August 2010 Archives

August 26, 2010

Michigan Selects Insurer for High Risk Insurance Pool

Physicians Health Plan will be the insurer to offer subsidized health coverage for chronically-ill Michigan residents.  The insurer, based in Lansing, will offer health coverage through the health insurance pool that was created to provide an avenue for the uninsured chronically ill to buy coverage until state exchanges are active in 2014 as set forth in the health care reform legislation.  To qualify for the pool individuals must provide proof of U.S. citizenship and Michigan residency, certification by a physician that the individual is chronically ill and evidence that an insurer has refused, for health reasons, to cover the individual within the previous six months.  Physicians Health Plan will start enrolling members August 31 for coverage that becomes effective October 15. 

For more information on Michigan health care news or health care reform, please visit or contact a Wachler & Associates attorney 248-544-0888. 

August 24, 2010

Michigan Doctor Sentenced to Prison for Medicare Fraud

The Detroit Free Press reported that a Michigan doctor was sentenced to 14 years in prison for Medicare fraud.  In addition to the prison sentence, the doctor will owe $9.4 million in restitution payments and is eligible for a three-year supervised release after his prison sentence.  According to the Department of Justice (DOJ), the doctor and a co-conspirator wrote prescriptions for controlled drugs in exchange for the patients' Medicare numbers.  The co-conspirator would then bill for fictitious rehabilitation and home health services using the Medicare numbers.  Medicare reimbursed the conspirators $9.4 million for fake services.

For more information on Michigan healthcare legal news, or for assistance with a Medicare audit or investigation contact a Wachler & Associates attorney at 248-544-0888. 

August 23, 2010

The OIG Publishes Reports Targeting IRFs

The Office of Inspector General (OIG) published two reports targeting inpatient rehabilitation facilities (IRF).  Most notable, however, is the CMS response to the OIG reports.  The first report reviewed IRF transmission of patient assessment instruments for calendar years (CY) 2006 and 2007.  This report showed that IRFs failed to timely submit patient assessment data and this could reduce the case-mix group payment. Based upon the OIG findings, CMS concluded that fiscal intermediaries (FI) overpaid IRFs approximately $20.2 million in CY 2006 and 2007.  Additionally, FIs may have overpaid $19 million because of a lack of clarity in the regulations regarding data for claims originally submitted within the 27-day timeframe, but then later resubmitted to correct errors outside the 27-day timeframe.

The second report addressed the issue of whether proper status codes were used on IRF claims.  When a patient is discharged to his or her home, Medicare pays the full prospective rate.  In contrast, if a patient is transferred from the IRF (to another IRF, a short-term, acute care prospective payment hospital, a long-term hospital or a nursing home that qualifies for Medicare or Medicaid payments), Medicare pays a reduced amount.  The OIG review found that out of 220 claims sampled, 213 claims were improperly coded as discharges.  This resulted in an overpayment of approximately $1.2 million.  For the four year period ending in September 2007, CMS determined the overpayments for this issue totaled approximately $34 million.  Of particular importance to IRFs is the fact that CMS has indicated that it will share the OIG audit information with the Recovery Audit Contractors (RACs) and encourage them to utilize the findings in their reviews.

For more information on Medicare audits, or for assistance with an audit, please visit or contact a Wachler & Associates attorney at 248-544-0888.

August 19, 2010

Michigan Receives $1 Million of Grants to Improve Oversight of Health Insurance Premium Increases

As part of the Patient Protection and Affordable Care Act (PPACA), i.e., health care reform, states received more than $46 million in grants from the U.S. Department of Health and Human Services (HHS).  Crain's Detroit Business reported that Michigan has received $1 million of grants from HHS to go towards improving oversight and review of proposed health insurance premium increases.  Although the Michigan Office of Financial and Insurance Regulation (OFIR) will ultimately use the grant for this purpose, OFIR first must obtain additional legislative authority to enforce consumer protections in the federal bill.  This will require the Michigan Legislature to amend the Michigan Insurance Code to incorporate the specific consumer protections.  At this time, the OFIR only has the authority to review, investigate, examine and encourage compliance from health insurance companies. 

Crain's Detroit Business also reported that Michigan plans to use the $1 million grant to:

(1) Contract with consulting actuaries for targeted, in-depth analysis and review of health insurance premium filings made by HMOs and commercial carriers.

(2) OFIR also plans to conduct a study on the feasibility of posting health insurance rate information on a website that will also create a forum for access to consumer friendly information.

For more information on Michigan healthcare legal news, or the implications of health care reform, please visit or contact a Wachler & Associates attorney at 248-544-0888.

August 18, 2010

OIG Publishes Report Showing Overpayments to DME Suppliers

The OIG recently published a report showing that from 2006 to 2008, Medicare allowed $2.2 million for routine maintenance and servicing of capped rental durable medical equipment (DME) with rental periods.  These payments were erroneously made because the Deficit Reduction Act of 2005 (DRA) dramatically limited, if not eliminated, routine maintenance and servicing for beneficiary-owned DME with rental periods that began after January 1, 2006.  During the same time period, OIG found that Medicare allowed nearly $4.4 million for repairs for beneficiary-rented capped rental DME.  Medicare has never allowed payments for repairs of beneficiary-rented capped dental DME as the cost for repairs are already included in the monthly rental payments to suppliers.

As a result of its discoveries, the OIG is recommending that the Centers for Medicare and Medicaid Services (CMS) establish an edit to deny claims for routine maintenance and services of capped rental DME periods beginning after January 1, 2006 and for claims for repair of beneficiary-rented capped rental DME.  In addition, the OIG urges CMS to enhance the enforcement of existing payment requirements for beneficiary-owned capped rental DME, to begin to track repair costs for capped rental DME and to take appropriate action on erroneously allowed claims for maintenance and servicing, repair and payment errors.

DME suppliers should expect to see audit activity from CMS contractors on this issue and may want to consider conducting self-audits as part of their compliance programs.

For more information on proper Medicare billing practices for DME suppliers or for assistance defending a Medicare audit, please visit or contact a Wachler & Associates attorney at 248-544-0888. 

August 17, 2010

OIG Report Identifies Overpayments to Physicians for Incorrect Place of Service Codes

The Department of Health and Human Services Office of Inspector General (OIG) published a report finding that Medicare contractors overpaid physicians an estimated $13.8 million for services provided during calendar year 2007 with incorrect place of service codes.  The OIG report reminded physicians that they must identify the place of service on health insurance claim forms submitted to Medicare contractors.  This is because physicians are reimbursed at different rates depending on where the services are performed.

In addition to its identification of common billing errors, OIG recommended that the Centers for Medicare and Medicaid Services (CMS) instruct its Medicare contractors to recover the overpayments found from the services OIG sampled for its report.  OIG also encouraged the CMS to reopen nonsampled services to recover any overpayments and to continue its effort to educate physicians and billing services on the importance of identifying the place of service in Medicare billing records.

Providers should ensure that their billing practices follow the Medicare requirements, including proper place of service codes.

For more information on proper Medicare billing practices or for assistance with defending a Medicare audit, please visit or contact a Wachler & Associates attorney at 248-544-0888.

August 16, 2010

CMS Reminds Providers of the Document Retention Requirements

The Centers for Medicare and Medicaid Services recently published an MLN Matters Article regarding the length of time physicians are required to retain documentation.  The article reiterated that the Health Insurance Portability and Accountability Act (HIPAA) of 1996 requires a covered entity to retain required documentation for six years from the date of its creation or the date when it was last in effect, whichever is later.  Although some state laws may have shorter periods, HIPAA requirements preempt these laws.  In addition, the HIPAA Privacy Rule requires covered entities to utilize appropriate administrative, technical and physical safeguards to protect the privacy of medical records and other protected health information (PHI) for the period in which the information is maintained by the covered entity, including disposal.

The MLN Matters Article also reminded providers that submit cost reports that they are required to retain the original or legally reproduced for at least 5 years after the closure of the cost report.

As is reiterated by this MLN Matters Article, the maintenance of accurate medical records for Medicare beneficiaries is very important.  The medical records should be completed promptly, accessible, retained and providers should implement a system of author identification to ensure authenticity and security.

Finally, CMS is working to implement an incentive program for eligible providers to establish the meaningful use of certified electronic health records (EHRs).  One step in this process is the development of initial standards and certification requirements by the Office of the National Coordinator of Health IT (ONC).

For more information on proper medical records retention policies or the use of electronic health records, please visit or contact a Wachler & Associates attorney at 248-544-0888. 

August 13, 2010

RACs Will Begin Medical Necessity Reviews

The American Hospital Association (AHA) reported on August 10 that the Centers for Medicare and Medicaid Services (CMS) have approved "medical necessity review" audits for the Recovery Audit Contractor (RAC) program.  According to the AHA, the approved audits include 18 types of inpatient hospital claims and one type of durable medical equipment claim.  Although the report did not include the specific new audit issues, providers should expect to see these issues posted on RAC websites and may begin receiving additional documentation requests (ADRs) within the next two weeks. 

For more information on recovery audit contractors, please visit or contact a Wachler & Associates attorney at 248-544-0888.  
August 12, 2010

OIG LEIE Search Errors

The Office of Inspector General (OIG) for the Department of Health and Human Services recently announced a discovery that during the time period from July 15, 2010 through August 4, 2010 the search/verification function on the online searchable List of Excluded Individuals/Entities (LEIE) was not working properly.  Therefore, health care providers who conducted searches during this time period are advised to repeat the searches because it is possible that searches may have resulted in false negative results, i.e. individuals and/or entities that are actually excluded may have shown up as not excluded.

Medicare providers who contract with or employ excluded providers are subject to civil monetary penalties, nonpayment for services and possible exclusion themselves.

For more information regarding obligations to search the excluded providers list as well as other compliance issues, please contact a Wachler & Associates attorney 248-544-0888.

August 11, 2010

Michigan Attorney General Mike Cox Will Host a Forum on DMC-Vanguard Deal

Michigan's Attorney General Mike Cox announced a community forum to be held next week regarding the proposed sale of the Detroit Medical Center to Vanguard Health Systems, Inc.  Earlier this year, DMC signed a purchase agreement that would require Vanguard to make $850 million in capital improvements over the next five years.  The forum will take place from 5:00-7:00pm on August 18 at the Cadillac Place in Detroit.  It will provide the public with an overview of the proposed sale, explain the Attorney General's review process for the transaction and provide the public an opportunity to comment and question representatives of DMC and Vanguard.

For more Michigan healthcare legal news, please visit or contact a Wachler & Associates attorney at 248-544-0888. 

August 11, 2010

The OIG Releases an Advisory Opinion Regarding the Anti-Kickback Statute

The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) published an advisory opinion regarding the Anti-Kickback Statute.  The OIG concluded that the Anti-Kickback Statute would not be implicated where a charitable donation is made in the name of a healthcare provider, so long as the healthcare provider does not receive a tax deduction or other monetary benefit from the donation.

The request of the advisory opinion created an online scheduling website for certain manufacturers (pharmaceutical, medical and diagnostic) to schedule a time to meet with healthcare providers to educate the providers about new products.  Although the manufacturers would pay a fee for the time, healthcare providers would not be paid for their availability, nor would they have to pay to participate.  Rather, healthcare providers would designate a public charity to receive donations "in name of" the healthcare provider.  Restrictions on the donation include, the healthcare provider will not be entitled to a tax deductions or other monetary benefit from the donation and neither the healthcare provider nor a member of the healthcare provider's family may be closely affiliated with the charity (i.e. serve on the charity's board or be employed by the charity). 

In its conclusion that this arrangement would not violate the Anti-Kickback Statute, the OIG stressed that the healthcare provider must not receive any form of remuneration, including tax incentives.  In addition, the OIG noted that the requestor had put in place several safeguards to ensure that the program was not abused.

For more information on the Anti-Kickback Statute, please visit or contact a Wachler & Associates attorney at 248-544-0888.

August 10, 2010

District Court Ruling - Medicare Contractors Can Reopen Claims Regardless of "Good Cause"

On July 28 the U.S. District Court of the Southern District of California granted the Department of Health and Human Services' (HHS) motion for summary judgment in the case, Palomar Medical Center v. Sebelius.  The case, filed on May 26, 2010, challenged a magistrate judge's recommendation that HHS is correct in its position that a decision to reopen a Medicare audit claim is not subject to appeal, regardless of whether "good cause" was given for the audit.

Palomar Medical Center originally alleged that the Centers for Medicare and Medicaid Services (CMS) unlawfully reopened a claim without showing "good case" for the reopening as required by Medicare regulations.  In addition, Palomar argued that CMS was incorrect in its position, that Administrative Law Judges (ALJs) may not review whether Medicare contractors, such as recovery audit contractors (RACs), have followed federal regulations when reopening claims.

This case has important consequences for Medicare providers because there appears to be no recourse when a Medicare contractor does not abide by CMS' reopening rules.

For more information on recovery audit contractors and other Medicare appeals, please visit or contact a Wachler & Associates attorney at 248-544-0888.

August 3, 2010

HHS Announces Grants to Help States Implement Health Insurance Exchanges

The Department of Health and Human Services (HHS) announced on July 29 that it will make available $51 million in grants to help states initiate health insurance exchanges, mandated by the Patient Protection and Affordable Care Act.  Grants of up to $1 million will be made available to each state.  The purpose of the grants is to help states develop consumer-centered health insurance marketplaces that will encourage competition and greater control in the hands of individuals and small businesses.  The exchanges will be "one stop shops" for consumers and businesses to purchase health insurance coverage.

The HHS recognized the importance of the grants to encourage the implementation of the health insurance exchanges, given states' struggles to maintain balanced budgets.  The Secretary of the HHS, Kathleen Sebelius voiced this concern by emphasizing that, "these grants will give [states] the resources to conduct the research and planning needed to build the health insurance marketplace of the future."

States have the option to establish and operate their own exchange or partner with another state or states to operate a regional exchange.  Secretary Sebeilus said that if a state decides not to create an exchange for its residents, the HHS will establish one on their behalf.

HHS officials have requested public input as standards are developed for the exchanges, which are to begin in 2014.  Grant applications are due by September 1, 2010 and comments on the exchanges are due by October 4, 2010.

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