April 20, 2015

OIG Advisory Opinion Clarifies that Excluded Providers May Receive Payments for Services Performed and Billed by Practice Prior to Exclusion

On February 9, 2015, the U.S. Department of Health and Human Services Office of Inspector General (OIG) delivered an advisory opinion finding that a physician or provider previously excluded from participating in Medicare, Medicaid, and all other federal health care programs was permitted to share in federal payments with his former medical practice when the payments were based on services furnished prior to the individual's exclusion even though payment was received by the practice after the exclusion. The Petitioner sought guidance from the OIG as to whether sharing in these payments with the practice would violate the terms of the Petitioner's exclusion from federal health care programs and would potentially subject the Petitioner to additional administrative sanctions or other liability.

The Petitioner was a physician who was prohibited from participating in all federal health care programs for 20 years under the terms of a criminal plea and civil False Claims Act settlement (Settlement). The Settlement resolved various allegations of fraud against the Petitioner and required the Petitioner to divest all his ownership in the medical practice. The divestiture was ultimately accomplished through an asset purchase agreement between the Petitioner and specified buyers. The asset purchase agreement was executed shortly after the effective date that Petitioner became an excluded provider under the terms of the Settlement, which prohibited his or her participation in federal health care programs. Under the terms of the purchase agreement, the Petitioner was permitted to share in a portion of the Practice's returns after the Petitioner divested his or her ownership in the Practice as long as those payments were for services that the Petitioner or Practice provided to patients and billed to federal health care programs before the Petitioner became an excluded provider.

The OIG's February 9th, 2015, advisory opinion began its analysis by citing federal statutes that prohibit payment by all federal health care programs for items or services furnished: (1) by an excluded provider; or (2) at the medical direction or under the prescription of an excluded person. The effects of becoming an excluded provider was not elaborated upon in the February 9th advisory opinion, however the OIG more fully addressed and explained the effect of provider exclusions in its May 8, 2013, Special Advisory Bulletin titled "Effect of Exclusion from Participation in Federal Health Care Programs."

The February 9, 2015 advisory opinion warns that an excluded provider may be subject to civil monetary penalties for every claim that the excluded provider submits, or that he or she causes to be submitted, during the period that the provider is excluded from the federal health care programs. The advisory opinion provides further clarification by explicitly stating that the prohibition on payments applies only to services or items provided by, or under the prescription of or at the medical direction of, an excluded provider on or after the date of exclusion. In sum, as the Petitioner sought to receive payments from the practice for services both furnished and billed before the effective date of exclusion, the OIG concluded that receiving those payments would not be grounds for imposition of civil monetary penalties or any other administrative liability.

April 17, 2015

FDA Gives Finalized Guidance on Medical Device Data Systems, Mobile Apps, and Medical Image Storage and Communications Devices

The Food and Drug Administration (FDA) issued non-binding guidance on February 9, 2015 finalizing its position on regulatory compliance of medical device data systems (MDDS), medical image storage and communications devices and mobile medical applications. In its recently issued guidance, the FDA explained that it will not enforce compliance with the regulatory controls that apply to MDDS, medical image storage devices and medical image communications devices because the devices pose a low risk to the patients and play an important role in the advancement of digital health care. Under FDA regulations, MDDS is defined as hardware or software that electronically transfers or stores medical device data, electronically converts medical device data from one format to another, or electronically displays medical device data. A medical image storage device stores and retrieves medical images and a medical image communication device electronically transfers medical image data between medical devices.

As a result of the FDA's position, manufacturers of MDDS or medical storage and communication devices will not have to register with the FDA, submit to pre-market review or post-market reporting, and can avoid quality system regulation, thereby saving manufacturers time and money. The FDA further stated that it will not enforce compliance with pre-market notification for MDDS, or medical image storage and communication devices that would have otherwise required such notification under the regulations.

Additionally, on February 9, 2015 the FDA issued non-binding guidance specific to mobile apps. The issued guidance contains three appendices that explain and provide examples of apps that are within FDA enforcement, outside of FDA enforcement, and those over which the FDA abstains from enforcing the regulations. The first appendix gives examples of apps that are not "devices" under FDA regulations; the second appendix gives examples of apps that may meet the definition of "device," but but regulations will not be enforced as the apps are considered low risk to patients and users; and the third appendix gives examples of what the FDA considers "mobile medical apps" over which the FDA does intend to enforce its regulations. The FDA defined "mobile medical apps" as apps that meet the definition of a "device" and are intended to be used as an accessory to a regulated device or are intended to transform a mobile platform into a device. In its guidance on mobile apps, the FDA stated many mobile devices do not fall under its definition of a "device" in 21 USC ยง 321(h) and are therefore not regulated by the FDA. The FDA did, however, strongly recommend that manufacturers of mobile apps that may qualify as a "device" follow the FDA's Quality System regulation in developing and designing apps. Lastly, while the FDA acknowledged that many current mobile apps do not constitute "devices" under FDA regulations, or are simply not regulated by the FDA, current and new mobile medical devices are subject to FDA enforcement.

In sum, the dually issued FDA guidance on MDDS, medical image storage and communication devices, and mobile apps in large part constitutes an abstention on behalf of the FDA, perhaps signalizing the FDA's recognition that strict enforcement of FDA regulations on MDDS, medical image storage and communication devices, and mobile apps will unduly burden manufacturers, slow the development of digital health care and fail to provide any greater protection to the public. However, mobile medical apps are subject to FDA regulation and enforcement and developers are encouraged to engage in open dialogue with the FDA to discuss potential regulatory requirements.

If you have any questions relating to MDDS, medical image storage and communication devices, or mobile application compliance with FDA regulations or any other compliance issues, please contact a Wachler & Associates attorney at 248-544-0888 or at wapc@wachler.com. For further updates on FDA regulatory requirements and other healthcare news, 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.

April 3, 2015

CMS Offers Clarification to HHA Contradictory Guidance

On March 18, 2015, Wachler & Associates attorneys, Andrew Wachler and Jessica Forster, highlighted contradictory guidance released by the Centers for Medicare and Medicaid Services ("CMS") relating to home health agencies ("HHAs") face-to-face encounter documentation. When the calendar year ("CY") 2015 Home Health Final Rule ("Final Rule") went into effect on January 1, 2015, new rules for HHAs face-to-face encounter documentation were implemented. Most prominently, the revised Final Rule eliminated the brief narrative requirement in almost all cases for home health face-to-face encounter documentation. Although the brief narrative requirement was removed, CMS mandated that the certifying physician's medical record include all required elements for the physician certification. Additionally, CMS stated in the Final Rule that a HHA may communicate with and provide information to the certifying physician about the patient's homebound status and need for skilled care and the certifying physician could incorporate the information into his or her medical record for the patient.

In two separate CMS conference calls, representatives provided contradictory information with regards to physician documentation responsibilities. The first conference call held by CMS properly reinforced the Final Rule's statement that HHAs could provide information to the certifying physician that the physician could incorporate into his or her medical record (a) if the physician signed/dated the documentation and (b) if the physician's own entries corroborated the information from the HHA. The Final Rule and the first conference call both said that this information from the HHA would be considered by medical reviewers to determine if the certification requirements were met. It was only during the second conference call, on March 11, that CMS contradicted prior guidance by stating that the physician's own documentation must meet the certification requirements and that medical reviewers were advised of this instruction. The CMS representative reiterated that even if a certifying physician signs and dates a HHA's documentation that does not mean that the documentation becomes part of the physician's medical record. Wachler & Associates reached out to CMS for clarification.

On March 23, 2015, CMS clarified the contradiction. In its reply, CMS stated that the patient's medical record must support the certification of eligibility and documentation in the patient's medical record shall be used as a basis for certification of home health eligibility. Importantly, CMS also noted that reviewers will consider HHA documentation if it is incorporated into the patient's medical record and signed off by the certifying physician.

Wachler & Associates will continue to monitor and provide timely updates on important HHA developments. Interested parties should listen to the next CMS Special Open Door Forum, which is scheduled for April 28, 2015 at 1:30pm ET. If you have any questions regarding the Final Rule, or HHAs in general, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com.

March 2, 2015

CMS to Audit All Home Health Agencies

In response to a report issued by the U.S. Department of Health and Human Services Office of Inspector General ("OIG") titled Limited Compliance with Medicare's Home Health Face-to-Face Documentation Requirements, the Centers for Medicare and Medicaid Services ("CMS") has decided to audit all home health agencies ("HHAs") in the country. In its report, OIG detailed its findings stemming from a review of 644 home health face-to-face encounter documents that were analyzed to determine if they confirmed encounters and contained the required elements. OIG reported that 32 percent of home health claims that required face-to-face encounters did not meet Medicare requirements. OIG estimated that this resulted in $2 billion in inappropriate payments. After reviewing the study's results, OIG recommended that CMS:

  • Consider requiring a standardized form to ensure that physicians include all elements required for the face-to-face documentation;
  • Develop a specific strategy to communicate directly with physicians about the face-to-face requirement; and
  • Develop other oversight mechanisms for the face-to-face requirement.
At the end of the OIG report, CMS concurred with these three recommendations. In response, CMS reported that it is implementing an oversight plan of HHAs through the Supplemental Medical Review Contractor ("SMRC"), one of CMS's newest tools meant to ensure program integrity. CMS stated that "the SMRC will perform approximately five document-only reviews for every HHA in the country to validate that the most recent/valid face-to-face encounter is in the medical record." CMS reported that this will be a one-year, service-wide review of every HHA and CMS will provide further recommendations after reviewing the results.

Additionally, CMS has published proposed electronic and paper versions of its clinical documentation template to assist physicians in documenting their home health face-to-face encounters. Because it is the first time CMS has provided the healthcare industry templates for a progress note, it is soliciting comments on the templates. Those interested in the home health face-to-face proposed templates may participate in Special Open Door Forums occurring in March, April and May 2015. Should the templates be adopted, their use will be voluntary. CMS's proposal for the templates comes at a time when HHAs are revising their policies and protocols for face-to-face encounter documentation in light of the elimination of the physician brief narrative requirement in most cases effective January 1, 2015.

HHAs should be aware of the imminent nationwide SMRC audit. It is important that HHAs develop an effective compliance program that provides proactive measures to educate staff and certifying physicians on documentation requirements and prepare for an audit. If you have any questions regarding CMS's impending audit or need assistance in creating a compliance plan to meet the home health face-to-face encounter documentation requirements, please contact an experienced healthcare attorney via email at wapc@wachler.com or 248-544-0888.

February 23, 2015

President's 2016 Budget Proposes Changes to Recovery Audit Procedures

On February 2, 2015, the White House released President Obama's budget report for fiscal year 2016. A significant portion of the report is dedicated to healthcare issues. The report proposes several reforms to the Medicare program and purports a projected savings of $407.2 billion in the next 10 years. Additionally, the report includes a $403 million multi-year investment towards preventing, detecting, and prosecuting healthcare fraud and abuse. Moreover, the 2016 budget provides for a $201 million investment to continue to fund the full Health Care Fraud and Abuse Control discretionary cap adjustment, increase funding to recovery auditors to take on more corrective actions, and provide more funds to the Medicaid Integrity Program. The President's budget states an intention to increase such funding to $4.6 billion over the next 10 years.

The budget brief published by the U.S. Department of Health and Human Services ("HHS"), proposes numerous measures in an attempt to curb the Medicare appeals backlog. Suggestions made by the Office of Medicare Hearings and Appeals ("OMHA") are summarized as follows:

  • Invest new resources at all levels of appeal to increase adjudication capacity and implement new strategies to alleviate the current backlog;
  • Take administrative actions to reduce the number of pending appeals and prevent new cases from entering the system; and
  • Propose legislative reforms that provide additional funding and new authorities to increase efficiency and address the volume of incoming appeals.
The investment increases suggested by OMHA are part of its requested budget of $140 million, a $53 million increase from fiscal year 2015. Aside from bolstered investment, OMHA also proposed several reforms that would impact the Medicare audit process. One such proposal is the implementation of a per-claim filing fee charged to providers at each level of the Medicare appeals process. The proposal allows for a refunding of the fee, but only in such instances where appellants receive a fully favorable appeal decision. OMHA projects that these filing fees will amount to $5 million, which will in turn fund 119 ALJ teams. The increase in ALJ teams is intended to decrease the backlog by improving efficiency and responsiveness.

OMHA also proposed the authorization of sampling and extrapolation techniques throughout the appeals process. This proposal would allow providers to consolidate all of their appeals into a single administrative appeal at all levels of the appeals process. If enacted, the proposal would require parties who are appealing claims included within an extrapolated overpayment, or consolidated previously, to file one appeal request for any such claims in dispute.

While HHS claims that these measures should assist in alleviating the backlog, the bulk of the reforms miss their mark. Ideally, HHS should rework the entire RAC process. For example, many industry stakeholders believe the financial incentives for RACs to deny claims are misguided. Wachler & Associates regularly counsels entities on how best to proactively prepare for an audit and mitigate audit risks. If you or your healthcare entity have questions regarding the outlined proposals, or are currently undergoing an audit and need assistance defending claims, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com.


February 20, 2015

CMS Considers Shortening the Meaningful Use Reporting Period

On January 29, 2015, the Centers for Medicare and Medicaid Services ("CMS") announced that it will consider shortening the meaningful use reporting period for electronic health record ("EHR") systems. Specifically, CMS stated that it intends to reduce the 2015 reporting period from 12 months to 90 days. Under the meaningful use incentive program, providers have faced the risk of a Medicare penalty if they failed to satisfy the program's requirements. A shortened reporting period of 90 days may increase compliance with Stage 2 of the program and reduce the reporting burden on providers. Additionally, providers can schedule their reporting period for the second half of 2015, providing additional time for providers to implement the EHR systems at Stage 2.

In a statement following CMS's announcement, the President of the American Medical Association ("AMA"), Steven J. Stack, MD, expressed the organization's support of the proposed shortening of the reporting period. However, Stack criticized the incentive program, stating that "EHRs are intended to help physicians improve care for their patients, but unfortunately, today's EHR certification standards and the stringent requirements of the meaningful-use program do not support that goal and decrease efficiency."

In its announcement, CMS also stated its intent to align the meaningful use reporting periods to the calendar year in an effort to give hospitals more time to integrate the 2014 Edition software and better coordinate with CMS quality programs. Although the proposed changes to the reporting period will not delay CMS's rollout of the forthcoming Stage 3 proposed rule, expected in March, CMS plans to limit the scope of the Stage 3 proposed rule to the criteria and requirements for meaningful use in 2017 and subsequent years.

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

February 17, 2015

CMS Modifies Manual Medical Review Process for Outpatient Therapy Claims Above Cap

The Protecting Access to Medicare Act of 2014 extended the process for exceptions to Medicare's outpatient therapy caps through March 2015. Exceptions to Medicare's outpatient therapy caps are allowed for medically necessary and reasonably therapy services. However, claims above $3,700 for physical therapy and speech language pathology services combined, and above $3,700 for occupational therapy services, are subject to manual medical review by recovery audit contractors (RACs). The caps are calculated per beneficiary, per year. While manual medical reviews of outpatient therapy claims above the cap were put on hold last year, existing RACs received approval on January 16, 2015 to resume sending additional documentation requests (ADRs) to Part B providers.

However, CMS recently introduced a new post-payment review system that requires RACs to review outpatient therapy claims using a new manual medical review process. RACs will now be required to review claims using a tiered approach to ADRs. The process allows for 100% review of provider claims above the $3,700 therapy caps ("eligible claims"), but prevents the RACs from requesting large and potentially unmanageable amounts of records at one time.

Beginning in January 2015, the new manual medical review process permits RACs to review 100% of a provider's eligible claims using a 5-step approach to ADRs. A RAC's first ADR may only review one claim, but additional ADRs may request records for an increasing percentage of claims. The second ADR may review up to 10% of eligible claims, the third ADR may review up to 25% of eligible claims, and the fourth ADR may review up to 50% of eligible claims. Finally, a RAC's fifth ADR to a particular provider may review 100% of the provider's total eligible claims. Please note that the new tiered approach retains the RAC's cycle of 45 days between ADRs.

The new manual review process meets the congressional mandate of a 100% review rate for outpatient therapy claims above the outpatient therapy cap. However, CMS believes the new manual review process will meet the congressional mandate in a more equitable manner. For now, the review process is limited to claims reviewed by existing RACs for claims made from March 1, 2014 to December 31, 2014. CMS has not yet finalized the process for claims made in 2015. The manual medical review process is also limited to claims made by Part B outpatient therapy providers, including but not limited to therapists' private offices, offices of physicians, Part B skilled nursing facilities (SNFs), home health agencies (HHAs), and hospital outpatient departments.

Wachler & Associates represents all types of therapy providers in a variety of matters, including responding to ADRs and appealing Medicare overpayment demands. If you or your healthcare entity has any questions regarding Medicare's new manual medical review process for therapy claims above the outpatient therapy cap, or seek help in defending an overpayment demand by a RAC, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. To stay up to date on healthcare regulatory developments, subscribe to our blog by adding your email address in the window on the top right of this page.

February 6, 2015

Pharmaceutical Company Pays $39 million to Settle Anti-Kickback and False Claims Allegations

On January 9, 2015, the Federal Bureau of Investigations and Department of Justice, along with several state Medicaid programs, announced that Daiichi Sankyo Inc. ("Daiichi"), a U.S. subsidiary of a Japanese pharmaceutical company, agreed to pay $39 million to settle alleged violations of the Anti-Kickback Statute and False Claims Act ("FCA").

In March 2010, a qui tam lawsuit was filed in the U.S. District Court for the District of Massachusetts. The allegation contained in the lawsuit related to speaker programs that Daiichi hosted between January 2004 and March 2011. The qui tam plaintiff, a former Daiichi sales representative, asserted that Daiichi inappropriately compensated physicians that participated in the speaker programs. The six primary allegations included:

  • The program honoraria recipient only spoke to member of his or her own staff in his or her own office;
  • Physicians took turns accepting speaker honoraria for duplicative discussions;
  • The audience include the honoraria's spouse;
  • The honoraria recipient did not speak at all because the event was previously canceled;
  • The program dinners exceeded Daiichi's internal cost limitation of $140 per person; and
  • Drugs that were promoted at the programs (Azor, Benicar, Tribenzor, and Welchol) were used for off-label purposes.
The Government contended that the meals, honoraria, and other remuneration paid to participating physicians amounted to illegal kickbacks that ultimately induced the physicians to prescribe the drugs for off-label use. Furthermore, this resulted in pharmacies unknowingly submitting false prescription drug claims because prescriptions for off-label uses are typically not eligible for reimbursement.

In addition to paying $39 million, Diiachi agreed to enter into a corporate integrity agreement that obligates it to implement dramatic internal reforms over the next five years. Specifically, the corporate integrity agreement mandates that Diiachi enact compliance programs to prevent similar improper practices from reoccurring. For the qui tam plaintiff's services, the former employee will receive $6.1 million of the Government's recovery.

Wachler & Associates regularly counsels providers regarding the FCA, Anti-Kickback Statute, and other federal and state fraud and abuse laws and assists in developing compliance programs to address these laws. If you or your healthcare entity have any questions regarding the FCA, Anti-Kickback Statute, and/or other federal and state fraud and abuse laws, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com.


January 29, 2015

HHS Sets Timelines for Focus of Reimbursement to Shift from Quantity to Quality

On January 26, 2015, the U.S. Department of Health and Human Services ("HHS"), for the first time ever, announced a timeline and corresponding goals to shift the basis of Medicare reimbursement away from the quantity of care provided towards the quality furnished to beneficiaries. With the passage of the Patient Protection and Affordable Care Act ("ACA") in 2010, Congress created several new payment models, including Accountable Care Organizations ("ACOs"), primary care medical homes, and new models of payment bundling for care. These models all share the commonality that they incentivize physicians to coordinate care for their beneficiaries, maintain quality, and control costs. With the proliferation of these models that focus on quality over quantity, HHS was compelled to reform the Medicare reimbursement process.

Specifically, HHS announced its goal of tying 30 percent of fee-for-service Medicare payments to quality output through alternative payment models, like ACOs or bundled payment arrangements, by the end of 2016. Furthermore, HHS plans on increasing that amount to 50 percent by the end of 2018. If this goal is met, half of all payments to physicians and hospitals will be made through alternative payment models by 2018. Additionally, HHS set a timeline for tying 85 percent of fee-for-service, or traditional, Medicare payments to quality output by 2016 through the Hospital Value Based Purchasing and Hospital Readmissions Reduction Programs. This number is also set to increase to 90% by 2018.

To accomplish this, HHS has created the Health Care Payment Learning and Action Network ("the Network"). The Network is an organization made up of health care stakeholders including private payers, consumers, providers, employers, and state Medicaid programs. The Network, which will hold its first meeting in March 2015, plans to expand alternative payment models nationwide into all areas of health care. HHS hopes that the intensity exhibited by the Network will even surpass its initial goals for program expansion.

In a separate announcement, the President of the American Medical Association, Robert Wah, MD, stated that the HHS timeline "aligns with the [AMA's] commitment to work toward innovative care delivery reform."

In 2011, Medicare essentially made zero payments to providers through alternative payment models. However, today the use of alternative payment models has increased to about 20 percent of all Medicare payments. HHS has already noted significant savings from the use of alternative payment models--reporting a $417 million savings to Medicare as a result of ACO programs. Moreover hospital readmissions have been reduced by eight percent, which is 150,000 fewer readmissions from January 2012 to December 2013.

If you or your healthcare entity have any questions regarding the implementation of new alternative payment models, please contact an experienced healthcare attorney by phone at 248-544-0888 or via email at wapc@wachler.com. Wachler & Associates will continue to keep you updated on HHS and Medicare news. If you are 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.

January 28, 2015

CMS Announces New RAC Contract for DME, Home Health and Hospice Claims

On December 30, 2014, the Centers for Medicare & Medicaid Services (CMS) announced that they had awarded the Region 5 Recovery Audit Contract (RAC) to Connolly, LLC. CMS contracts with RACs to identify and correct improper payments. Connolly, which has been the RAC for Region C, was awarded the Region 5 contract which covers claims for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS), home healthcare and hospice providers. With the awarding of the new RAC contract focused on DME, home health and hospice providers, these provider types can expect increased scrutiny of their Medicare claims.

CMS also outlined a number of "improvements" to the RAC program that will take effect with each new RAC contract awarded, beginning with the Region 5 contract awarded on December 30, 2014.

One of the "improvements" brought by the new RAC program is that the CMS has reduced the RAC look-back period to 6 months from the date of service for patient status reviews where hospitals submitted the claim within 3 months of the date of service. Previously, the look-back period for RACs was from 3 years and hospitals had to submit a claim within one year from the date of service in order to comply with the timely filing rules, leaving hospitals with the inability to rebill denials from patient status reviews. Another improvement is that the CMS has established new Additional Documentation Request (ADR) limits based on a provider's compliance with Medicare rules. Specifically, the ADR limits will align with providers' denial rates (i.e., providers with low denial rates will have lower ADR limits), and ADR limits will be adjusted as a providers' denial rates decrease.

With the new RAC contract awarded, DME, home health and hospice providers should be prepared for increased audit activity from the new RAC. If you are currently undergoing an audit and need assistance defending claims denials, or have any questions about how to proactively prepare for an audit or mitigate audit risk, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. To continue to stay updated on healthcare 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.

January 13, 2015

House Republicans Release Proposal to Eliminate Two-Midnight Rule

In November 2014, Republicans in the U.S. House of Representatives circulated a "discussion draft," which proposed significant reforms to the process by which Medicare reimburses hospitals for short stays. Perhaps most notably, the GOP proposal would eliminate the two-midnight rule. Since its enactment, the two-midnight rule has remained controversial among healthcare providers. Under the two-midnight rule, an admission is appropriate only when the patient remains in the hospital for two midnights. However, since its adoption, the rule has created confusion and elicited criticism from providers who claim that it undermines their clinical decision-making process. Acknowledging the issue, the Centers for Medicare and Medicaid Services (CMS) limited enforcement of the two-midnight rule and solicited stakeholders for suggestions on improving it.

The discussion draft also proposes the establishment of a new Medicare payment system for hospital stays. Under the proposal, the payment system would go into effect in fiscal year 2020 and unify the currently separate inpatient and outpatient payment systems. During the five years before the implementation, CMS would be tasked with developing a transitional, per-diem payment system for short-term hospital stays. Additionally, CMS would restrain Recovery Audit Contractors (RAC) until the new payment system is adopted. This reprieve is important when establishing a new payment system because of the RAC program's onerous presence in the healthcare industry. Just last year, the RAC program recouped over $3 billion in Medicare overpayments, and audit appeals have created such a backlog that many appellants are waiting over three years for a decision. The backlog of appeals violates the statutory requirement for Administrative Law Judges to decide Medicare appeals within 90 days of the request for hearing.

Also included in the GOP's discussion draft is a partial elimination of the Patient Protection and Affordable Care Act's (ACA) moratorium on the expansion of physician-owned hospitals. Currently, the law prohibits new physician-owned hospitals, expansion of existing physician-owned hospitals, and an increase in the percentage of physician ownership in existing physician-owned hospitals. Any reduction of the physician-owned hospital limitation would be welcomed news in the physician community. Further, in an effort to curb costs, the proposal also includes provisions that would promulgate a nationwide bundled payment program. Upon analyzing these proposals, many stakeholders believe that the circulation of the discussion draft indicates the direction of the anticipated Medicare debate in Congress and expect several of these provisions to be at the forefront of discussions in the next congressional session.

Wachler & Associates has been involved in policy formation regarding the two-midnight rule and we believe that any change to the rule will have widespread impact on providers and the Recovery Audit program. Our firm will continue to monitor breaking national healthcare news and provide timely updates. If you have questions regarding the discussion draft, the two-midnight rule, the moratorium on physician-owned hospitals, or any other health law compliance matter, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. To remain 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.

December 22, 2014

Final Rule Tightens Provider Enrollment Policies, Expands CMS Authority

On December 3, 2014, the Centers for Medicare and Medicaid Services ("CMS") released a final rule that broadens its authority to deny providers or suppliers from enrolling in Medicare and revoke providers already participating. The final rule, which is scheduled to go into effect on February 3, 2015, permits CMS to deny or revoke enrollment of providers with abusive billing patterns or practices, deny enrollment of providers affiliated with unpaid Medicare debt and deny or revoke enrollment of providers if a managing employee has been convicted of certain felonies.

CMS plans to identify improper billing by analyzing several factors such as:

  • The percentage of denied claims;
  • The reason for the denials; and
  • The length of any billing irregularities.

Providers and suppliers affiliated with entities with unpaid Medicare debt may prevent the enrollment denial or revocation if they agree to a structured repayment plan or pay the debt in full. The purpose of this provision is to prevent entities from incurring substantial Medicare debt, exiting the program and then re-enrolling as a new entity. Currently, CMS can only deny enrollment to those who have overpayments. The final rule explicitly expands this power to include Medicare debt, which includes overpayments as well as other financial obligations.

The final rule also authorizes CMS to deny or revoke enrollment to entities that continue to retain a managing employee that has been convicted of a certain felonies within the past ten years. CMS identified felonies that it deems detrimental to beneficiaries and the Medicare program, including assault, income tax evasion, and embezzlement.

The final rule also restricts reimbursement for ambulance suppliers by eliminating their ability to bill Medicare for the year prior to their enrollment. Additionally, the final rule brings ambulance providers into the same fold as practitioners by requiring that they submit all claims within sixty days of enrollment revocation. CMS estimates that these provisions will save Medicare $327 million annually.

Wachler & Associates regularly counsels providers regarding CMS rules and regulations. If you have any questions about CMS' final rule, or how the new billing parameters may impact your practice, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. To continue to stay updated on healthcare 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.

December 17, 2014

Medicare Pilot Program Requires Prior Authorization for Ambulance Transport Services

On December 1, 2014, the Centers for Medicare and Medicaid Services ("CMS") launched a three-year pilot program ("the program") in an effort to curb improper Medicare payments to ambulances providers. Under the program, CMS requires prior authorization for repetitive, scheduled, non-emergent ambulance transport claims billed using the following HCPCS codes: (1) A0425 - BLS/ALS mileage, per mile; (2) A0426 - Ambulance service, Advanced Life Support (ALS), non-emergency transport, Level 1; and (3) A0428 - Ambulance service, Basic Life Support (BLS), non-emergency transport. CMS defines a "repetitive ambulance service" as medically necessary ambulance transportation services that are furnished three or more times in a ten-day period, or at least once per week for at least three weeks. According to CMS, these services are often used by elderly beneficiaries that require transportation for dialysis, cancer, or wound treatment.

The prior authorization the process requires the ambulance provider to request provisional affirmation of coverage by CMS before a service is rendered to a beneficiary and before a claim is submitted for payment. CMS believes that prior authorization will ensure that the ambulance service is medically necessary and meets the applicable Medicare coverage criteria. According to CMS, the Medicare Administrative Contractor (MAC) will make every effort to review the prior authorization request and postmark decisions letters win ten business days. Each prior authorization decision may affirm up to 40 round trips per request in a 60-day period. The prior authorization request submitted by an ambulance provider must include:

  • The beneficiary's name, Medicare number, and date of birth;
  • The physician's name, national provide identifier ("NPI"), and address;
  • The provider/provider's name, NPI, and address;
  • Procedure codes;
  • Submission date of the prior authorization request;
  • Start of the 60-day period;
  • Indicate is the request is an initial or resubmission review;
  • Physician certification statement;
  • Number of transports requested;
  • Documentation from the medical record to support the medical necessity of repetitive transports;
  • Information on the origin and destination of the transports; and
  • Any other relevant document as deemed necessary by the Contractor to process the prior authorization.
For prior authorization requests denied by CMS, the ambulance provider can resolve any identified deficiencies in the request and resubmit the request; this can be done an unlimited number of times. The provider may also choose to provide the service and submit the claim for payment, even when the prior authorization is denied; however, any claim submitted will be denied, and payment can be sought through the Medicare appeals process. Finally, if an ambulance provider has not requested prior authorization before the fourth round trip, any subsequent claim will be stopped and reviewed on a prepayment review basis.

The initial stages of the pilot program apply only to ambulance providers located in South Carolina, New Jersey and Pennsylvania, and do not include ambulance transports included in a covered Part A stay or provided by an institutionally-based ambulance provider. However, even if currently outside the scope of the pilot program, providers should be alerted to CMS's recent scrutiny of ambulance transport services and may be a sign that providers could be targeted for Medicare audits in the future. If you are an ambulance provider and have any questions regarding the new prior authorization rules or the implications that the new pilot program may have on your practice, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com.

December 12, 2014

CMS Issues Proposed Rule Postponing ACO Penalties

On December 1, 2014, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule that would postpone penalties against accountable care organizations (ACOs) for three years. The proposed rule is one of the latest measures CMS has taken to encourage ACOs to stay in the Medicare Shared Savings Program. In 2012, as part of the rollout of the Patient Protection and Affordable Care Act, the Medicare Shared Savings Program was initiated in an effort to curb spending, while improving quality of care. Since its enactment, industry stakeholders have pushed for leniency, primarily because the Medicare Shared Savings Program penalizes ACOs after the first three years unless the ACOs voluntarily take on financial risk earlier, in exchange for larger bonuses if they perform well. While policymakers supported the penalties as a means of incentivizing change in the healthcare market, providers, particularly less experienced providers, pushed back--arguing that a more moderate approach would ease the financial risk and foster more growth. Recently, the National Association of ACOs released the results of a survey, which reported that approximately 200 of the 300 ACOs in the program were somewhat or highly unlikely to continue if they were required to accept penalties.

With the issuance of the proposed rule, CMS conveyed that it wants less experienced ACOs to remain in the program. By postponing the penalties, CMS acknowledged that some ACOs might not be ready to accept the financial risks and fear these providers might exit the program in lieu of exposing their entity to liability.

However, ACOs must abide by specific criteria if they want to take advantage of the postponement. Under the proposed rule, ACOs must have reduced their spending in their first two years in the program and be prepared to assume the financial risk of penalties after six years. Additionally, CMS plans to encourage ACOs to exit the safer track and take on more risk by decreasing the safe track bonuses from fifty percent to forty percent. Furthermore, CMS proposed a third track, which would implement new methods to determine which patients are included in the ACO. Specifically, the ACOs would start the year with a list of patients, and manage those patients' costs and care. This new system should benefit ACOs because CMS will identify the patients at the start of the year, allowing for more focused improvement efforts. Lastly, the third track will also include potential bonuses and penalties.

Wachler & Associates frequently counsels healthcare providers regarding ACOs, compliance with ACO requirements, and other healthcare fraud and abuse laws. If you have any questions regarding ACOs or how CMS's proposed rule may impact your healthcare entity, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com.

December 5, 2014

Deadlines for Certification with the American Board of Radiology Approaching Quickly

The American Board of Radiology's ("ABR") Board Eligibility Policy, implemented on January 1, 2012, limited the period of time that may elapse between the completion of residency training and achievement of Board Certification. Because a number of radiologists had completed their residencies but not yet achieved Board Certification when the policy went into effect, the ABR established a transitional phase-in period with specific time limits on the Board Eligibility period.

Importantly, the dates chosen by the ABR as the deadlines for achieving certification for certain radiologists are quickly approaching. For diagnostic radiology and radiation oncology, the termination dates for board eligibility status are as follows:

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As a result, radiologists who completed their training in 2004 or before but continue in the examination process are facing possible termination of "board eligibility" as soon as the end of this year. After the period of board eligibility expires, radiologists who have not achieved Board Certification will no longer be considered by the ABR to be "board eligible," and will no longer be permitted to designate themselves as such for credentialing purposes.

Moreover, re-entry into the certification process will require substantial effort. To return to "board eligible" status, the candidate must complete an additional year of training in a department with an Accreditation Council for Graduate Medical Education (ACGME)-accredited or Royal College of Physicians and Surgeons of Canada (RCPSC)-accredited diagnostic radiology or radiation oncology residency program. Additionally, the ABR must approve the additional year of training before it begins and the training must begin after expiration of board eligibility. During this one-year period, the candidate's status will be "not certified, not board eligible." Following the one-year training, the program director must attest to the candidate's successful completion. Once the ABR receives confirmation, the candidate will reenter the certification process and must pass the Core and Certifying examinations. Candidates will have a six-year period to pass the examinations.

Wachler & Associates will continue to monitor and provide timely updates on important ABR developments. If you have any questions regarding your board eligibility status, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. To remain 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.