Wachler & Associates Health Law Blog

On May 8, 2013, in a retrial of a 2010 case, a federal jury found that Tuomey Healthcare System (Tuomey) in Sumter, SC violated both the Stark Law and the False Claims Act (FCA). The jury found that Tuomey violated the FCA by submitting 21,730 claims to the Medicare program that were tainted by illegal compensation arrangements which induced physicians to refer patients to the hospital in violation of the Stark Law.

The underlying employment arrangements were made for 19 surgeons who each received base pay, significant benefits, and potentially two bonuses. The jury agreed with the government's contentions that the pay was not consistent with fair market value and was not commercially reasonable. The government argued that the excess compensation was evidence that the employment agreements took into account the volume or value of the physicians' referrals to Tuomey.

The jury assessed damages against Tuomey in the amount of $39,313,065, which is the full amount of the Medicare claims at issue. In addition, under the FCA, the government may seek up to three times the amount of damages plus $11,000 per claim, meaning Tuomey could potentially face up to $357 million in liabilities under the FCA. However, since Tuomey is a community hospital, they are likely to receive a penalty less than that amount. Each side will now submit motions interpreting what they think are the appropriate amount of damages, with a final damage amount coming sometime in the future.

This case should encourage providers to further evaluate potential business arrangements, or reevaluate current business arrangements, to ensure the arrangement does not run afoul of the Stark Law, Anti-Kickback Statute, False Claims Act or other fraud and abuse laws. Although the majority of penalties assessed for violating the FCA are reached through settlements, the jury's findings in Tuomey may result in a greater number of these cases reaching a jury verdict, which would likely result in substantially larger penalties. If you have any questions relating to the Anti-Kickback Statute, Stark Law or other federal or state fraud and abuse regulations, please contact an experienced Wachler & Associates healthcare attorney at 248-544-0888.

Hospice providers must always obtain written certification that a patient meets Medicare's hospice coverage criteria. Written certification of terminal illness needs to be obtained no later than 2 days after hospice care is initiated, and must be on file in the hospice patient's record prior to the submission of a claim to the Medicare contractor. Certification must be made by the medical director of the hospice and, if applicable, the patient's attending physician. Payment for hospice care will begin the date certification is obtained.

This initial certification satisfies the hospice certification requirement for the first 90-day period of coverage. Additional periods require recertification, which can be obtained 15 days prior to the next benefit period, but no later than 2 days after that period begins.

Per the Medicare Benefit Policy Manual, the written certification must include:

1. A statement that the patient's medical prognosis is that their life expectancy is 6 months or less if the terminal illness runs its normal course;
2. Specific clinical findings and other documentation supporting a life expectancy of 6 months or less;
3. Signature(s) of physician(s), the date signed, and the benefit period that the certification or recertification covers; and
4. The physician's brief narrative explanation of the clinical findings that supports a life expectancy of 6 months or less as part of the certification and recertification forms, or as an addendum to the forms.

Additionally, if a hospice patient requires a third benefit period, hospice physicians or hospice nurse practitioners must complete and document a face-to-face encounter with the patient prior to that period. The face-to-face encounter must take place no more than 30 days prior to the benefit period, and must be documented by a properly executed attestation form signed by the performing hospice physician or nurse practitioner.

Due to the burdensome nature of this requirement, hospice recertification requirements have increasingly become an area of focus for Recovery Auditors. The Recovery Audit Contractor (RAC) for Region D, HDI, recently added "Face-to-Face Evaluation for Recertification of Hospice Care" as an approved audit issue.

Failure to meet the face-to-face requirement results in the hospice's failure to recertify the patient's terminal illness eligibility, and the patient is then ineligible to receive the benefit. Hospice providers thus must have systems in place to ensure compliance with Medicare's hospice patient recertification requirements. The timing and proper execution of hospice recertification forms will continue to be a changing and essential aspect in obtaining full Medicare reimbursement.

Our firm assists hospice providers in the implementation of hospice compliance plans. We regularly represents hospice providers nationwide in then defense of RAC, Medicare, ZPIC and other audits. If you or your hospice entity have any questions regarding Medicare's face-to-face recertification requirements, or otherwise need assistance, please contact a Wachler & Associates attorney at 248-544-0888.

Blue Cross Blue Shield of Michigan (BCBSM) is auditing physicians who have conducted in-office Drug of Abuse (DOA) screening test. The purpose of these BCBSM audits is to determine whether the services, treatment, devices, and procedures that the physician billed to BCBSM conformed to Current Procedural Terminology (CPT) codes at the time of billing.

In auditing physicians who billed drug screening procedure codes, BCBSM is alleging that those physicians have incorrectly billed under current CPT codes for dates of services prior to the effective date of the current billing policies. In these cases, BCBSM sent notices to physicians enclosing current copies of the Physician Office Laboratory List (POLL) - a list of payable laboratory services allowed to be performed in the physician office setting - instead of the relevant POLL covering the audited time period. The drug screening procedure code at issue is CPT code 80101 [drug screen, qualitative; single drug class method (e.g., immunoassay, enzyme assay), each drug class], which is not listed on the current POLL. Instead, BCBSM states that codes 80104 and G0434 are the proper and payable drug screening tests when performed in the physician's office. BCBSM is seeking returns of alleged overpayments from these physicians who billed 80101 in the office setting, as opposed to billing the lesser-paying drug screening procedure codes.

BCBSM may not hold physicians retroactively accountable for recent changes in billing. We are currently representing a number of physicians that have been audited by BCBSM. Based upon our review, we believe these audits can be successfully defended and the amount for overpayment substantially reduced. If you have been audited by BCBSM, we believe we can help, as we are currently representing physicians in similar cases and have been successfully defending providers against BCBSM audits since 1980. For further information on BCBSM audits, please contact an experienced Wachler & Associates healthcare attorney at 248-544-0888.

On May 8, 2013 the Office of Inspector General ("OIG") for the Department of Health and Human Services issued an Updated Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs ("the Updated Bulletin") to replace and supersede a bulletin issued in 1999.

The Updated Bulletin reiterates, clarifies and/or provides guidance on many points, including the following with regard to the effect of exclusion on participation in Federal health care programs:

• Payment cannot be made from a Federal health care program for items or services furnished by an excluded person or at the medical direction or on the prescription of an excluded person.
• Exclusions and payment prohibitions continue to apply to an excluded person even if he or she switches professions during the exclusion period (e.g., an individual excluded as a pharmacist cannot go on to obtain a medical degree and furnish services to patients covered by federal health care programs).
• An excluded provider may refer a patient to a non-excluded provider if the excluded provider does not furnish, order, or prescribe any services for the referred patient, and the non-excluded provider provides all treatment and submits all bills to the Federal health care programs.
• Exclusions and payment prohibitions extend beyond direct patient care. For example, an excluded person could not prepare surgical trays, review treatment plans, input prescription information for pharmacy billing or be involved in any way in filling prescriptions for drugs that are billed to a Federal health care program, or provide transportation services paid for by a Federal health care program, such as working as an ambulance driver or dispatcher.
• Excluded providers are prohibited from providing administrative or management services that are payable by a Federal health care program, even if the services are not separately billable. Some examples of management and administrative roles that an excluded provider could not perform include: chief executive officer, chief financial officer, general counsel, director of health information management, director of human resources, physician practice office manager, health information technology services and support, strategic planning, billing and accounting, staff training and human resources unless wholly unrelated to federal health care programs.
• The payment prohibition extends to volunteer positions. For example, an excluded health professional could not volunteer at a hospital or hospice where services are payable by a Federal health care program.
• A provider may employ or contract with excluded providers for items or services that are solely furnished to non-Federal healthcare program beneficiaries. In such a situation, the excluded providers do not have to be paid out of a separate account. However, there can be no claim submitted or payment received from a Federal health care program for services or items provided directly or indirectly by the excluded provider.
• Providers should confirm at the point of service that the ordering or prescribing physician is not excluded. The OIG further cautions that some excluded providers may still have a Drug Enforcement Agency (DEA) license. The OIG also cautions against relying on Medicare Part D plans and/or state agencies to have edits in place to identify excluded providers since reliance on a third party does not relieve the provider of responsibility with regard to any overpayments or civil monetary penalties related to services ordered or prescribed by an excluded provider.
• From a practical standpoint, an excluded provider cannot retain greater than 5% ownership interest in a provider entity, nor can an excluded provider hold an administrative or management position.
• OIG urges providers to screen potential employees or contractors by using the OIG List of Excluded Individuals/Entities (LEIE). Although there is no statutory or regulatory requirement to check the LEIE at any specific intervals, the OIG suggests monthly screening to best minimize potential overpayment and CMP liability. The OIG further suggests that providers maintain documentation of all name searches performed and additional searches conducted.
• In determining who to screen, a provider is expected to look at each job category and contractual relationship and determine whether the item or service is payable directly or indirectly, in whole or in part by a Federal health care program. If the answer to this question is yes, then all persons in that job category or with a similar contractual relationship should be screened to best minimize CMP liability.
• The OIG cautions providers who rely on third parties to conduct screening that the provider will retain liability for CMP. Where health care workers are contracted through another entity, such as a staffing agency, the OIG states that a provider may reduce or eliminate CMP liability if it can demonstrate that it reasonably relied upon the staffing agency's agreement by contract to perform LEIE screening. The OIG further cautions that any such delegation should be documented in the agreement between the parties and the provider should exercise due diligence in ensuring that the agency is meeting the contractual obligation.
• The LEIE is the primary database that should be used for the purposes of exclusion screening (as opposed to the NPDB or SAM).
• Providers who identify potential CMP liability for contracting with or employing an excluded provider could use the OIG's Provider Self-Disclosure Protocol (SDP) to disclose and resolve potential CMP liability.

For further information regarding the effect of exclusion on a provider's ability to contract with or be employed with a health care entity that bills federal health care programs, please contact an experienced Wachler & Associates' health law attorney.

On May 3, 2013, the Office of Inspector General (OIG) released a memorandum describing hospice general inpatient care (GIP) provided to Medicare patients in 2011, for which Medicare paid $1.1 billion. According to the memorandum, the OIG will be conducting an in-depth medical record review to evaluate the appropriateness of GIP provided by hospices. The study will be focused on the accuracy of reimbursement for GIP and the proportion of GIP provided in different settings, specifically Medicare-certified hospice inpatient units, hospitals, and skilled nursing facilities.

This ongoing study is a continuation of prior studies released by the OIG, which show that the amount of GIP services provided differs significantly depending on the setting. For example, hospices that have their own inpatient units provided GIP to 35% of their Medicare patients. In contrast, hospices that have to outsource GIP care sent only 12% of their Medicare beneficiaries to receive that care. Furthermore, hospices that provided GIP in their own inpatient units recorded 50% longer patient stays and three times the proportion of Medicare payments for GIP services than did hospices that have to outsource GIP care.

The memorandum states that the OIG will begin a new study which will use actual beneficiary medical records to determine the accuracy of reimbursement. In addition to its own investigations, the OIG advised CMS to ensure that the hospices not currently providing GIP are still providing beneficiaries with appropriate access to the types and amount of care needed at the end of their lives. These studies are part of OIG's continuing investigations related to Medicare hospice care. In 2011, Medicare paid $13.7 billion for hospice services on behalf of 1.2 million beneficiaries, and both of those numbers are expected to increase with the aging of the baby boomer generation.

Despite this report not containing recommendations to CMS, as OIG reports typically include, the OIG intends to provide CMS with recommendations in a follow-up report after the OIG completes its medical record review. Once the OIG makes its recommendations to CMS, hospice providers can anticipate increased audit scrutiny surrounding hospice GIP, including the over-utilization of inpatient hospice stays for hospice providers that have their own inpatient units. The way hospice providers should respond to this increased scrutiny is to increase their compliance activities in this area.

Wachler & Associates healthcare attorneys regularly counsel providers, including hospice providers, in proactively addressing potential audit risk areas and defending providers against Medicare audits. If you or your healthcare entity need assistance in developing an effective compliance plan, or assistance in Medicare, Medicaid or third party payor audit defense, please contact our experienced healthcare attorneys at 248-544-0888.

As mandated by the American Taxpayer Relief Act of 2012, Medicare Part B outpatient therapy providers now face manual medical review of claims at or above a $3700 statutory cap. Due to some confusion in the provider community, the Centers for Medicare and Medicaid Services (CMS) published a Frequently Asked Questions to clarify the new therapy manual medical review process.

In the FAQ, CMS explains that the manual medical review process is triggered when a beneficiary's services for that year exceed one of two threshold caps dictated in Section 603 of the Act. The cap for Occupational Therapy (OT) services is $3700 per year, per beneficiary. Separately, the combined cap for Physical Therapy (PT) and Speech Language Pathology (SLP) is $3700 per year, per beneficiary. CMS also points out that although physical therapy and speech language pathology services are combined to trigger the cap, the medical review of those claims will be conducted separately.

The FAQ states that the cap and manual medical review process applies to all Part B Outpatient Therapy settings and providers, including private practices, Part B skilled nursing facilities (SNFs), home health agencies (HHAs), outpatient rehabilitation facilities, rehabilitation agencies and hospital outpatient departments.

Therapy providers will continue to submit claims to their Medicare Administrative Contractor (MAC) but the manual medical review process will be completed by CMS' Recovery Auditors, who began processing manual medical review of PT claims on April 1st, 2013.

A distinction in the manual medical review process exists, however, depending on whether the provider is in a Recovery Auditor Prepayment Review Demonstration state or not. Therapy providers in the demonstration states - Florida, California, Michigan, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina and Missouri - will receive their Additional Documentation Request (ADR) from the MAC but will send that additional documentation to the Recovery Auditor. The prepayment review then must, by law, be completed by the Recovery Auditor within 10 days of receiving the additional documentation. Providers in other states will face "immediate post-payment review." Their MAC will pay the claim once received and any ADR will come directly from the Recovery Auditor, who will again complete the manual medical review and notify the MAC of the payment decision within 10 days.

The CMS FAQ also acknowledged the existing $1900 therapy cap and made clear that "no Recovery Auditor is approved for therapy review between $1900 and $3700." CMS noted that such a review could occur in the future but that it is currently outside this mandate.

The outpatient therapy manual medical reviews and ADRs will be per claim. The Recovery Auditors will be paid a contingency fee and operate under existing policy guidelines. Of note, they are required to use Registered Nurses and/or therapists when conducting medical necessity and coverage decisions, and certified coders in coding determinations. Importantly, in CMS FAQ answer 19, CMS states that additional documentation limits will not apply to therapy pre and post payment reviews.

Therapy providers may appeal their adverse manual medical review determinations through their MAC, and the Medicare administrative appeals process remains unchanged. Providers must prepare for inevitable documentation requests and account for manual medical reviews in their Medicare audit compliance systems.

Wachler & Associates' healthcare attorneys regularly counsel therapy providers in a variety of matters. If you or your healthcare entity has any questions regarding CMS' new outpatient therapy manual medical review process, or otherwise need assistance with a Medicare audit or RAC compliance plan, please contact our healthcare attorneys at 248-544-0888.

On April 24, 2013, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule that increases CMS' ability prevent fraudulent Medicare providers from enrolling, or remaining enrolled in the Medicare program. The provisions that CMS proposes to implement include:

• Allowing CMS to deny the enrollment of any provider, supplier or owner affiliated with an entity that has unpaid Medicare debt in order to prevent entities with such debt to avoid repayment by leaving the Medicare program and re-enrolling as a new business.
• Denying enrollment or revoking a provider or supplier's Medicare billing privileges if a managing employee has been convicted of certain felony offenses.
• Revoking the Medicare billing privileges of providers and suppliers that are found to have a pattern of billing for items or services in a manner not accordance with Medicare billing requirements.
• Making the effective date of Medicare billing privileges (typically, the date in which the enrollment application was filed) consistent across certain provider/supplier types.

In addition to the proposed changes to the Medicare enrollment provisions, CMS also proposes to increase the potential reward amount to people that provide tips of Medicare fraud and abuse. The proposed changes would increase the reward percentage for recovered Medicare funds from 10% to 15%, and would substantially increase the reward cap from $1,000 to $9.9 million.

If you have any questions regarding these recent developments, or have any questions relating to the Anti-Kickback Statute, Stark Law or other federal or state fraud and abuse regulations, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.

On April 26, 2013, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to clarify when a Medicare beneficiary is appropriately admitted to a hospital as an inpatient and what is required for Medicare Part A payment of hospital inpatient services. In this rule, CMS proposes a time-based presumption of medical necessity for hospital inpatient services based on the beneficiary's length of stay. More specifically, RACs and other Medicare contractors would presume that hospital inpatient admissions are appropriate for payment under Medicare Part A if the beneficiary is admitted to the hospital pursuant to a physician order and receives care for at least two midnights. Similarly, there would be a presumption that hospital inpatient admissions spanning less than 2 midnights should have been provided on an outpatient basis, unless there is clear documentation in the medical record supporting the physician's order and expectation that the beneficiary would require care spanning more than 2 midnights or the beneficiary is receiving a service or procedure designated by CMS as inpatient-only. In contrast, CMS's current manual instructions indicate that physicians should use a 24-hour period and the expectation of a beneficiary's need for an overnight stay in the hospital as inpatient admission benchmarks. In reviewing inpatient stays that did not reach the 2 midnight threshold, RACS and other Medicare contractors will be instructed to employ factors similar to those currently included in the Medicare Benefit Policy Manual (MBPM) to determine the medical necessity of the inpatient admission. These factors include, for example, the severity of the signs and symptoms exhibited by the patient and the medical predictability of something adverse happening to the patient. Later in the proposed rule, however, CMS indicates that it will codify the general 2 midnight threshold rule at 42 CFR 412.3(c)(1) and that 42 CFR 412.3(c)(2) would include an exception stating that "...if an unforeseen circumstance, such as beneficiary death or transfer, results in a shorter beneficiary stay than the physician's expectation of at least 2 midnights, the patient may be considered to be appropriately treated on an inpatient basis, and the hospital inpatient payment may be made under Medicare Part A." This language tends to suggest that a Medicare contractor's review of an inpatient admission of less than 2 midnights will focus less on the clinical factors listed above, and more on "unforeseen circumstances." Clarification will likely be sought during the open comment period.

In addition, the proposed rule also clarified the requirement that a patient is admitted as an inpatient only on the recommendation of a physician or licensed practitioner permitted by the State to admit patients to the hospital. The proposed rule explained that this requirement is understood to mean that a patient is admitted through an inpatient admission order given by the practitioner responsible for the care of the patient, provided that the practitioner, either a physician or other licensed practitioner, has been authorized by the State and granted admitting privileges by the hospital. However, CMS clarifies that although the Conditions of Participation (CoPs) do not specifically prohibit the delegation of an inpatient admission to a non-physician practitioner, for payment purposes CMS will clarify in regulation that the authority to admit cannot be delegated to an individual who lacks that authority in his or her own right.

This proposed policy is intended to address longstanding concerns from hospitals that they need more guidance on when a patient is appropriately treated and paid by Medicare as an inpatient. Although CMS' proposed rule provides some clarity on how a medically necessary inpatient admission would be defined by a Medicare review contractor, it raises other questions, particularly how Medicare review contractors will review inpatient admissions spanning less than 2 midnights. Please note that CMS will accept comments on the proposed rule until 5:00 p.m. EST on June 25, 2013. The comments must be received by that time and date, not postmarked. CMS will respond to comments in a final rule to be issued by August 1, 2013.

If you have any questions regarding CMS's proposed rule or questions regarding the RAC appeals process, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888 or WAPC@wachler.com.

The Centers for Medicare & Medicaid Services (CMS) plans to make significant changes to the Recovery Auditor (RAC) program. In doing so, CMS hopes to address providers' complaints and improve the RAC program through new Recovery Auditor contracts that will be awarded next year.

The most significant change is the creation of a fifth, nationwide Recovery Audit Contractor that is solely responsible for the identification and correction of improper payments for home health and hospice claims and payments for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). The change leaves the existing four regional RACs in place to identify overpayments for all other Medicare A/B claims and provider types.

In the Statement of Work for DME and Home Health Recovery Auditors, CMS claims that the changes will further the Recovery Audit Program's goal of "efficient detection and correction," and assist the Agency in "lowering future error rates and identifying improper payments that will have the greatest impact on the [Medicare and Medicaid] Trust Fund."

Further, all Recovery Auditors will now be required to "support" CMS in the administrative appeals process and, if necessary, in appeals to federal court. Recovery Auditors must provide supporting documentation, including statutes, regulations, manuals and instructions. The RACs will also be required to represent CMS at "any hearings associated with the overpayment when requested by CMS." Specifically, the new Statement of Work states that RACs must participate and take party status in 25% of cases that reach the administrative law judge (ALJ) level.

These changes, among others, will be implemented through CMS' new recovery auditor contracts in early 2014. The new RAC contract period will run through 2018, and we suggest that all Medicare and Medicaid providers read through the modified RAC Statement of Work and also the new Statement of Work for DME, home health and hospice recovery auditors.

If you have any questions regarding how CMS' changes to the recovery audit contractor program affects your healthcare entity, or otherwise need assistance with Medicare or Medicaid recovery audits, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.

The Centers for Medicare & Medicaid Services (CMS) updated the Medicare provider Additional Documentation Requests (ADR) limitations, which relate to the Medicare Fee-for-Service Recovery Audit Program. These changes went into effect April 15, 2013. The limitations include:

• Recovery Auditors can select up to 75% of any claim type for review (compared to 100%). The remaining 25% can be requested from any or all other types. For example, if a provider submitted three different claim types, the Recovery Auditor may select up to 75% of the calculated ADR from one of the claim types, and the balance of the calculated ADR may be selected from any single or combination of the remaining claim types.
• Recovery Auditors may request up to 20 records per 45 days from providers whose calculated limit is 19 additional documentation requests or less (compared to a minimum of 35 records).

If you have any questions regarding the updated ADR limits, or if you need assistance in preparing for, or defending against RAC audits, or implementing a compliance program geared toward identifying and correcting potential risk areas related to RAC audits, please contact an experienced health care attorney at Wachler & Associates attorney at 248-544-0888

On April 17th, 2013, the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS) released an update to its Provider Self-Disclosure Protocol (SDP).

The SDP was established in 1998 to incentivize healthcare providers and suppliers to voluntarily disclose potential fraud related to payments received under Federal health care programs. All healthcare entities who are subject to the OIG's Civil Monetary Penalty (CMP) authorities are eligible to use the SDP.

The SDP dictates the procedures that healthcare providers must follow to identify potentially fraudulent conduct, determine damages, and report to the OIG. Successful use of the SDP leads to a settlement that reduces the healthcare entity's liability under the OIG's CMP provisions. To this end, the updated SDP states the OIG's belief that providers who disclose fraud through the SDP deserve to pay less than they would be required to pay pursuant to an investigation initiated by the government. Notably, the updated SDP explicitly references the OIG's general practice of imposing a multiplier of 1.5 times the single damages in CMP settlements of SDP cases; however, the OIG expressly reserves the right to determine whether a higher multiplier is warranted in each case. In addition, the OIG states that corporate integrity agreements are typically not required for providers utilizing the SDP in good faith.

The OIG reports that through the SDP, the OIG has resolved over 800 disclosures and returned more than $280 million to the U.S. government. The most commonly disclosed instances of healthcare fraud include submissions of false or inflated Medicare claims, receipt of federal healthcare payments by entities that employ persons excluded from Medicare, and payments to doctors meant to induce referrals. These instances commonly result from violations of the Anti-Kickback Statute. Arrangements that solely violate the Stark Law are not to be disclosed using the SDP and should instead be disclosed through CMS' Self-Referral Disclosure Protocol. However, the SDP is available for hybrid offenses that violate both the Anti-Kickback Statute and Stark Law. Because many arrangements that implicate the Stark Law also implicate the Anti-Kickback Statute, it is important for providers who suspect possible fraud to carefully analyze these arrangements so that the correct course of action can be taken.

Further, the OIG recognizes self-disclosure as the result of an effective compliance plan. As compliance plans are increasingly required as a condition to participation in Federal healthcare programs, the implementation of a proper compliance plan is recommended for reducing government scrutiny. Overall, it is important that health care providers maintain an effective and well-developed compliance plan that includes processes for detecting, reporting and correcting potential misconduct.

If you need assistance in analyzing established or prospective business arrangements under the Anti-Kickback Statute, Stark Law or other federal or state fraud and abuse laws or regulations, or need help developing an effective compliance plan, please contact an experienced health care attorney at Wachler & Associates at (248) 544-0888.

Intermountain Healthcare, the largest health system in Utah, has agreed to pay $25.5 million to resolve claims that it violated the federal Stark law and False Claims Act by engaging in inappropriate financial relationships with referring physicians.

In 2009, Intermountain disclosed to federal officials that the system may have illegally paid bonuses to 37 doctors based on their patient referrals. If true, Intermountain would have been in violation of the Stark law. In addition, Intermountain disclosed that it compensated more than 170 doctors in the absence of written agreements, including via rentals of office space in several cities without written lease agreements. In total 209 physicians were involved in the violations, which spanned over a 10 year period.

Intermountain discovered the violations through its regular review process, and reported them to the government in 2009. Intermountain cites the complexities of the Stark law's regulations as one cause of its noncompliance. According to Intermountain's Chief Medical Officer Dr. Wallace, Intermountain should have more closely monitored the situation and although Intermountain's management realized that penalties could be significant, they chose to self-disclose the issues.

Intermountain's self-disclosures ultimately led to a $25.5 million settlement agreement, which is one of the largest recent healthcare settlements with the Department of Justice. Freeman Health System of Joplin, Missouri entered into a similar settlement agreement with the Department of Justice last November for $9.3 million. Notably, Intermountain has not admitted to any wrongdoing in the settlement agreement nor has there been determination of liability on the part of Intermountain or the physicians involved.

The partnership between the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative and the Department of Justice has led to intensive efforts to prevent and reduce Medicare and Medicaid fraud. As illustrated by these recent settlements, the False Claims Act has proven to be a very effective tool for the government, and has resulted in recoveries in excess of $14.2 billion since the partnership began in 2009.

If you need assistance determining how the Stark law and False Claims Act may affect your practice or how to set up a regular review process, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.

On April 2, 2013, the Centers for Medicare & Medicaid Services (CMS) held an Open Door Forum to discuss CMS's Administrator's Ruling (CMS-1455-R) and Proposed Rule (CMS-1455-P) that provide for significant changes to Medicare's Part B payment policy when a Part A hospital inpatient claim is denied as not medically necessary because the care was not provided in the appropriate setting.

During this Forum, CMS Representatives advised that hospitals do not have to wait until CMS's Change Request 8185 implementation date of July 1, 2013 to rebill Part B for Part A inpatient claims denied as not reasonable and necessary pursuant to the interim ruling. CMS Representatives stated that additional instructions for rebilling Part B claims will be released shortly and should be similar to those found in the now defunct Part A to Part B Rebilling Demonstration Program. CMS representatives also confirmed that the interim ruling does not apply to Medicare Advantage.

For those unable to attend the Open Door Forum, a recording of the Forum is available by phone beginning at 5:00 pm on April 2, 2013. To access the recording, dial 1-855-859-2056 and reference conference ID: 78861443. The recording expires after two business days. If you have questions regarding these recent developments or questions about the Medicare appeals process, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.

On Tuesday, April 2, 2013 (2:00-3:00 pm EST), the Centers for Medicare & Medicaid Services (CMS) will be holding an Open Door Forum for stakeholders in the healthcare community to call in and discuss the recent changes to the Medicare Part B payment policy in light of recently issued CMS Ruling. The CMS Ruling allows for hospitals to submit a Part B claim when a Part A inpatient claim is denied as not reasonable and necessary.

Tuesday's Open Door Forum will be conference call only. To participate by phone, dial 1-800-837-1935 and reference conference ID: 78861443. Persons participating by phone do not need to RSVP. TTY Communications Relay Services are available for the Hearing Impaired. For TTY services dial 7-1-1 or 1-800-855-2880. A Relay Communications Assistant will help. Encore is an audio recording of this call that can be accessed by dialing 1-855-859-2056 and entering the Conference ID beginning 2 hours after the call has ended. The recording expires after 2 business days. The number for Encore is 1-855-859-2056; Conference ID: 78861443.

On March 22, 2013, the Centers for Medicare and Medicaid Services (CMS) released Change Request 8185 to implement CMS Ruling (CMS-1455-R) and provide Medicare contractors with additional guidance for accepting claims rebilled from Part A to Part B. The CMS Ruling, which was released on March 13, 2013, permits hospital providers to rebill under Part B for Part A inpatient claims denied as not reasonable and necessary.

The Change Request reiterates the numerous revisions to the Part B payment policy when a Part A claim is denied as not reasonable and necessary. While the CMS Ruling remains in effect, the Change Requests instructs hospitals to submit Part B inpatient claims with the condition code "W2." By attaching the "W2" condition code, the hospital is acknowledging that the Part B claim is a duplicate of the Part A claim that was previously denied, no payment shall be made for items or services included on the Part A claim, and the beneficiary will be refunded for any amounts collected from the beneficiary with respect to the Part A claim. Furthermore, by including the "W2" condition code, the hospital attests that no appeals are pending with respect to the previously submitted Part A claim and that any previous appeal of the Part A claim has become final, binding or dismissed, and no further appeal will be filed on the Part A claim. Any Part B inpatient claim submitted under the CMS Ruling that does not include condition code "W2" will be rejected by the contractor. The effective date of the Change Request mirrors that of the CMS Ruling, which took immediate effect on March 13, 2013. However, the implementation date of the Change request is July 1, 2013. Despite the delayed implementation date of the Change Request, hospitals may submit their Part B claims prior to the implementation date, according to CMS.

Wachler & Associates will continue to monitor the developments of CMS's revised policy on Part B billing following the denial of a Part A inpatient hospital claim. If you have any questions regarding these developments or questions regarding the Medicare appeals process, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.