May 2010 Archives

May 31, 2010

BCBSM Will Cease Payment on CPT Consultation Codes for Medicare Plus Blue PFFS and Medicare Plus Blue PPO

Beginning July 1, 2010, Blue Cross Blue Shield of Michigan (BCBSM) will cease payment on CPT consultation codes for Medicare Plus Blue PFFS and Medicare Plus Blue PPO. This decision follows after the Centers for Medicare & Medicaid Services (CMS) discontinued reimbursement as of January 1, 2010 for consultation codes in CPT ranges *99241-*99245 and *99251-*99255.

BCBSM outlined three situations in which consultation codes will not be payable, beginning with dates of service on or after July 1, 2010:

  • Services performed in various settings that were previously billed to inpatient facility and office or outpatient settings.
  • Method II critical access hospitals, when physicians and non-physician practitioners have reassigned their billing rights.
  • In Medicare secondary payor cases, physicians and others must bill an appropriate evaluation and management code for the services previously paid using the consultation codes.
  • Where appropriate BCBSM will process consultation codes with dates of service on or after July 1, 2010, according to the following situations:

  • Claims billed with office or outpatient setting with CPT codes *99201-*99215, depending on the complexity of the visit and whether the member is new or established patient to that physician.
  • Claims billed with an inpatient hospital or nursing facility setting for any physician or qualified NPPs who perform an initial evaluation during an inpatient hospital care visit with CPT codes *99221-*99223 or nursing facility care visits with CPT codes *99304-*99306.
  • Hospital outpatient observation claims with CPT codes *99217-*99236.
  • Rural health clinic and federally qualified health center claims with CPT codes *99281-*99285 and *99304-*99306.
  • Emergency department claims with CPT codes *99281-*99288 for services provided to the member by both the member's personal physician and emergency department physician.
  • Modifer "AI," when billed with the evaluation and management, will distinguish the provider who oversees the member's care from all other physicians who may be furnishing specialty care.
  • For more information on proper billing practice or assistance with BCBSM audits and appeals, please visit or contact a Wachler & Associates attorney at 248-544-0888.

    May 31, 2010

    Sale of DMC to Vanguard Health Systems is Delayed

    The sale of the Detroit Medical Center (DMC) to Vanguard Health System, a hospital chain based in Nashville, has been delayed ten days. The DMC Board of Trustees and Vanguard Health Systems extended the letter of intent to allow each organization's legal teams to complete the necessary work for the parties to reach an agreement.

    The proposed deal involves Vanguard's investment of $850 million over five years in 20 projects, including a new tower at DMC's Children's Hospital of Michigan, and the expansion of the emergency department at Sinai-Grace Hospital. In addition, Vanguard would pay DMC $417 million to retire its debt and fund $278 million in pension obligations.

    For more information on health law issues, please visit or contact a Wachler & Associates attorney at 248-544-0888.

    May 31, 2010

    RACs Post New Issues for All Four Regions

    Recovery Audit Contractors (RACs) recently posted new issues approved for review:

  • The RAC for Region A, DCS Healthcare, added three RAC issues for non-medical necessity claims for providers in the District of Columbia, Maine, Delaware, New Jersey, New York, New Hampshire, Pennsylvania, Rhode Island and Vermont.
  • CGI, the RAC for Region B, added a new issue for non-medical necessity DRG-validation inpatient claims and a new issue for durable medical equipment (DME) claims to its CMS-approved list for providers in all Region B states.
  • Connolly Healthcare, the RAC for Region C, added 6 new issues for outpatient hospital reviews and 12 issues for non-medical necessity DRG validation reviews for providers in Alabama, Arkansas, Colorado, Florida, Georgia, Louisiana, Mississippi, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia (WPS only), West Virginia (WPS only).
  • The RAC for Region D, HealthDataInsights, added one new issue for Part B reviews for providers in all Region D states.
  • More detailed information about each approved issue is available on the RAC's website. If you need assistance with a RAC or third party payor audit or for more information, please visit or contact a Wachler & Associates attorney at 248-544-0888.

    May 25, 2010

    Motion to Dismiss Virginia Attorney General's Healthcare Reform Challenge

    The Department of Health and Human Services Secretary Kathleen Sebelius filed a motion to dismiss in U.S. District Court to dismiss the Virginia Attorney General's challenge of the healthcare reform law. The suit is separate from the legal action filed in Florida that includes 20 states. The Virginia Attorney General, Ken Cuccinelli, argued that Virginia was in a position to challenge the healthcare reform measure because of a law adopted in Virginia that states that individuals cannot be forced to buy health insurance in Virginia. The motion to dismiss filed by the Obama administration on Monday argues that Virginia had no standing to sue and that the Congressional power to regulate commerce renders the law constitutional.

    Although the Obama administration has remained clear on its federal arguments defending the healthcare reform law, this motion to dismiss is the first time that these arguments have been formally submitted to a court.

    For more information on healthcare reform and its impact on providers, please visit or contact a Wachler & Associates attorney at 248-544-0888.

    May 24, 2010

    Health Alliance of Greater Cincinnati Settles False Claims Suit

    The U.S. Department (DOJ) and the Health Alliance of Greater Cincinnati entered into an agreement to settle a False Claims Act lawsuit with the DOJ alleging that from 1997 to 2004 Christ Hospital, a former member of the Health Alliance, scheduled cardiologists at a diagnostic unit based on the amount of business they brought to the hospital. The DOJ alleged that the arrangement was a kickback scheme because the cardiologists could bill for their diagnostic services and obtain new patients for follow-up procedures. The case was initiated by a whistle-blower lawsuit that the DOJ joined in 2008.

    In the settlement agreement, Health Alliance of Greater Cincinnati and Christ Hospital deny the allegations and do not admit liability. The organizations agreed to pay a total of $108 million in the agreement.

    This case - and similar cases that have been brought against health care providers by the DOJ over the past several years - highlight the importance of ensuring compliance with federal laws including the Stark law and the Anti-Kickback Statute to protect against the possibility of costly False Claims Acts lawsuits.

    If you would like any of your financial arrangements analyzed for risk of Stark or Anti-Kickback Statute violations, please contact a Wachler & Associates attorney at 248-544-0888.

    May 23, 2010

    CMS Releases MLN Matters Article Explaining Additions to the Medicare Program Integrity Manual

    On May 14, 2010, the Centers for Medicare and Medicaid Services (CMS) released an MLN Matters article explaining Change Request (CR) 6954. CR 6954 adds Section 3.14 to the Medicare Program Integrity Manual. This section clarifies language regarding clinical review judgments. It requires Medicare claim review contractors to instruct their clinical review staffs to use the clinical review judgment process when making complex review determinations about a claim. The clinical review judgment involves two steps:

    (1) The synthesis of all medical record information to create a longitudinal clinical picture of the patient; and

    (2) The application of the clinical picture to the review criterial to determine whether the clinical requirements in the relevant policy are met.

    This information may be helpful for providers in appealing audits, for example, where one note does not support medical necessity on its own, but where the totality of the medical records establishes medical necessity.

    For more information, please visit or contact a Wachler & Associates attorney at 248-544-0888.

    May 16, 2010

    MLN Matters Article Discusses New Remittance Advice Code Created to Identify Claims Subject to the Limitation on Home Health Prospective Payment System Outlier Payments

    Last month the Centers for Medicare and Medicaid Services (CMS) published an MLN Matters Article regarding changes to remittance advice coding. The article is directed towards Home Health Agencies that submit claims to a Regional Home Health Intermediary (RHHI) or to the Home Health Medicare Administrative Contractor (HH MAC - National Heritage Insurance Corporation (J14 only)) for services provided to Medicare beneficiaries.

    The article explains that CMS released Change Request (CR) 6897 to instruct Medicare RHHIs and the J14 HH MAC to use a new Remittance Advice Remark Code (RARC) and a changed Claims Adjustment Reason Code (CARC) for home health agencies (HHAs) that are subject to the Home Health Prospective Payment System (HH PPS) outlier limitation. Up to CR 6897, the code "CARC 45" had been used to alert HHAs that an outlier payment, which would be eligible for payment, was not eligible because the HHA's outlier limitation had been met. CMS found that CARC 45 did not adequately explain the reasoning for the denial of the payment, and therefore created a new remittance advice remark code (RARC) to be used in situations where the outlier limitation has been met. Then new RARC is N523. In addition to N523, HHAs can expect to see the claim adjustment reason code B5 (CARC B5).

    The new RARC and updated CARC are effective for claims with dates of service on or after March 1, 2010. Therefore, if a calculated outlier amount is not paid because the HHA has reached the outlier limitation, HHAs can expect to see the following on their remittance advice: (1) Group Code CO: "Contractual Obligation," (2) Claim adjustment reason code B5 (CARC B5); (3) RARC N523.

    For more information on health law issues, please visit or contact a Wachler & Associates attorney at 248-544-0888.

    May 16, 2010

    CMS Clarifies Signature Requirements

    The Centers for Medicare & Medicaid Services (CMS) issued Change Request (CR) 6698 to clarify how Medicare claim review contractors review claims and medical documentation submitted by providers. This clarification included an outline of new rules for signatures and added language for e-prescribing.

    The previous language in the Program Integrity Manual (PIM) required a "legible identifier" in the form of a handwritten or electronic signature for every service provided or ordered. CR 6698 updates these requirements to require that every service provided or ordered be "authenticated by the author" by handwritten or electronic signature; stamp signatures are generally unacceptable.

    CR 6698 also provides some exceptions to the signature requirement. First, facsimiles of original written or electronic signatures are acceptable for certifications of terminal illness for hospice. Second, there are other circumstances for which an order does not need to be signed. For example, orders for clinical diagnostic tests are not required to be signed, but there must be medical documentation by the treating physician that s/he intended the clinical diagnostic test to be performed. The documentation showing intent must be authenticated by the author with a handwritten or electronic signature. Finally, other regulations and CMS instructions regarding signatures take precedence. For example, if the NCD, LCD, and CMS manuals have specific signature requirements, those signature requirements take precedence. However, if these are silent as to signature requirements, the reviewer should follow the guidelines set forth in CR 6698.

    In the event that the NCD, LCD, and CMS manuals are silent on whether the signature be legible or present, the Medicare contractors must apply the specific requirements set forth in CR 6698 in reviewing the signature. For example, contractors must determine if there are reasons for denial of the claim unrelated to the signature requirements. If there are, the reviewer does not have to proceed to signature authentication. In addition, if the signature is illegible, the contractors must consider evidence in a signature log or attestation statement to determine the identity of the author of a medical record entry. If the signature is missing, then the contractors must disregard the order during the review of the claim. If the signature is not dated, the reviewer must review to ensure that the documentation contains enough information for the reviewer to determine the date on which the service was performed or ordered.

    In addition, CR 6698 outlined clarifications for electronic prescribing. E-prescribing can save time, enhance office and pharmacy productivity, and improve patient safety and quality of care. Through e-prescribing, healthcare professionals can electronically submit both new prescriptions and responses to requests for renewal to a pharmacy without having to write or fax a prescription. CR 6698 specified some key points regarding e-prescribing: (1) reviewers will accept as a valid order any Part B drugs, other than controlled substances, ordered through a qualified e-prescribing system (defined as one that meets all requirements set forth in 42 CFR 423.160); (2) e-prescribing is not permitted for the prescription of controlled substances, and as such reviewers will only accept hardcopy pen and ink signatures as evidence of a drug order when reviewing claims for controlled substance drugs; and (3) reviewers must accept as a valid order any drugs incident to DME, other than controlled substances, ordered through a qualified e-prescribing system.

    For more information on health law issues, please visit or contact a Wachler & Associates attorney at 248-544-0888.

    May 16, 2010

    U.S. Western District Court of Michigan Dismisses False Claims Act Claim for Failure to State a Claim with the Required Particularity

    Earlier this month, the U.S. District Court for the Western District of Michigan granted a defendant's motion to dismiss a qui tam action against it. The court held that the relator failed to state a claim with the required particularity.

    Robert Lauricia filed the qui tam action under the False Claims Act (FCA) against Stryker Corporation. Mr. Lauricia's complaint alleged that Stryker was engaged in a kickback scheme with Dr. Hari K. Parvateneni. The scheme involved Dr. Parvateneni's agreement to use Stryker's medical devices for implantation into Medicare patients in exchange for Stryker's agreements to fund the training of Parvateneni's residents and research projects. Mr. Lauricia alleged that since Parvateneni and Stryker engaged in the illegal kickback scheme, any claims submitted for reimbursement from Medicare were violations of the FCA.

    The defendants' motion to dismiss was granted by the district court. The court expressed that the allegations failed to state a claim for relief as the relationship between the defendants was neutral on its face, with Mr. Lauricia failing to produce any specific conduct that would render it illegal. The court also noted that the claim failed to allege the time or place of the alleged misrepresentations, any injury resulting from the alleged fraud, or even a single particular fraudulent claim.

    However, the district court granted Mr. Lauricia 21 days from the date of the opinion to amend the complaint.

    For more information on false claims and the anti-kickback statutes, please visit or contact a Wachler & Associates attorney at 248-544-0888.

    May 16, 2010

    PPACA Grants Authority to the Secretary of the Department of Health & Human Services to Require Health Care Providers to Adopt Compliance Programs

    Section 6401 of the Patient Protection and Affordable Care Act (PPACA) grants the Secretary of the Department of Health and Human Services (the "Secretary") the authority to require health care providers to adopt compliance programs as a condition of participation in the Medicare, Medicaid and CHIP programs. Before the PPACA, a corporate compliance program was only mandatory for a healthcare provider or supplier that was operating under a Corporate Integrity Agreement or had a contract with the federal government that exceeded $5 million and lasted longer than 120 days.

    Although section 6401 lacks specific direction to the Secretary with regard to the health care providers that will be subject to the mandatory compliance programs and the core elements of the programs, the section gives the Secretary the authority to make these decisions. One exception to the lack of specific direction is found in section 6102 of PPACA. That section requires skilled nursing facilities (SNFs) and other nursing facilities to establish compliance programs. According to the language in section 6102, the SNF program must be "reasonably designed, implemented, and enforced so that it will be generally effective in preventing and detecting criminal, civil and administrative violations under this Act and in promoting quality of care." The section lists eight required components of the compliance program, and requires that the programs be in place by March 2013. The eight required components include:

  • Compliance standards and procedures must be adopted and followed by employees and other agents in a position to reduce criminal, civil and administrative violations under the PPACA.
  • Specific individuals with authority and sufficient resources must be assigned the responsibility to oversee compliance with the standards and procedures.
  • The organization must exercise due care to ensure that the above authority is not delegated to an individual with a propensity to engage in criminal, civil and administrative violations of the PPACA.
  • The organization must take steps to educate its employees and agents of the compliance program.
  • The organization must take reasonable steps to achieve compliance with its standards.
  • The standards and procedures must be consistently enforced.
  • In the event that an offense is detected, the organization must take all reasonable steps to respond appropriately and to prevent similar offenses.
  • The organization must periodically reassess the compliance programs and make changes necessary to reflect changes within the organization.
  • Although the requirements for compliance programs are still works in progress for health care industry sections other than SNFs, all Medicare and Medicaid providers should begin to prepare for the upcoming mandates from the Secretary. One avenue of preparation is for health care providers to review guidance given by the Office of Inspector General (OIG) to those in the industry that voluntarily adopt compliance programs. The OIG has provided guidance to a number of health care providers including: hospitals, home health agencies, clinical laboratories, manufacturers and suppliers of durable medical equipment, prosthetics, orthotics, and medical supplies (DMEPOS), hospices, physicians/medical practice, and ambulance suppliers. The OIG suggested seven core elements to a compliance program. It should be noted that these core elements serve as a foundation for a compliance program, but the Secretary may required additional elements once the mandate is created pursuant to section 6401. The seven core elements recommended by the OIG include:

  • The development and distribution of written standards of conduct, as well as written policies and procedures that promote a commitment to compliance.
  • The designation of a chief compliance officer and other appropriate bodies given the responsibility to operate and monitor the compliance program and who report directly to the CEO or other governing officer.
  • The development and implementation of regular, effective education and training programs for all affected employees.
  • The creation and maintenance of a process to receive complaints and the adoption of procedures to protect the anonymity of complainants and to protect whistleblowers from retaliation.
  • The development of a system to respond to allegations of improper/illegal activities and the enforcement of appropriate disciplinary action against employees who have violated internal compliance policies, applicable statutes, regulations or Federal health care program requirements.
  • The investigation and remediation of identified systematic problems and the development of policies addressing the non-employment or retention of sanctioned individuals.
  • For more information on health care reform or compliance programs, please visit or contact a Wachler & Associates attorney at 248-544-0888.

    May 11, 2010

    CMS Issues New Transmittal to Address Concerns with Recoupments

    The Centers for Medicare and Medicaid Services (CMS) issued a new transmittal to address concerns regarding the reporting of recoupment for overpayment on the remittance advice (RA). During the RAC demonstration project providers would receive an RA, which is a notice of payments and adjustments sent by Medicare contractors to providers, billers and suppliers. The RA would either be delivered as a companion to a claim payment, or as an explanation when no payment was made. If a RAC denied a claim and was entitled recoup money, the amount would be taken from a future payment. However, there was not a mechanism to trace the recouped payment back to the original claim that had been denied. The result was that providers were unable to maintain correct records.

    Transmittal 659 addresses this concerning by instituting a system that will assign a control number at the point a recoupment demand is made. The control number will stay attached to the claim and will later be used on the RA when the payment is offset from the provider's reimbursement. Therefore, the control number will identify a particular claim and providers will be able to maintain accurate records.

    If you need assistance with a RAC or third party payor audit or for more information, please visit or contact a Wachler & Associates attorney at 248-544-0888.

    May 11, 2010

    Request for Information on the Expansion of the Right to Receive an Accounting of Disclosures

    The U.S. Department of Health & Human Services Office for Civil Rights (OCR) published a request for information (RFI) on the Health Information Technology for Economic and Clinical Health (HITECH) Act's expansion of an individual's right to receive an accounting of disclosures under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule. Pursuant to the HITECH Act, covered entities will soon be required to account for disclosures of protected health information (PHI) made for treatment, payment, and healthcare operations if the entity utilizes an electronic health record (EHR) system. This is a significant change from current guidance, by which covered entities are not required to provide an accounting of any disclosures made for purposes of treatment, payment, or healthcare operations. As the OCR prepares to develop specific regulations, it has issued the RFI to pose specific questions to and request comments from covered entities, EHR system vendors, and individual and consumer advocates regarding the new requirement.

    Specific questions posed to covered entities include: (1) How do covered entities inform individuals of their rights to an accounting of disclosures? (2) How many accounting of disclosures requests a covered entity has received? (3) Whether a covered entity uses a single EHR system and whether that system creates an automatic accounting of disclosures, or whether there is a separate system to generate this information? and (4) Whether the HITECH Act's requirement that covered entities that acquire EHR systems after January 1, 2009 account for disclosures for treatment, payment, and healthcare operations by January 1, 2011 is a feasible deadline, and, if not, how long it would take a covered entity to install a feature to track these disclosures?

    Other requests for comments are directed at individuals, consumer advocates, and EHR system vendors. The questions directed at individuals and consumer advocates inquire into the benefits of an accounting of disclosures, whether individuals are aware of their right to receive an accounting of disclosures, and whether an individual was provided requested information. The RFI also requested information from EHR system vendors as to whether the EHR system is able to distinguish between PHI "uses" and "disclosures" and as to the additional burdens that would be imposed on the EHR system to account for disclosures for treatment, payment, and healthcare operations and the feasibility of an EHR module to account for these disclosures.

    For more information on HIPAA privacy and security rules, please visit or contact a Wachler & Associates attorney at 248-544-0888.

    May 11, 2010

    Surgeon Sentenced to Prison for HIPAA Violation

    The first defendant to receive a prison sentence for a HIPAA privacy violation was sentenced to four months in prison after admitting to illegally accessing protected health information contained in electronic medical records of celebrities and others. The defendant, a former UCLA Health System surgeon, pleaded guilty in January to four misdemeanor counts of violating the HIPAA privacy rule. The incidences occurred in 2003 when the surgeon accessed and read the medical records of his immediate supervisor, other co-workers, and celebrities who had visited the health system after receiving notice that he was being dismissed from his job. He illegally accessed patient records 323 times over a 3 week period.

    For more information on HIPAA privacy and security rules, please visit or contact a Wachler & Associates attorney at 248-544-0888.

    May 11, 2010

    Requirements for the Home Health Care CAHPS Survey

    The Consumer Assessment of Healthcare Providers and Systems (CAHPS) Home Health Care Survey is designed to measure the experiences of individuals receiving home health care from Medicare-certified home health care providers. The CAHPS has three broad goals: (1) to produce comparable data on the patient's perspective that allows objective and meaningful comparisons between home health agencies on domains that are important to consumers; (2) public reporting of survey results so as to create incentives for agencies to improve their quality of care; and (3) public reporting to enhance public accountability in health care by increasing the transparency of the quality of care provided in return for public investment.

    The home health care CAHPS (HHCAHPS) survey began in October 2009 with agencies that wished to implement the survey on a voluntary basis. The data collected during the voluntary period will be posted in Spring 2011. Agencies will have the option to suppress the reporting of their data collected during the voluntary period.

    However, the Home Health Prospective Payment System (HHPPS) Final Rule (November 10, 2009) stated that HHCAHPS will be linked to the quality reporting requirement for the CY 2012 annual payment update (APU). The Centers for Medicare & Medicaid Services (CMS) strongly encourages that the designated quality staff in all Medicare-certified home health agencies (HHAs) read the Final Rule.

    The HHCAHPS requires the following: (1) data collection must start in the third quarter of 2010 in the form of a practice "dry run" of the survey, the results of which will not be publicly reported on HH Compare; and (2) the HHAs must conduct a dry run for at least one of the months in the third quarter of 2010, and continuously collect HHCAHPS data every month beginning in October 2010. The specific deadlines for the dry run in the third quarter of 2010, and the deadline for the fourth quarter are stated in the Final Rule.

    Finally, the Final Rule states that there will be exemptions for newly Medicare-certified HHAs, and also for HHAs with less than 60 eligible patients in an annual period that is defined in the rule. HHAs must provide CMS with patient counts from April 1, 2009 through March 31, 2010 (if fewer than 60) by June 16, 2010 to be exempt from the 2012 APU reporting requirements.

    For more information on health law issues, please visit or contact a Wachler & Associates attorney at 248-544-0888.