of meaningful use through 2016, thus delaying implementation of Stage 3. For those providers who first became meaningful users of EHR in 2011 or 2012, Stage 3 of meaningful use is now scheduled to begin in 2017. According to CMS, the updates in the final rule will better enable providers to participate and meet meaningful use objectives, including:

  • Electronic prescribing;
  • Checking for drug allergies and interactions;
  • Providing clinical summaries to patients;
  • Reporting on key public health data; and
  • Reporting on quality measures.

Wachler & Associates will continue to monitor CMS rule-making and guidance related to EHR meaningful-use criteria, as well as other breaking health care news. If you need help understanding the meaningful-use requirements or assistance with negotiating EHR contracts, please contact an experienced healthcare attorney at Wachler & Associates via phone at 248-544-0888 or email at wapc@wachler.com.

September 15, 2014

CMS Holds Conference Call on 68% Settlement Offer

On Tuesday, September 9, the Medicare Learning Network (MLN) hosted a Conference Call regarding the newly revealed 68% settlement offer from the Centers for Medicare & Medicaid Services (CMS) for short-stay inpatient status claims. In an effort to 'more quickly reduce the volume of inpatient status claims' pending in the appeals process, CMS offered an administrative agreement to any hospital willing to withdraw all of their pending short-stay inpatient status claim denial appeals in exchange for partial payment of 68% of the net allowable amount as long as the date of admission was prior to October 1, 2013 and the claim is either pending appeal or the appeal has been filed and is pending review. In its release, CMS further noted that only acute care hospitals and critical access hospitals are eligible to submit a settlement request; psychiatric hospitals, inpatient rehabilitation facilities, long-term care hospitals, cancer hospitals, and children's hospitals are not permitted to submit a settlement request.

The purpose of the Conference Call was to provide interested stakeholders an opportunity to speak with CMS representatives in order to ask questions and obtain a better understanding of how this settlement process will work. Wachler & Associates healthcare attorneys participated in the Conference Call and came away with a deeper understanding of how this process works, but there are still unanswered questions. First and foremost, submissions for settlement are due by October 31, 2014. If your entity cannot meet this deadline, you may ask CMS for an extension. Additionally, short-stay inpatient status claims pending at any level of the appeals process are eligible to be submitted for settlement.

In sum, eligible claims must also meet four requirements: (1) they must be pending in the appeals process or within the timeframe to appeal; (2) the date of admission for the claim must have been prior to October 1, 2013; (3) the denial must be based on a patient status review; and (4) the claim must not have been previously withdrawn or re-billed for payment under Part B. During the Conference Call participants requested clarification of whether the rebill for Part B must not have been submitted or whether it must not have been paid. CMS indicated that it would provider further clarification on this issue through the Frequently Asked Question (FAQ) page on CMS' website for hospitals. In agreeing to settle all claims for the 68%, the entity agrees to the dismissal of all associated claims (the entity may not pick and choose which ones to settle) and agrees that the settlement will serve as the final administrative and legal resolution of all eligible claims. However, this resolution does not resolve any potential False Claims Act reviews by the Department of Justice. Additionally, eligible claims include claims from any Medicare contractor so long as the denial was based on a patient status review.

A final point of emphasis pertains to whether interest will be paid under Section 935 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) upon such claims if they are settled. Representatives from CMS indicated that Paragraph 3 of the settlement agreement indicates that payment in full by CMS would not include 935 interest on the claims. If a hospital paid interest on an overpayment (i.e. the hospital prevented recoupment at the earlier stages of appeal, but interested in favor of CMS accrued on the alleged overpayment) during subsequent recoupment of an alleged overpayment, that interest will be included in the net allowable amount that is used to calculate the settlement. If this same interest accrued on the alleged overpayment, but the hospital has not begun to repay any of that interest, then that interest balance will be waived. Finally, if CMS does not make payment on the settlement within 60 days of finalization, interest will accrue and be paid to the entity.

The CMS settlement offer is an enticing offer for hospitals. By accepting the settlement, hospitals will receive reimbursement from the settlement in a much timelier manner than waiting for final adjudication of the appeals. Furthermore, hospitals will be able to conserve the resources required to challenge these denials. However, before choosing to settle, a hospital should weigh the costs and benefits, including calculating the amount of 935 interest the hospital could forego if it accepts CMS' settlement offer. For further information on this new settlement process please see our past blog post in addition to the CMS' FAQ Document on the topic and the PowerPoint presentation provided by CMS that accompanied the Conference Call.

If you have any questions regarding this process, or require assistance in pursuing a settlement, do not hesitate to contact the healthcare attorneys at Wachler & Associates, P.C. at (248) 544-0888 or at wapc@wachler.com.

September 8, 2014

CMS Announces Settlement Offer to Hospitals

In an effort to reduce the amount of cases currently pending appeal, specifically the backlog at the Administrative Law Judge (ALJ) level of appeal, the Centers for Medicare & Medicaid Services (CMS) announced an offer to hospital appellants to settle their patient status claim denials currently pending appeal. In exchange for hospitals' withdrawal of their pending appeals, CMS has offered to pay hospitals 68% of the net payable amount of the claims.

In its announcement, CMS lists a number of conditions that must be met for a hospital to be eligible for settlement, including:

  1. The provider must be either (1) an Acute Care Hospital, including those paid via Prospective Payment System, Periodic Interim Payments, and Maryland waiver, or (2) Critical Access Hospitals (CAH). Those entities which are not eligible for the settlement include: psychiatric hospitals paid under the Inpatient Psychiatric Facilities Prospective Payment System, Inpatient Rehabilitation Facilities (IRFs), long-term care hospitals (LTCHs), cancer hospitals and children's hospitals.
  2. The claim was not provided to a Medicare Part C (i.e., Medicare Advantage) enrollee.
  3. The claim was denied upon review by a CMS audit contractor (e.g., Recovery Audit Contractor (RAC), Medicare Administrative Contractor (MAC), Zone Program Integrity Contractor (ZPIC) or Comprehensive Error Rate Testing Contractor (CERT)).
  4. The claim was denied was based on the CMS contractor's finding that the patient was inappropriately treated as an inpatient as opposed to outpatient.
  5. The first day of the inpatient admission was before October 1, 2013.
  6. The claim denial was timely appealed, or the provider has not yet exhausted their appeal rights.
  7. The provider did not subsequently rebill and receive payment for the claim under Medicare Part B.

For those hospitals with eligible claims, CMS has provided instructions on its website detailing the process for hospitals to participate in the settlement offer. In order to take advantage of the settlement offer, hospitals must submit their settlement requests by October 31, 2014.

According to the Administrative Agreement (i.e., settlement agreement), CMS will pay the agreed amount to the hospital within 60 days from the date in which the binding settlement agreement is executed. Once the binding settlement agreement is entered into, the pending appeals associated with the settled claims will be dismissed and the settlement will serve as the final administrative and legal resolution of those claims.

This past July, the Department of Health and Human Services (HHS) introduced two new pilot programs - Settlement Conference Facilitation Pilot and Statistical Sampling Pilot - as alternative methods for eligible providers to resolve their appealed claim denials currently pending at the ALJ level of appeal. The recently announced settlement offer to hospitals is an added initiative implemented by HHS in an effort to reduce the ALJ backlog. CMS will be holding a national provider call on September 9, 2014, to further discuss the announced settlement offer. Wachler & Associates will be participating in that call. If you have any questions regarding the CMS settlement offer or pilot programs, or if you need assistance in the pursuing a settlement, please contact an experienced healthcare attorney at (248) 544-0888 or wapc@wachler.com.

August 29, 2014

Reports Show Increase in Individuals Participating in Employer-Based Health Plans

Since the passage of the Patient Protection and Affordable Care Act (ACA) in 2010, much of the media focus has been on individuals who were previously denied coverage because of preexisting conditions or financial barriers. Now, studies are focusing on the large group of individuals who, prior to the ACA, simply chose not to purchase health insurance. The reports demonstrate that due to the Individual Mandate portion of the ACA, which requires individuals to purchase health insurance, many more individuals are choosing to participate in their employers' health plans.

The increased participation in employer health plans will inevitably cost employers. Most recently, Wal-Mart announced that a dramatic increase in employees signing up for insurance through the company will cost its stockholders $500 million -- up from the company's previous estimate of $330 million. Although Wal-Mart is experiencing the employer-based insurance shift on a large scale, many employers nationwide are expected to see a jump in participation in their health plans. Recently, the National Business Group on Health announced that large employers should expect to see a 6.5% rise in healthcare costs in 2015.

Although The New England Journal of Medicine and members of the Urban Institute both note a rise in individuals signing up for insurance through their employers, other analysts predict that employers' costs will be too high, and that the employers will simply "dump" these employees into their state's health insurance marketplace. Many experts, however, expect that if such dumping were to occur, it would come from small employers who merely cannot afford to offer adequate health plans.

If you have questions regarding the ACA or how the anticipated increased participation in employer-based health plans may impact your practice, please contact an experienced healthcare attorney at 248-544-0888 or contact us here. To stay updated on healthcare news, subscribe to Wachler & Associates' health law blog by adding your email address and clicking "Subscribe" in the window on the top right of this page.

August 26, 2014

Community Health Systems to Pay $98.15 million to Settle False Claims Act Allegations

On August 4, 2014, the United States Department of Justice (DOJ) announced that Community Health Systems (CHS) agreed to pay $98.15 million to settle False Claims Act (FCA) allegations that CHS knowingly billed Medicare, Medicaid and TRICARE for inpatient hospital services that should have been billed as outpatient or observation services. Seven actions were filed against CHS by whistleblowers under the qui tam provisions of the FCA, which allows individuals to file suit on behalf of the government and, in turn, obtain a portion of the recovery. These seven actions were filed in six different jurisdictions and alleged that, between 2005 and 2010, CHS engaged in a corporate scheme to increase admissions of Medicare, Medicaid, and TRICARE beneficiaries even though the admissions were not medically necessary at an inpatient level of care. Rather, the United States alleged that the patients could have been cared for in less costly outpatient or observation settings.

In addition to the $98.15 million settlement payment, CHS agreed to enter into a five-year Corporate Integrity Agreement with the Office of Inspector General (OIG) in which CHS is required to implement significant compliance protocols, including retention of an independent review organization (IRO) to review CHS's inpatient admission claims. In exchange, CHS will be released from any civil or administrative monetary claims the United States has for the covered conduct under the FCA, Civil Monetary Penalties Law, or Program Fraud Civil Remedies Act.

According to the DOJ, this settlement agreement is the largest FCA recovery in the Middle District of Tennessee. The DOJ touted the Health Care Fraud Prevention and Enforcement Action Team's (HEAT) coordinated nationwide effort for exposing the FCA noncompliance. Since the establishment of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) in 2009, the DOJ has recovered over $20.2 billion in FCA cases, of which $14 billion has come from cases involving fraud against government health care programs.

Wachler & Associates regularly counsels providers regarding the FCA, Stark Law, Anti-Kickback Statute, and other federal and state fraud and abuse laws. If you or your healthcare entity have any questions regarding the FCA, Stark Law, Anti-Kickback Statute and/or other federal and state fraud and abuse laws, please contact an experienced healthcare attorneys, please contact us at 248-544-0888 or wapc@wachler.com.

August 22, 2014

OCR Announces Start of HIPAA Audit Program Phase 2

The U.S. Department of Health and Human Services' Office for Civil Rights ("OCR") recently announced that it will be initiating Phase 2 of the compliance audits mandated by the Health Information Technology for Economic and Clinical Health Act (HITECH). The first phase of audits was carried out in 2011 and 2012, and targeted covered entities. While Phase 2 will expand the targeted entities to include business associates, it will utilize information gathered during Phase 1 to narrow the scope of audits in order to review the areas of greatest risk to protected health information (PHI).

Following Phase 1, OCR's findings noted that, generally, the smaller the covered entity, the more compliance issues it had with all 3 Health Insurance Portability and Accountability Act (HIPAA) Standards: privacy, security, and electronic transactions. Furthermore, OCR observed that over 60% of the violations related to security standards. Additionally, nearly 40% of the findings related to privacy standards occurred simply due to lack of knowledge regarding the privacy standards.

Applying this information, OCR will narrow the focus of their compliance audits in Phase 2. The audits will occur between October 2014 and June 2015, and will address:

  • Security risk analysis and management;
  • Breach content and effectiveness of notifications;
  • Privacy notices and access to records; and
  • Proper safeguards and adequate training.

Phase 2 will begin with a random selection of 550-800 covered entities, chosen through America's Health Insurance Plans' databases of health plans, as well as the National Provider Identifier database. All covered entities that are randomly selected will be sent a link to an online pre-survey. OCR will use the pre-survey results to narrow-down the covered entities to 350 entities who will then be notified and sent data requests this fall. OCR will choose the business associates for Phase 2 from these data requests. 150 of the covered entities and 50 of the business associates will be audited for security standards compliance. Further, 100 of the 350 covered entities will be audited for compliance with breach notification standards and privacy standards.

Once the covered entities and business associates are chosen, they will receive audit requests and have two weeks to respond. The requests will include a list of all the files needed, but OCR may request additional information at a later date. Audited entities are advised to respond to OCR in a timely fashion because failure to do so could lead to a more scrutinized compliance review by the OCR Regional Office. Once an audit is completed, OCR will provide a draft report and allow management to comment. OCR will take the comments into account before issuing a final report.

Because covered entities and business associates are chosen at random, these entities should prepare for a potential Phase 2 compliance audit. Recommended steps include:

  • Undergoing a risk assessment to highlight any vulnerabilities;
  • Compiling a list of all business associates to fulfill date request;
  • Confirming that all employees are up to date on their HIPAA Standards training;
  • Checking that the entity is implementing all security, privacy, and breach standards and documentation is provided in the event that certain measures were not enacted.
OCR's website will provide the Phase 2 Audit protocol for entities looking to prepare for a potential compliance audit. For more comprehensive preparation, covered entities and business associates can contact Wachler & Associates, P.C. Since the enactment of the HIPAA Privacy and Security Rules, Wachler & Associates has counseled healthcare entities in HIPAA compliance matters, which includes updating security policies and procedures, and ensuring employees undergo vital HIPAA compliance training. If you have any questions or require assistance developing a HIPAA compliance plan for your entity, please contact an experienced healthcare attorney at 248-544-0888 or contact us here.
August 7, 2014

FDA to Bolster its Regulation of Diagnostic Testing

With the passage of the Food and Drug Administration Safety and Innovation Act (FDASIA) on July 9, 2012, Congress expanded the Food and Drug Administration's (FDA) authority to safeguard and advance public health. Exercising such authority, on July 31, 2014, the FDA notified Congress of its plan to publish a proposal to expand its oversight of laboratory developed tests (LDTs). LDTs are diagnostic tests, which are designed, manufactured, and used within a single laboratory. Previously, LDTs certified under the Clinical Laboratory Improvement Amendments (CLIA) could exist without FDA oversight. This exception existed because LDTs were primarily used for rare diseases. However, advances in molecular biology allowed laboratories to produce a broader range of LDTs, applicable to more common illnesses. The former exception has been touted by some as fostering laboratory independence, allowing for exponential innovation and accuracy in diagnostics. However, others like Senator Edward Markey (D-Mass.) claim that the newly implemented FDA oversight has been "long-overdue."

As a result of support from individuals like Senator Markey, more than 11,000 LDTs, housed in 2,000 different laboratories, may fall into the FDA's expanded regulations. The FDA has cited LDTs for illnesses like Lyme disease and cancer, as justification for the new regulatory framework. By subjecting LDTs to such scrutiny, the FDA's stated goal is to eliminate faulty tests that produce inaccurate diagnoses and cause patients to seek unnecessary treatment, or delay vital treatment. However, opponents of the new regulation contend that the prior independence allowed laboratories to diagnose and measure disease with far greater accuracy than ever before.

The FDA's regulatory expansion will take place over nine years and will first be applied to what are deemed the riskiest LDTs. However, some tests will remain excluded from FDA regulations. Such LDTs include those which treat rare diseases and those for which there is no FDA-approved test.

In its announcement, the FDA stated its intent to publish guidelines detailing how laboratories can notify the FDA regarding their current manufacturing and use of LDTs. Once these guidelines are released, laboratories that currently utilize LDTs should notify the FDA about their tests in order to avoid legal repercussions. The FDA will allow currently available LDTs to continue during the reviewing process, in order to prevent any disruptions.

If your laboratory utilizes LDTs or has any questions regarding the FDA's new regulations, please contact an experienced health care attorney at 248-544-0888 or email at wapc@wachler.com. Wachler & Associates will continue to keep you updated on breaking regulatory changes and other health care news.

August 1, 2014

Bipartisan House Bill Proposes Increased Medicare Coverage of Telemedicine

A bill amending Title XVIII of the Social Security Act will be proposed soon, marking the culmination of bipartisan efforts in the House of Representatives. Representatives Glenn Thompson (R-Penn.) and Mike Thompson (D-Calif.) are prepared to announce a new telehealth bill, titled the Medicare Telehealth Parity Act of 2014, which would reduce the Social Security Act's current limitations on reimbursable telemedicine technologies.

Currently, the Social Security Act only permits reimbursement for telemedicine uses in rural health professional shortage areas (HPSAs) and non-Metropolitan Statistical Areas (MSAs). Not only are these qualifications limiting, they are also difficult to discern. For example, in the 2000s, the Health Resource and Service Administration (HRSA) eliminated the "rural HPSA" category from its designations, resulting in confusion regarding the correct application of the term. The forthcoming bill seeks to slowly resolve these reimbursement complications through a cost-effective, four-year plan:

  • Within six months of the bill's passage, it would mandate that Medicare provide coverage for telemedicine in urban areas with a population of 50,000 or less. Additionally, the six month period would be used to increase care sites to include retail clinics.
  • Two years following the bill's passage, Medicare coverage would expand to urban areas with a population of 100,000 or less. Furthermore, the bill would include home telehealth to the list of care sites, while expanding reimbursable services to encompass physical and speech therapy.
  • Lastly, after four years have passed, the bill would make telemedicine reimbursable across the United States.
In addition to the four-year plan, the bill seeks to officially add remote patient monitoring (RPM) to the Social Security Act's list of reimbursable services. The bill defines RPM as "the remote monitoring, evaluation, and management of an individual with a covered chronic health condition . . ., insofar as such monitoring, evaluation, and management is with respect to such condition, through the utilization of a system of technology that allows a remote interface to collect and transmit clinical data between the individual and the responsible physician . . . or supplier." By offering government reimbursement for RPM services, thereby expanding RPM use, the bill hopes to increase Medicare savings over time.

Also, the Representatives' bill would task the Secretary of Health and Human Services (HHS) with developing standards for remote patient monitoring. Finally, the United States comptroller would be directed to conduct a study within two years of the bill's passage, to determine the efficacy and estimated Medicare savings from the expansion of telemedicine applications.

The bill does not address Medicaid, the Children's Health Insurance Program (CHIP), or other federal health plans, nor does it comment on licensure or liability issues. However, studies show that incorporating reimbursement strategies for telemedicine in Medicare alone will result in significant cost savings, not only in transportation costs, but also in models of delivery and access to care. According to a study conducted by Stanford University, the implementation of telemedicine is estimated to generate 7.7% to 13.3% spending reductions per Medicare patient, per quarter.

Wachler & Associates' health law attorneys will continue to monitor any further developments regarding the proposed bill and all other federal and state legislation. If you have any questions about how your entity will be impacted by the final rule or any other regulation, please contact an experienced health care attorney at Wachler & Associates via phone at 248-544-0888 or via email at wapc@wachler.com.

July 14, 2014

Senate Report Finds the RAC Program to be Ineffective in Reducing Improper Payment Rates and Burdensome on Providers

In a report released on July 9, 2014, the Senate Special Committee on Aging criticized the Centers for Medicare and Medicaid Services (CMS) for the increase in improper payments in the Medicare program, despite the increasing amount of audit activity and the resulting burden on Medicare providers.

The report noted that despite an increase in the number of contractors conducting pre and post-payment audits and in audits themselves, there has not been a reduction in the total rate of improper payments made to providers. In 2013, the rate jumped to 10.1%, from 8.5% in 2012. This was the highest rate in the last five years, despite significant efforts to combat improper payments.
The report also found numerous inefficiencies in the Recovery Audit Contractor (RAC) program and with other contractors more generally. For instance, the report noted that often times different audit contractors audit the same provider for claims that have been previously reviewed. This results in duplicative document requests that burden providers. The report recognized that providers often times providers must respond to documentation requests from contractors with their own unique timelines and specifications for proper documentation submission. The inconsistencies among contractors lead to significant confusion and, in some cases, denial of properly billed claims. Also noted was a problem well-recognized by the provider community, the withholding of Medicare funds during the later stages of the appeals process, despite the often the two, three even four year delay before providers receive an administrative law judge (ALJ) hearing decision. According to the report, one large hospital system has over $200 million withheld until its matters are adjudicated. The report recognized that for many providers, the ALJ level of appeal is successful. As an example, the report noted that for another health system, there was a 97% success rate for appeals at the ALJ level. The withholding of funds, especially when they have been properly billed, presents an enormous burden on all healthcare providers, even potentially forcing smaller providers to close their doors because they are unable to absorb the loss in revenue.

The Senate report also criticized the RAC program on some fundamental issues. The report was highly critical of what is termed the "pay and chase" model of reducing improper payments to providers. Although CMS announced its move away from this model to a more preventative model, the report concluded that the structure of the audit programs still encourages "pay and chase." Under this model, most of the audit contractors seek to recoup improper payments after they have been made to providers. This is problematic for numerous reasons, one of which is that under this model the RACs are paid on a contingency fee basis that is dependent upon the amount of improper claims that they identify. Thus, there is a potential incentive for RACs to keep improper payment rates high in an effort to increase RAC productivity. The report and members of the Senate Special Committee suggested that the RACs should be compensated by how effective they are at reducing the improper payment rate over a designated period of time or by how they prevent improper payments from occurring in the first place.

In order to lower the improper payment rate, the report recommends that:

  • CMS consolidate post-payment review programs to the extent possible;
  • CMS consider financial incentives aimed at reducing the improper payment rate, rather than at the amount of improper rates identified;
  • CMS assess the reliability of data within the RAC Data Warehouse and correct any data errors or omissions;
  • Pre-payment review programs should have defined objectives and scopes of operation related to reducing the improper payment rate, including how to achieve this goal through collaboration of the auditors;
  • CMS more stringently review contractor error rate reduction plans to ensure that Comprehensive Error Rate Testing (CERT)-identified problem areas are in accordance with the Office of Inspector General's recommendations;
  • CMS ensure that local coverage decisions target high cost, highly utilized services or items and do not create inconsistent access to care;
  • CMS should review the effectiveness of pre-payment review processes in terms of reducing improper payments; and
  • CMS place a greater emphasis on provider education as a means of reducing improper payments.
If you or your entity are currently being audited by CMS and need assistance with the Medicare appeals process or Medicare compliance to proactively prepare for an audit, please contact an experienced healthcare attorney at Wachler & Associates at 248-544-0888 or at wapc@wachler.com.

July 10, 2014

HHS Unveils Statistical Sampling Pilot Program for ALJ Hearings on Medicare Audit Appeals

Last week, the Office of Medicare Hearings and Appeals (OMHA) announced the Statistical Sampling Pilot Program (Pilot Program). The Pilot Program offers Medicare providers an alternative route, along with the Settlement Conference Facilitation Pilot, to reach a final determination for claims pending at the administrative law judge (ALJ) hearing level without enduring the 2-3 year delay for hearing. Although the Pilot Program offers a time-saving and perhaps more efficient option for Medicare providers, engaging in the Pilot Program also comes with risks as Medicare providers may "put all of their eggs in one basket" and rely on a single ALJ to issue a decision that affects a large volume of claims. In some cases, the provider may know the identity of the ALJ prior to agreeing to statistical sampling, but in other cases the provider will not.

The Pilot Program is available to Medicare providers that have requested an ALJ hearing following a Medicare Qualified Independent Contractor (QIC) reconsideration decision. At this time, the ALJ hearing requests must either be assigned to an ALJ or must have been filed between April 1, 2013 and June 30, 2013 and it must meet all jurisdictional requirements, including that it was filed timely. In order to be eligible for the Pilot Program, the Medicare provider must have a minimum of eligible 250 claims and the claims must be one of the following: (1) pre-payment claim denials; (2) post-payment non-RAC claim denials; or (3) post-payment RAC claim denials from one RAC. In addition, claims that are assigned to different ALJs or were requested in different consolidation groups may be incorporated into the request for statistical sampling.

A Medicare provider that meets the eligibility requirements for the Pilot Program may request statistical sampling by submitting a "Request for Statistical Sampling" form that is available on OMHA's website. The provider must also submit a spreadsheet, a template is also available on OMHA's website, that provides detailed information about the claims requested to be included in the statistical extrapolation.

After a request is submitted, if granted, a consent template will be sent to the Medicare provider. The consent template will request the Medicare provider to consent in writing to statistical sampling. After written consent is obtained, a pre-hearing conference will be held to confirm the consent, establish the universe of claims from which the sample will be taken and agree to other matters related to the hearing. Following the pre-hearing conference, the ALJ will issue an order and if no objections are received within 10 days of receipt of the order, the order will become binding. Once the pre-hearing conference order becomes binding, consent for the statistical sampling may not be withdrawn.

After the pre-hearing conference order becomes binding, OMHA will combine the universe of claim appeals agreed to in the pre-hearing conference under a single ALJ appeal number. The appeal will be assigned to the next ALJ on the rotation unless all of the appeals had been assigned to an ALJ prior to the statistical sampling request. The random statistical sampling will be compiled by a trained and experienced statistical expert who will develop appropriate sampling methodology in accordance with Medicare guidance. At the hearing, the ALJ will review the sample units and make a decision regarding those units. It is important to note that either CMS or a CMS contractor may participate in the hearing. The decisions on the sample units will be extrapolated to the universe of claims at issue.

The Pilot Program offers an opportunity to eligible Medicare providers with large volumes of claims to seek an alternative, and perhaps more efficient, avenue to final resolution of the claims. The new program is a welcomed creative development to solving the backlog of appeals waiting for assignment for ALJ hearing. However, Medicare providers should carefully consider before engaging in the process and fully understand the implications of agreeing to statistical sampling. Wachler & Associates will continue to provide updates on the developing Pilot Program. For more information on ALJ appeal strategies and the Pilot Program, please contact an experienced health care attorney at 248-544-0888 or wapc@wachler.com.

July 9, 2014

HHS Launches Pilot Program for Providers to Settle Medicare Overpayment Demands with CMS

Recently, the Department of Health and Human Services (HHS) announced its new pilot program - Settlement Conference Facilitation (SCF) Pilot - to provide an alternative dispute resolution process for settling appealed Medicare claims denials. Through the SCF program, providers have the opportunity to discuss with the Centers for Medicare and Medicaid Services (CMS) the potential of a mutually agreeable resolution to the claims appealed to an Administrative Law Judge (ALJ) hearing. According to HHS, the settlement conference facilitator, who is an employee of the Office of Medicare Hearings and Appeals (OMHA), will use mediation principles to assist the appellant and CMS in reaching a mutual settlement agreement. If a settlement is reached between the appellant and CMS, the facilitator will draft the settlement document to be signed at the settlement conference by both parties. Once a binding settlement agreement has been executed, any pending ALJ hearing requests for the claims covered by the settlement agreement will be dismissed and no further appeal rights will be attached to those claims. On the other hand, if the parties are unable to reach a settlement agreement and the facilitator believes further efforts to reach an agreement will be unsuccessful, the SCF process will be concluded and the appealed claims will return to the ALJ level of appeal in the order the hearing request was originally received by OMHA.

Initially, HHS is limiting eligibility for the SCF pilot program to claims by Medicare Part B providers who have filed requests for ALJ hearing in 2013 and are not currently assigned to an ALJ. For those eligible providers, the request for SCF must include all of the provider's pending ALJ appeals for the same item or service (i.e., all claims for the same item or service in which ALJ hearing requests were submitted in 2013). Appellants must include all appeals included in the applicable ALJ hearing requests, and may not request an SCF for some claims and proceed to the ALJ hearing for the remaining claims. Additional SCF eligibility requirements include that at least 20 claims must be at issue or, if fewer than 20 claims are at issue, at least $10,000 must be in controversy. Also, the amount of each individual claim must be less than $100,000. For claims subject to statistical sampling, the extrapolated overpayment amount at issue must be less than $100,000; however, HHS states that it will continue to explore expanding the SCF pilot program for larger extrapolated overpayment cases.

Although the SCF process is only available for a limited group of claims at this time, those providers whose appeals are currently ineligible (e.g., Part A providers) for the SCF pilot program may nonetheless view these developments as a silver lining as countless appealed claims are currently awaiting ALJ hearings to be scheduled - claims in which CMS has likely recouped all of the alleged overpayment amount. With the substantial volume of claims currently backlogged at OMHA causing two to three year delays before the appealed claims are finally adjudicated, appellants may soon be provided a forum to reach mutually agreeable resolutions with CMS and receive the timely payment in which the provider is entitled.

If you or your entity have questions related to the SCF pilot program, or would like assistance from experienced health care attorneys in representing you or your entity in the SCF process, please contact Wachler & Associates at 248-544-0888 or wapc@wachler.com.

July 8, 2014

Michigan Passes Law Allowing Direct Access to Physical Therapists

On June 26, 2014, Michigan Governor Rick Snyder signed into law SB 690, allowing a physical therapist or physical therapist assistant to treat a patient without a physician's referral. Pursuant to the new law, which goes into effect January 1, 2015, physical therapist may now treat self-referring patients without a prescription from a physician under the following circumstances: (1) for up to 21 days or 10 treatments, whichever comes first; or (2) the patient is seeking physical therapy services to prevent injury or promote fitness. With the signing of SB 690, all 50 states, as well as the District of Columbia, now provide for some kind of direct access to physical therapists.

Under the new law, when a physical therapist is treating a patient without a prescription from a physician, the physical therapist must refer the patient to a physician if the physical therapist has reasonable cause to believe that symptoms or conditions are present that require services beyond the physical therapist's scope of practice. In addition, the law provides that the physical therapist must consult with a physician if the patient does not show reasonable response to treatment in a time period consistent with the standards of practice. The new law also provides that the physical therapist must determine that the patient's condition requires physical therapy before delegating physical therapy interventions to a physical therapist assistant.

According to the House Committee's summary of Senate Bill, these rule changes "do not create an open door to [physical therapy] services; a patient would need to obtain a prescription if more than 10 visits or three weeks of treatment were needed." Moreover, as provided in concurrently adopted Senate Bills (SB691-SB694), an insurer would not be mandated to provide coverage for treatment that was not provided pursuant to a prescription from a physician.

Wachler & Associates will continue to keep you updated on legislation regarding patient access to care, as well as other national health care news. Please subscribe to the Wachler & Associates health law blog by adding your email address and clicking "Subscribe" in the window on the top right of this page. If you have any questions regarding the newly adopted laws, or have any other questions related to reimbursement rules for physical therapy, please contact an experienced health care attorney at 248-544-0888 or wapc@wachler.com.

July 7, 2014

CMS Affirms Physicians May Bill Certain Pharmacy Services as "Incident To" But Highlights Recent Regulatory Amendments Regarding Compliance with State Law

In a March 25, 2014 letter to the American Academy of Family Physicians (AAFP), CMS Administrator Marilyn Tavenner responded to an inquiry from the AAFP asking whether, if all of the "incident to" rules are met, may a physician bill Medicare for a Part B covered service provided by a pharmacist in the physician's practice.

In its January 2014 letter, AFFP noted the "increasing emphasis on team-based care in family medicine" particularly in the context of a "patient-centered medical home." Due to such changes, AAFP advised CMS that family medicine practices were employing pharmacists as part of the patient care team. Pursuant to the plan of care developed by the physician, these pharmacists were having and documenting direct, face-to-face encounters with patients where they reviewed "applicable patient history and medications" and counseled patients on the "risks and benefits of pharmaceutical treatment options" and "instructions for improving pharmaceutical treatment compliance and outcomes." The AAFP took the position with CMS that such encounters would meet the definition of an established patient evaluation and management services ("E/M service") and would be billed as an E/M service if the physician had provided the service. The AAFP also reviewed applicable Medicare rules on "incident to" billing, specifically section 60 of chapter 15 of the Medicare Benefit Policy Manual and stated that it "found nothing in Section 60 that would exclude pharmacists from this definition." Accordingly, AAFP requested confirmation that a physician who met all of the "incident to" rules would be permitted to bill Medicare for a Part B covered service provided by a pharmacist in the practice.

In her response, Administrator Tavenner stated that CMS agreed with AAFP's position that if all the requirements of the "incident to" statute and regulations were met, a physician may be reimbursed under Medicare Part B for services provided by pharmacists in the practice as "incident to" services.

Administrator Tavenner offered further guidance on this issue by directing AFFP's attention to the regulations at 42 CFR 410.26, which contained two new provisions as a result of CMS rulemaking for the calendar year 2014 physician fee schedule (PFS). Specifically, a phrase was added to the definition of "auxiliary personnel" in 42 CFR 410.26(a)(1), which requires that auxiliary personnel must "meet[] any applicable requirements to provide the services, including licensure, imposed by the State in which the services are being furnished" and a new section was added, 42 CFR 410.26(b)(7), which provides that, "[s]ervices and supplies must be furnished in accordance with applicable State law." Administrator Tavenner also referred AAFP to the CY 2014 PFS final rule and comments, found at 78 Fed. Reg. 74410, for more information. In light of these new provisions, she advised the AAFP to consider "applicable state laws" in addition to the other "incident to" requirements when considering when it is appropriate to bill for services "incident to" the physician's services.

As a result of this guidance from CMS and recent regulatory amendments, physicians and other providers wishing to bill under the "incident to" rules must carefully review not only the "incident to" rules themselves but also consider closely whether the "incident to" services are being furnished in compliance with applicable state laws such as licensure requirements for auxiliary personnel.

Wachler & Associates regularly counsels providers regarding the rules and regulations involving Medicare reimbursement, including "incident to" billing. If you have questions about "incident to" billing, or how these recent developments may impact your practice, please contact an experienced healthcare attorney at 248-544-0888 or at wapc@wachler.com. Please subscribe to the Wachler & Associates health law blog by adding your email address and clicking "Subscribe" in the window on the top right of this page.