September 2010 Archives

September 30, 2010

CMS Begins Preparing for RAC Expansion to Medicaid

On September 10, 2010, CMS released draft form CMS-10343, which will be used by state Medicaid plans to show that they have contracted with a RAC auditor.  The forms are used in connection with preparation for Medicaid RAC expansion and include criteria related to payments to the Medicaid RAC and the appeal of Medicaid RAC denials.  Under the Social Security Act section 1902(a)(42)(B)(i), States are required to have an operational program and contract with a Medicaid RAC by December 31, 2010.  Pursuant to CMS's Supporting Statement, States will be able to tailor the Medicaid RAC's activities to the uniqueness of the Medicaid program in their state, as well as identify and proposetargeted areas for improper payments.

As CMS begins to move towards expansion of the RACs to Medicaid, providers should start preparing for audits of their Medicaid claims.

For more information on RACs or if you need assistance defending a Medicaid audit, please visit or contract a Wachler & Associates attorney at 248-544-0888.

September 29, 2010

On September 23, 2010 the Centers for Medicare and Medicaid Services (CMS) published the Medicare self-referral protocol (SRDP).  The SRDP was established by sec. 6409 of the Affordable Care Act (ACA) which required the Secretary of Health and Human Services to establish a Medicare self-referral program that affords providers of services and suppliers the opportunity to self-disclose actual or potential violations of the physician self-referral statute.  The SRDP is open to all health care providers of services and suppliers, whether individuals or entities, and is not limited to a particular industry, medical specialty or type of service.  The purpose of the SRDP is to facilitate the resolution of matters that the disclosing party reasonably assesses are actual or potential violations of the Stark Law.  Thus, disclosing parties should make a submission to the SRDP only with the intention of resolving its overpayment liability exposure for conduct it identified.  CMS will evaluate the facts and circumstances surrounding the disclosed conduct to determine an appropriate solution.  It is important to note that CMS is not obligated to follow conclusions made by a disclosing party regarding the matter and has no obligation to resolve the matter in a particular way.

The disclosing party must submit the disclosure electronically and submit an original and 1 copy by mail to the Division of Technical Payment Policy.  Information required to be in the disclosure includes: (1) description of actual or potential violation(s); (2) financial analysis; (3) a signed certification stating that best to the individual's knowledge, the information provided contains truthful information and is based on a good faith effort to bring the matter to CMS's attention.

For more information on the SRDP or for assistance with Stark compliance measures please call a Wachler & Associates attorney at 248-544-0888. 

September 23, 2010

RAC for Region A Adds New Issues for Medical Necessity Review

Recently the RAC for Region A, DCS Healthcare (DCS), added new issues for medical necessity reviews to its list of approved issues. DCS approved nine medical necessity issues, including Respiratory (limited to MS-DRG 190, 191, and 192), Gastro Intestinal Disorders (limited to MS-DRGs 391 and 393) and Diseases and Disorders of Blood, Blood Forming Organs and Immunological Disorders (limited to MS-DRG 811).  RACs for Region B, C and D have also approved medical necessity reviews for certain MS-DRGs.

For more information on RAC approved issues or if you need assistance with a Medicare audit, please visit or contract a Wachler & Associates attorney at 248-544-0888.

September 23, 2010

CMS Publishes Proposed Rule Implementing Affordable Care Act Provisions

The Centers for Medicare and Medicaid Services (CMS) published a proposed rule implementing provisions of the Patient Protection and Affordable Care Act (PPACA) that help tackle Medicare and Medicaid fraud.  According to Peter Budetti, the Director of the new anti-fraud office at CMS, the proposed rules will provide federal authorities the power to identify fraud and reduce improper payments by an estimated $55 billion.

According to CMS, the proposed rule is essential to the implementation of healthcare reform since the expansion of healthcare coverage relies upon saving money on fraud and abuse in the healthcare systems.  Specifically, the rules will provide increased scrutiny to $900 billion in annual spending in federal Medicare, and the state-federal Medicaid and Children's Health Insurance Program (CHIP), but it is unknown how much money the proposed rules will actually save.

Increased scrutiny over Medicare and Medicaid Programs will include the following measures:

- As soon as there has been a "credible allegation" of fraud that warrants further investigation, payments to that provider will be suspended.

- Medicaid programs will be required to not use providers that have been kicked out of Medicare or another state's Medicaid or CHIP program.

- More providers' offices and firms will be visited to ensure their legitimacy.

- Providers will be rated on their risk for engaging in fraud.  Providers with a high-risk of fraud and new home-health agencies and suppliers will undergo fingerprinting and criminal background checks.

There is a 60 day comment period for the proposed rule and a final rule is expected to be published by the end of 2010.

For more information on healthcare reform, this proposed rule and its implications for health care providers, or compliance measures please contact a Wachler & Associates attorney at 248-544-0888. 

September 22, 2010

The OIG Publishes an Unfavorable Advisory Opinion Involving a Manufacturer's Proposal to Compensate Providers for Warranty-Covered Services

A manufacturer of cochlear implants ("Requestor") inquired whether a Proposed Arrangement would violate the Anti-Kickback Statute and result in civil monetary penalties.  The Office of the Inspector General for the Department of Health and Human Services (OIG) concluded that the Proposed Arrangement presents more than a minimal risk of violation of the Anti-Kickback Statute.

Cochlear implants are devices, covered by the Medicare and Medicaid programs, which assist patients' ability to hear.  The implants consist of both internal and external components.  The internal component of the device is surgically implanted and following the implantation an audiologist must program the external sound processor.  Patients may choose the cochlear implant device and this choice may be influenced by the patient's audiologist or surgeon.  The Requestor warranties the external component and operates a toll-free telephone line for customer's questions and concerns about their product.  However, since customers often contact the Clinics for assistance with their devices, Clinics will provide troubleshooting services (Services) pursuant to the Requestor's established process.

The Proposed Arrangement would operate pursuant to a written agreement between the Requestor and the Clinics.  The Requestor would compensate the Clinics $37 per occurrence for the Services.  The compensated Services would include those provided the Requestor under the customer's warranty.  The Requestor affirmed that the fee was consistent with the fair market value and that Clinics would be prohibited from billing third-party payors or patients for the services.  These services would not be marketed to the patients. 

The OIG determined that the Proposed Arrangement posed a more than minimal risk of fraud because (1) the Requestor failed to implement safeguards to dissuade improper patient steering that could result as the incentives tied to the selection of the Requestor's device; (2) the Requestor did not demonstrate a compelling need for the Requestor to pay the Clinics for providing the Services for which the Requestor already has processes in place to perform; and (3) the OIG questioned the methodology the Requestor utilized to determine that the fee for the services represented the fair market value.

The OIG ultimately concluded that the Proposed Arrangement would not create grounds for civil monetary penalties, but that it could result in prohibited remuneration under the Anti-Kickback Statute and OIG could impose administrative sanctions as a result. 

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

September 20, 2010

U.S. District Judge Likely to Allow Lawsuit Challenging Healthcare Reform to Proceed

U.S. District Judge Roger Vinson indicated last Tuesday that he will likely allow a lawsuit to proceed that challenges the Constitutionality of the Healthcare Reform law.  The lawsuit, filed by 20 states, the National Federation of Independent Business and two individuals, challenges whether the Constitution permits the federal government to mandate Americans to purchase health insurance.  Earlier this summer the Obama Administration requested Judge Vinson to dismiss the lawsuit, arguing that the challenge requests the court to overturn precedent enforcing the federal government's power to regulate interstate commerce.

After a two-hour hearing with the parties, Judge Vinson indicated that he would likely deny the federal government's motion to dismiss on at least the count addressing whether Congress can require most citizens to purchase health insurance.

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

September 17, 2010

Concierge Medical Practices on the Rise

According to a study by researchers at the National Opinion Research Center at the University of Chicago and Georgetown University, the number of doctors engaged in "concierge medicine" is on the rise.  The study found that almost 1,000 physicians nationwide practice concierge medicine.  Physicians with these types of practices offer enhanced services for patients, including longer appointments and increased availability.  In return, physicians request patients to provide retainers or additional costs for the services. 

There are many legal issues that must be considered when setting up a concierge medical practice.  If you need assistance with billing for concierge services or setting up a concierge medical practice, please contact the attorneys at Wachler & Associates at 248-544-0888.  
September 15, 2010

CMS Publishes a New Rule Affecting DME Providers

The Centers for Medicare and Medicaid Services (CMS) recently published a new rule affecting Durable Medical Equipment (DME) providers.  The rule, effective September 27, 2010, strengthens Medicare's standards for marketing and solicitations and expands enrollment requirements for DMEPOS providers.

Important highlights from the rule include:

- DME providers will be required to remain open to the public for at least 30 hours per week, except for physicians or licensed non-physician practitioners furnishing services to their own patients as part of their professional service and DME providers working with custom orthotics and prosthetics.

- DME providers must continue to maintain ordering and referring documentation from physicians or non-physician practitioners.

- DMEPOS providers must establish and maintain billing privileges in the Medicare program.

For more information on rules affecting DME Providers or Medicare billing regulations, please visit or contact a Wachler & Associates attorney at 248-544-0888. 

September 10, 2010

The DMC Announces Cost-Savings From the Use of Electronic Medical Records

The Detroit Medical Center (DMC) recently announced that it has saved more than $5 million in costs in 2009 due to its system-wide Electronic Medical Records (EMR).  This is the second consecutive year that the DMC has experienced cost-savings due to the EMR system. 

The system, which started to be implemented in 1998, cut costs by effectively preventing medication errors and monitoring important hospital tasks.  DMC leaders expressed enthusiasm not only for the cost-savings, but also for the improved quality of care for patients.  In the DMC press release, the DMC's Chief Medical Information Officer, Dr. Leland Babitch, stated that the reduction in medication errors is "...a major gain for patients - especially given the fact that medication errors account for the majority of accidental deaths and injuries at U.S. hospitals."

The DMC's press release comes at a time when the Obama Administration is encouraging electronic health record (EHR) systems across the country.  For instance, the Office of the National Coordinator for Health Information Technology (ONC) recently named the first technology review bodies that are authorized to certify EHR systems. 

for more information on EHR stimulus funds, health information technology or Michigan healthcare legal news, continue to visit the Wachler Blog or visit 
September 8, 2010

The OIG Publishes Two Advisory Opinions

The U.S. Department of Health and Human Services Office of Inspector General (OIG) recently issued two Advisory Opinions.  The first Advisory Opinion, AO 10-12, found that an arrangement between a grant program operated by a nonprofit, tax exempt charitable organization that provides grants to brain tumor patients who require financial assistance for the costs of drugs and/or devices would not result in civil monetary penalties (CMPs) even though the arrangement could cause prohibited remuneration under the Anti-Kickback Statute.

Although the funding for the grants comes from manufacturers of drugs and devices used to treat brain tumors and other conditions covered by the program, the OIG found sufficient safeguards in the system that mitigate the risk of improper influence.  First, the grant program will award assistance to beneficiaries based on objective criteria.  The assistance will not limit the patient's ability to choose a provider, practitioner or supplier because the patient will have already made these choices prior to receiving the assistance.  In addition, no donor will exert control over the Foundation or affect the Foundation's decision to award assistance.  Donors will not receive data that would allow it to determine the correlation between its donations and the use of its products or services.

In the second Advisory Opinion, AO 10-13, the OIG determined that it would not impose administrative sanctions for the provision of free insurance pre-authorization services because the arrangement included sufficient safeguards to reduce the risk that the free services would be inducements for referrals.  The proposed arrangement involved a hospital addressing requests from insurers for the pre-authorization of diagnostic imaging services before they are completed by the hospital.  The pre-authorization services would be provided by the hospital free of charge and without regard to the volume and/or value of any physician referrals.

For four reasons the OIG found that the risk of improper inducements for referrals was low.  First, the proposed arrangement would not target particular physicians.  Second, the safeguards in place were sufficient to reduce the risk of fraud and abuse.  Physicians would not receive payments, there would be no ancillary agreements and there were no assurances that pre-authorization approval would be made.  Third, the pre-authorization services would operate transparently.  Finally, the hospital has a legitimate business reason to operate the pre-authorization services as their payment is at stake.

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

September 2, 2010

The ONC Names Technology Review Bodies to Certify EHR Systems

The Office of the National Coordinator for Health Information Technology (ONC) named the first technology review bodies that are authorized to certify electronic health record (EHR) systems.  The review bodies, The Certification Commission for Health Information Technology (CCHIT) and the Drummond Group Inc. (DGI), will have the task of ensuring that EHR systems are in compliance with criteria set forth by the U.S. Department of Health and Human Services.  David Blumenthal, M.D., the national coordinator for Health Information Technology stressed that this is a "crucial step" as certified EHR systems will be required for providers to meet meaningful use standards and the healthcare community's confidence will grow in these systems. 

This announcement comes as an important step in the Administration's effort to encourage the transition from paper-based medical records to EHRs.  The Health Information Technology for Economic and Clinical Health (HITECH) Act created incentive payment programs to encourage healthcare providers to make this transition.  In order to qualify for the incentive payments, however, providers must adopt and demonstrate the meaningful use of certified EHR systems.  Now with CHIT and DGI, EHR systems can begin to receive certification and providers may begin to strive to demonstrate meaningful use of the EHR systems. 
For more information on the implementation of health information technology, obtaining incentive payments from CMS for the demonstration of meaningful use, or review of EHR contracts please visit or contact a Wachler & Associates attorney at 248-544-0888. 
September 1, 2010

RACs for Regions D and C Add Medical Necessity Reviews to Approved Issues Lists

The RACs for Region D and Region C added medical necessity reviews to their lists of approved RAC audit issuesHealthDataInsights (HDI), the RAC for Region D, added ten medical necessity reviews to its list of approved issues, while Connolly Healthcare (Connolly), the RAC for Region C, posted 18 medical necessity reviews involving 29 MS-DRGs.  The approvals of medical necessity reviews in RAC Regions D and C follow closely behind 18 medical necessity reviews recently approved by CGI, the RAC for Region B.  It is important to note that the "new" issues were included in sections already listed on HDI's approved audit issues lists for review of DRG validations, whereas Connolly listed the medical necessity reviews as separate "new" approved issues.

For more information on RACs or if you need assistance defending a Medicare audit, please visit or contact a Wachler & Associates attorney at 248-544-0888.