June 2010 Archives

June 28, 2010

Codification of the Hospital 3-Day Payment Window

President Obama signed the "Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010." The law includes a provision that clarifies Medicare's position for payment of hospital outpatient services provided on either the day of or the three days prior to an inpatient admission. The 3-day payment window policy is effective for services provided on or after June 25, 2010. Medicare may not reopen claims submitted prior to June 25, 2010 to require a separate bill for outpatient non-diagnostic services.

The 3-day payment window, which has been unofficially followed by Medicare since 1991, allows a hospital to charge for all diagnostic services and non-diagnostic services "related" to the inpatient stay that are provided during the 3-day payment window.

The law defines "other services related to the admission" as including services that are not diagnostic services (other than ambulance and maintenance renal dialysis services) for which payment may be made by Medicare that are provided to a patient by a hospital: (1) on the date of the patient's inpatient admission; (2) during the 3 days immediately prior to the date of admission, unless the hospital shows that the services provided were not related to the admission.

For assistance with billing compliance or Medicare audits and appeals, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.

June 27, 2010

RACs Post New Issues

Three Recovery Audit Contractors (RACs) posted new issues.

  • The RAC for Region A, DCS Healthcare, posted 23 new approved issues. One new issue applies to DME supplier claims and applies to providers in all Region A states.
  • Connolly Healthcare, the RAC for Region C, posted 3 new issues for non-medical necessity DRG validation reviews. These issues apply to providers in: AL, AK, CO, FL, GA, LA, MS, NM, NC, OK, PR, SC, TN, TX, VI, VA and WV.
  • HealthDataInsights, the RAC for Region D, posted two new RAC issues for Part B claims in all Region D states.
  • If you need assistance with a RAC or third party payor audit or for more information, please visit www.racattorneys.com or contact a Wachler & Associates attorney at 248-544-0888.

    June 24, 2010

    CMS Reports that Providers Are Winning a Large Percentage of Appeals

    In its report, "The Medicare RAC Program: Update to the evaluation of the three-year demonstration," the Centers for Medicare and Medicaid Services (CMS) reveals that providers have been winning more appeals since its last report in January 2009. The report first noted that the number of reported claims for appeal have decreased significantly since the January 2009 report. The decrease is due to a more accurate method of counting claims, i.e., claims are now counted only once regardless of how many levels of appeal the provider pursues. In addition, CMS removed claims from the category of "appealed" if the denial was reversed by the contractor after it received additional documentation from the provider.

    CMS's report also found that providers chose to appeal 12.7 percent (76,073) of the RAC determinations. Of those appealed claims, 64.4 percent were overturned on appeal.

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

    June 23, 2010

    The OIG Releases an Advisory Opinion Regarding the Dietitian and Social Worker Services Provided at a Freestanding Radiation Oncology Center

    The U.S. Department of Health and Human Services Office of Inspector General (OIG) issued Advisory Opinion 10-08 to address the provision of dietitian and social worker services at a freestanding radiation oncology center (Center) at no extra charge to the beneficiaries. The OIG determined that the proposed arrangement would not violate the Federal Anti-Kickback Statute and thus, the OIG would not impose administrative sanctions.

    The proposed arrangement involved patients at the Center receiving dietitian and social worker services at no additional charge. The OIG addressed the arrangement as it affected Medicare beneficiaries. The services would not be advertised as "free" or "at no charge." Patients would receive the dietitian services after being identified for risk of nutritional complications and social worker services would be provided during the patient's treatment. Under the proposed arrangement, the services would not be separately billed, and the applicable cost sharing amounts for the Medicare beneficiaries would not be routinely waived.

    The Centers for Medicare and Medicaid Services (CMS) informed the OIG that the dietitian and social worker services provided at the Center would fall within the reimbursement the Center received for the patients. Thus, the amounts that the Medicare beneficiaries pay to share the costs would be partially attributable to the costs of the dietitian and social worker services and the Center would not be provided the services free because of this reimbursement. If this form of reimbursement had not been factored into the proposed arrangement, then the services would not be part of the reimbursement and could implicate the Anti-Kickbac Statute.

    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.

    June 22, 2010

    The Senate Passes a Plan to Fix Medicare Physician Payment for Another Six Months

    On June 18 the U.S. Senate passed a six-month plan to prevent the Medicare physician 21 percent payment cut. The measure, which will cost $6.4 billion, was pushed through with the concern that the steep payment cut would raise the possibility that medical providers would turn away patients covered by Medicare. It will delay the cuts until November 30, 2010 while Congress tries to create a long-term plan. The plan was passed unanimously and lawmakers attribute its passage to the efforts to offset its attributed costs.

    Almost immediately after the U.S. Senate announced the passage of the plan, Medicare announced that it would process Medicare claims received for June at the lower rate. This is because the U.S. House of Representatives will not be able to consider the plan until next week. However, there are indications that the bill's success in the House may be complicated. House Speaker Nancy Pelosi announced that the House will not pass the Senate bill until the Senate agrees to act on job-creation legislation. If the bill does pass in the House, Medicare providers will have the burden to resubmit their claims to be made whole.

    For more information on Medicare payments or the physician fee cut, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.

    June 21, 2010

    Federal Wrangling May Negatively Impact Michigan's Medicaid Program

    Michigan's budget may be threatened by U.S. Congressional action. Crain's Detroit Business reported that Congress' concern over the nation's deficit may affect its willingness to pay for an estimated $24 billion in Medicaid assistance to states and other financial assistance, leading to the removal of the enhanced Federal Medical Assistance Percentage (FMAP) provision from legislation pased by the U.S. House in May.

    Due to these cuts, Michigan lawmakers are concerned that Michigan may not receive $514 million in Medicaid "matching" funds from the federal government. The amount was already factored into the fiscal year 2011 budget for the Michigan Department of Community Health. If Michigan does not receive this funding it may result in deep cuts in various programs, such as Medicaid prescription drug coverage, payments to Medicaid providers, mental health services, revenue sharing and university funding.

    For more information on Michigan health care, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.

    June 20, 2010

    Michigan's Uninsured Chronically Ill May Have New Coverage Option

    The Michigan Office of Financial and Insurance Regulation released details about a new high-risk pool that will offer insurance to the uninsured. To qualify the individuals must have been uninsured for at least six months, have been rejected by an insurer, and first spend $1,000 in out-of-pocket costs.

    The purpose of the pool is to provide an avenue for the uninsured chronically ill to buy coverage until state exchanges are created by the federal health reforms in 2014. Policies in the pool will include low co-pays for drugs and services. However, services not covered in the pool include: dental, vision, nursing home, chiropractic care, hearing aids, and bariatric and cosmetic surgery. Enrollment begins in September and coverage starts in October.

    The concern regarding the high-risk pool is the requirement that individuals pay $1,000 up front before receiving coverage. This provision may render the coverage unattainable for many chronically ill individuals.

    For more information on health care reform, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.

    June 17, 2010

    Update on ABIM Suspensions**

    As noted in our June 11 blog entry, the American Board of Internal Medicine (ABIM) recently took unprecedented action in immediately suspending the board certifications of 139 physicians. We have been in communication with the ABIM urging them to characterize the action as non-final recommended action pending appeal rather than an immediate suspension. Our intent is to avoid the irreparable impact that an immediate suspension will have on our clients' staff privileges and relationship with third party payors. We have submitted legal support for this position, and we hope to work with the ABIM to effectuate a more reasonable and thought out solution.

    As of today, the following notation has been added to each of the affected physician's entries on the ABIM website: "Under Appeal - Suspension not final." This is a significant advancement for all parties involved. We are hopeful that we will be able to effectuate a workable solution through further communication and the appeals process.

    For more updated information, please visit the Wall Street Journal's health blog.

    If you have been adversely affected by ABIM's action, please contact Andrew B. Wachler, Laura C. Range, or Alicia B. Chandler at 248-544-0888.

    **NOTE: Please read our July 7, 2010 update of this post. 

    June 17, 2010

    Government Accountability Office (GAO) Recommends Post-Payment Reviews to Focus on Home Health and Durable Medical Equipment

    The Director of Health Care for the Government Accountability Office (GAO), Kathleen M. King, recently testified before the Subcommittees on Health and Oversight, Committee on Ways and Means, House of Representatives. An important component of her testimony included a recommendation that Recovery Audit Contractors (RACs) should focus their post-payment review activities on home health and durable medical equipment providers.

    Ms. King reported in her testimony that the Centers for Medicare & Medicaid Services (CMS) estimates improper payments for Medicare fee-for-service (FFS) reached $24.1 billion for calendar year 2009. However, Ms. King emphasized that this may not be the full figure, and identified challenges to and strategies for preventing fraud, waste, and abuse and to reduce improper payments. The GAO identified five strategies to help CMS address these challenges. The strategies are: (1) strengthening provider enrollment processes and standards, (2) improving pre-payment review of claims, (3) focusing post-payment claims review on most vulnerable areas, (4) improving oversight of contractors, and (5) developing a robust process for addressing identified vulnerabilities.

    Ms. King also discussed the future strategy for RACs. She stated that since RACs are paid on a contingent fee basis, they often focus their post-payment reviews on health provider with expensive claims. However, the GAO recommends that RACs focus their post-payment review activities on items and services where RACs are not expected, specifically home health and durable medical equipment.

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

    June 14, 2010

    Accountable Care Organizations Grow in Michigan

    Accountable Care Organizations (ACOs) are beginning to populate Michigan's healthcare sector. ACOs are integrated groups of hospitals, physicians, long-term care facilities and home health agencies. A provision in the Patient Protection and Affordable Care Act (PPACA) authorized provider organizations to create ACOs so long as they agree to manage care for a minimum of 5,000 Medicare patients. The purpose of the ACOs is to provide providers with a financial incentive to coordinate care and improve the quality of care.

    Crain's Detroit Business reported several ACOs forming in Michigan. The article notes that Oakwood Healthcare Inc., University of Michigan Health System, Detroit Medical Center, and Trinity Health are all in various stages of forming ACOs.

    Despite their popularity, some critics fear that ACOs will prevent doctors from participating in other healthcare contracts or take away doctors' ability to effectively negotiate.

    For more information on the impacts of healthcare reform legislation or if you are interested in discussing what steps your organization would need to take to establish an ACO, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.

    June 10, 2010

    The American Board of Internal Medicine Takes Formal Action Against Physicians**

    The American Board of Internal Medicine (ABIM) has filed suits against 5 physicians for alleged copyright infringement, the misappropriation of trade secrets, and breach of contract. In addition, ABIM immediately suspended or revoked a total of 139 physicians' board certification. The ABIM is an organization that certifies internal-medicine specialists and sub-specialists. The organization alleges that the physicians solicited or shared confidential examination questions used to certify doctors in internal medicine and its subspecialties. The Wall Street Journal reported that the law suits stem from participation in Arora Board Review, an independent test review course. Last year, ABIM sued Arora alleging that Arora instructors told class participants that the review questions were from actual certification exams and encouraged them to inform the company of additional questions they remembered after taking the exam.

    Our firm represents numerous physicians who have been affected by this unprecedented action. We are in the process of conducting a comprehensive evaluation of their legal rights regarding the suspension of their board certifications and individualized analyses of potential efforts to mitigate any collateral effects.

    If you have been adversely affected by this lawsuit and would like assistance in evaluating your legal rights, please contact a Wachler & Associates attorney at 248-544-0888.

    **NOTE: Please read the July 7, 2010 update of this post.

    June 9, 2010

    The RAC for Region D Adds New Issues

    The RAC for Region D, HealthDataInsights, added two new RAC issues for Part B claims review to its CMS-approved list. The new issues are co-surgery not billed with modifier 62 and global days. The issues apply to providers in all Region D states.

    For more information on RAC approved issues or if you need assistance with a RAC or third party payor audit, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.

    June 8, 2010

    St. Jude Medical Center to Pay $3.7 Million Kickback Settlement

    St. Jude Medical Center will pay $3.7 million in a settlement with the Department of Justice regarding allegations that the organization paid illegal kickbacks to hospitals. In the settlement, St. Jude does not admit wrongdoing. The Department of Justice alleged that St. Jude paid kickbacks to hospitals in order to obtain opportunities in the heart device business. St. Jude argued that the allegations were based on "small, isolated product rebates "that had been paid over five years ago. The government argued, however, that these were kickbacks merely disguised as rebates. The case came to the attention of the Department of Justice through a whistleblower who had filed a False Claims Act qui tam action exposing the kickbacks. The whistleblower will receive $640,000 as part of the settlement.

    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.

    June 3, 2010

    The OIG Releases Two Advisory Opinions

    The Office of Inspector General (OIG) of the Department of Health & Human Services (HHS) issued two advisory opinions.

    The first advisory opinion released by the OIG involves a continuing care retirement community's proposed rewards program for referrals by current residents and employees. The OIG determined that the proposed arrangement would not be a violation of the Anti-Kickback Statute, and thus would not subject the requestor to administrative sanctions.

    The requestor for the OIG's opinion on the proposed arrangement operates continuing care retirement communities (CCRCs). The CCRCs provide three levels of care: independent living, assisted living, and skilled nursing. Although continuing care residents have a contractual right to move to a higher level of care, a 2005 actuarial study conducted by the requestor found that two-thirds of those who enter the CCRCs at the independent living level are not expected to become residents of the community's skilled nursing units. The CCRCs do not provide health care, nor do they participate in Federal health care programs.

    The proposed arrangement involves two parts: (1) Gift cards for CCRC Tours: current residents and employees of the CCRCs who recommend the community to a prospective resident receive a gift card. (2) Credits/Rewards for Independent Living Referrals: if the prospective resident moves into independent living at the CCRC within 12 months after the tour, the current resident who made the referral will receive a one-time credit toward his/her monthly CCRC fee and an employee will receive a check as part of his or her employment compensation. The CCRC employees who make the referrals would be typically friends or acquaintances of the prospective residents and are not physicians or other health care professionals in the position to make direct recommendations about health services.

    The advisory opinion determined that the proposed arrangement, limited to the facts provided by the requestor, would not be a violation of the Anti-Kickback Statute. First of all, the referral program is limited to the independent living section of the communities which does not involve health care services or participation in Federal health care programs. The OIG found that whether an individual resident referred to the CCRC independent living unit will eventually require assisted iving or skilled nursing services that do involve Federal health care programs is far too speculative and outside the control of the referring employee or current resident. In addition, the OIG focused on the fact that the CCRC employees would likely be friends or acquaintances of the referrals, not health care professionals. Thus, the proposed arrangement would not impact a health care professional's decision to order a health care item or service or to refer a patient to a particular practitioner, provider or supplier.

    The OIG's second advisory opinion determined that it would not impose administrative sanctions on a nonprofit, tax-exempt, independent charitable organization if it provided financial assistance for drug copayment obligations to underinsured patients, including Medicare and Medicaid beneficiaries. The Charity is controlled by an independent board of directors that makes all policy determinations, including the specifications of the proposed patient assistance program (PAP). Funding for the PAP comes in the form of cash or cash equivalents from individual, corporate, and foundation donors. Although the donations may be either unrestricted or earmarked for a specific disease category, the donors would not be given information that could correlate the PAP recipients with the donors' products, nor would the patient know the identity of the Charity donors.

    The Charity would utilize an objective, first-come, first-served basis for accepting underinsured patients into the PAP. Eligible patients would receve a MasterCard debit card issued by an independent third party. The debit card does not carry direct funds, but rather the funds are applied when an approrpiate pharmacy transaction occurs.

    In making its determination, the OIG focused on two components of the PAP: (1) the Charity's acceptance of donations is structure to insulate beneficiary decision-making from donations and (2) the Charity's financial assistance to underinsured patients is not likely to improperly influence a patient's choice of a particular provider, practitioner, supplier, service, or product. In its analysis of the first component, donor contributions, the OIG noted several factors that rendered beneficiary decision-making sufficiently insulated from donations. These factors included: no donor exerts control over the Charity or the use of funds; financial assistance is based upon reaosnable, verifiable, uniform and objective criteria; and non individual information is provided to donors, and donors are unable to correlate the amount or frequency of their donations with the amount or frequency of the use of their products or services. The OIG's focus on the second component that the financial assistance is unlikely to improperly influence a patient's choice of health care involved a review of factors including: patients can switch providers, suppliers, and products at any time without affecting eligibility for assistance. Eligibility is based purely on financial need; and as a charitable, tax-exempt entity, the Charity has an incentive to fulfill its mission by maximizing charitable use and minimizing expenditures. Due to these safeguards, the OIG determined that it would not impose administrative sanctions with respect to the Charity's PAP.

    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.