October 2010 Archives

October 27, 2010

Joint Commission Announces Accreditation Standards for Patient-Centered Medical Homes

In September the Joint Commission announced that it will begin to accredit patient-centered medical home models for physicians by July 2011.  A medical home model is a method to deliver care that is based on the ability to demonstrate evidence-based protocols, self-management education and care coordination with specialists and other facilities.  The Joint Commission's final standards will be available in March 2011 and on-site surveys will begin in July 2011. 

The American Medical Association supports patient-centered medical homes, but stated to American Medical News that it will continue to work with the Joint Commission to ensure that proposed accreditation standards will focus on patient safety and access to physician care.  Currently, some of these practices follow the standards published by a Washington D.C.-based organization, National Committee for Quality Assurance (NCQA).  NCQA argues that more accreditation or recognition bodies will complicate the accrediting landscape and will cause confusion among providers.

For more information on patient centered medical homes or other health care reform concepts, please contact a Wachler & Associates attorney at 248-544-0888.

October 25, 2010

OIG Releases Work Plan For Fiscal Year 2011

The Office of the Inspector General recently released the Work Plan for fiscal year (FY) 2011. The Work Plan describes areas the OIG will focus on in the upcoming year; something all practitioners concerned with compliance should pay attention to.  Medical devices, radiation therapy quality and safety, and an expanded focus on the three and one day payment windows are all covered.

Part of the focus for FY 2011 is on quality and billing concerns.  In particular, brachytherapy reimbursement, replacement of devices received at no cost or reduced cost, safety and quality of intensity-modulated radiation therapy (IMRT) and the safety and quality of image guided radiation (IGRT) are areas receving increased scrutiny.  When it comes to billing issues, particularly for a difficult billing area such as medical devices, providers need to be aware of the correct procedure.  Conducting a thorough and in depth compliance audit of a provider's billing procedures is a smart and effective way to make sure that office practices do not run afoul of proper procedures.

With respect to the payment window rules, the Work Plan has added a one day payment window for non-IPPS facilities.  This rule is akin to the three day payment window available to IPPS facilities and it requires payments to non-IPPS facilities for diagnostic services provided the day before an inpatient claim to be included, along with other services related to admission on the day before admission, as part of the inpatient claim.

Several other topics are also on OIG's watch list for FY 2011.  These include provider status, observation services for outpatient services, Part A hospital capital payment, critical access hospitals, Medicare disproportionate share payments, duplicate graduate medical education payments, hospital readmissions with conditions coded present-on-admission, inpatient rehabilitation facility transmissions of patient assessment instruments and Medicare excessive payments.

If you would like more information regarding compliance in any of the areas identified in the OIG Work Plan, please contact a Wachler & Associates attorney at 248-544-0888 or visit our websites at www.wachler.com and www.racattorneys.com

October 25, 2010

Most Recent RAC Activity

The RACs for Regions A, B and C recently added new approved issues for review.  The RAC for Region A, DCS Healthcare, added two issues, DRG validation claims and outpatient claims, to its list for providers in Region A states.  CGI, the RAC for Region B, added two new issues for professional services claims and the RAC for Region C, Connolly Healthcare, added a new issue for outpatient hospital claims and physician (carrier) claims.

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

October 20, 2010

CMS Releases Letter to State Medicaid Directors Regarding Medicaid RACs

On October 4, 2010 the Centers for Medicare and Medicaid Services (CMS) published a letter that was sent to state Medicaid directors as part of a series of letters that will provide guidance for the implementation of provisions of the Patient Protection and Affordable Care Act (PPACA), including the expansion of the Recovery Audit Contractor (RAC) program to Medicaid.  States are required to contract with Medicaid RACs consistent with state law and the RACs will be paid through contingency fees.  States will submit a State Plan Amendment (SPA) to CMS through which the State will either attest that it will establish a Medicaid RAC program by December 31, 2010 or indicate that it is seeking an exemption from the requirements.  CMS will permit states to maintain flexibility in the design of the state's Medicaid RAC program and the number of entities the state will enter into contracts with, so long as the states act within the parameters of the statutory requirements. 

States that seeks to request variances or exceptions from the Medicaid RAC program must submit to CMS a written request from the state's Medicaid Director to the CMS/Medicaid Integrity Group.  CMS has expressed that it will grant complete Medicaid RAC program exceptions rarely and only under the most compelling of circumstances.

Another important component of the Medicaid RAC program is the contingency fee payment to the contractors.  PPACA requires that Medicaid RACs be paid only from amounts "recovered" on a contingent basis for collecting overpayments and in amounts specified by the State for identifying underpayments.  Although CMS will not dictate the contingency fee rates, the maximum rate will be established.  CMS will publish a notice in the Federal Register, no later than December 31, 2010, to announce the highest Medicare RAC contingency fee rate and this rate will apply to Medicaid RAC contracts with a performance period beginning on or after July 1, 2014.  The contingency fee rates should be reasonable and take into account several factors, including: the level of the effort performed by the RAC, the size of the state's Medicaid population, the nature of the state's Medicaid health care delivery system and the number of Medicaid RACs engaged.  The fees paid to Medicaid RACs must include amounts associated with (1) identifying and recovering overpayments and (2) identifying underpayments.  States must maintain an accounting of amounts recovered and paid, and ensure that the total Medicaid RAC fees paid are not more than the total amount of overpayments collected.

States will be required to establish an adequate appeals process for entities that experience adverse decisions made by the Medicaid RACs.  CMS will not require states to establish new administrative review infrastructure to conduct Medicaid RAC appeals, so long as the state has an existing appeals process that can accommodate Medicaid RAC denials.

For more information on the RAC expansion to Medicaid or other provisions of the Health Care Reform Act, please contact a Wachler & Associates attorney at 248-544-0888. 

October 18, 2010

OIG Advisory Opinion 10-20 and 10-21

The Office of the Inspector General recently released Advisory Opinions 10-20 and 10-21.  Advisory Opinion 10-20 deals with a radiology group seeking to pre-authorize insurers free of charge for referring physician groups.  These requests for pre-authorization would be handled before the requestor would be providing the services.  Additionally the radiology group would bear the financial risk if they were not able to obtain preauthorization from the insurers.

Although the situation where services are provided free of charge to a referring source does have a potential for risk, the OIG mentioned several mitigating factors present in the proposed arrangement to limit the risk of influencing referrals.  One factor that limits the risk of influencing a referral is that the proposed arrangement would not target any specific physicians and since there are a large number of insurers the requestor would be unlikely to know the specific obligations of a physician with respect to any particular patient.  To help reduce the risk of fraud and abuse, no payment would be made to physicians, no assurance of preauthorization approval would be made and all private laws would be followed.  The arrangement would be operated transparently, where the insurers would know that the call center was operated by the requestor.  Finally, the OIG noted that the requestor's insurance reimbursement is at stake, which is a legitimate business purpose.

For all the aforementioned reasons, the OIG determined that the risk of inducing referrals under the proposed arrangement was minimal given the safeguards and legitimate business purpose.

Advisory Opinion 10-21 deals with a discount offered to a Medigap Plan by a preferred hospital network.  These discounts would be given to policyholders who choose to use hospitals in the preferred network.  This discount would be given in the form of a credit on the policyholder's renewal premium.  After analyzing the arrangement for violations of beneficiary inducement provisions of the civil money penalty statute and the Anti-Kickback statute the OIG determined that they would not impose administrative sanctions.  However, they did note that the arrangement might violate the Anti-Kickback statute for prohibited remunerations.

While analyzing the arrangement, the OIG noted several features that mitigate the risk of fraud or abuse.  These features include the fact that the waiver could not change or increase the services provided by the hospital, there would be no increase in utilization due to the discount because the Medigap policy would have paid the deductible had there been no discount, physicians do not receive remunerations as part of the arrangement, and that the sharing of the discount with the policy holders provided little risk to the program.

Analyzing this proposed arrangement under the beneficiary inducement statute, the OIG found that this credit, although not the same as differentials in coinsurance and deductibles, has the same effect.  As such, the exceptions for differentials in coinsurance and deductibles under the beneficiary inducement statute would apply to the proposed discount.  The OIG also noted that the proposed arrangement would lower costs for policyholders.

If you would like your financial arrangements analyzed for Stark, Anti-Kickback, or beneficiary inducement compliance, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.

October 13, 2010

U.S. District Judge Refuses to Grant Injunction Against Health Care Reforms Implemented through the Affordable Care Act

On October 8, U.S. District Judge George Steeh refused to grant an injunction that would prevent the implementation of the federal health reforms enacted through the Affordable Care Act.  Judge Steeh also dismissed several substantive portions of the suit, determining that Congress did not exceed its constitutional authority by requiring most people to buy health insurance.  The lawsuit was brought by the Thomas More Law Center, an Ann Arbor-based Christian legal center and four plaintiffs.  The Detroit Free Press reported that an attorney for the law center, Robert Muise, stated that the plaintiffs will appeal the decision.

The Michigan lawsuit is one of several lawsuits filed challenging provisions of the Affordable Care Act.  Another lawsuit filed by several attorney generals, including Michigan Attorney General Mike Cox, is in the appeals process with oral arguments scheduled for December 16.

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

October 8, 2010

American Hospital Association Releases RACTrac Survey

In September the American Hospital Association (AHA) released its RACTrac for the second quarter of 2010.  RACTrac is a nationwide survey conducted by the AHA which documents the ongoing Recovery Audit Contractor (RAC) activity.  The purpose of the survey is to fill the void of information provided by the Centers for Medicare & Medicaid Services (CMS) on the RAC program's impact on hospitals


RACTrac reported that 1,389 hospitals participated in the survey from all of the RAC regions.  During the first quarter of 2010, more than two thirds of these hospitals experienced RAC activity.  The survey results indicated that the RACs primarily engaged in complex reviews.  For instance, during the first quarter of 2010, 88 percent (over $15.5 million) of the reported RAC activity by hospitals participating in the survey was involved in complex reviews, while 20 percent was involved in automated reviews.  Complex reviews require human review of the medical records and a determination of whether or not an improper payment was made.  If an improper payment is identified, the hospital will receive a letter stating that the associated claim has been "denied."  Automated reviews, however, involve a claim determination without human review of the medical records.  Instead, the RACs utilize software to detect certain types of errors.  The RAC will send a demand letter to the hospital, providing notice that an overpayment has been detected. 

Participating hospitals also reported appealing 16 percent of the RAC denials available for appeal.  Of the claims that had completed the appeals process at the time of the survey, 13 percent were overturned in favor of the provider.  However, 1,571 of the claims are still in the appeals process and the overturned rate may increase once the appeals process is complete. 

The RACTrac Survey also documented information regarding the increased administrative burden on hospitals due to the RAC program.  76 percent of the responding hospitals reported that their RAC impacted their organization in the first quarter of 2010, regardless of whether they had experienced RAC reviews. 

For more information on RACs or for assistance with a RAC or other Medicare Audit, please contact a Wachler & Associates attorney at 248-544-0888.  
October 7, 2010

OIG Advisory Opinion 10-17

The Office of the Inspector General (OIG) recently released Advisory Opinion 10-17 which deals with donations made as part of a private settlement agreement stemming from a Certificate of Need (CON) dispute. These donations, made to programs, which provide services to children and families, were deemed not to violate the Anti-Kickback statute.

The proposed donations would be made by the children's health system to the health system in exchange for the health system dropping its challenge to the CON applied for by the children's system.  These donations would be made to the health system's wholly owned, federally tax exempt, entity that raises funds for the health system but does not provide any healthcare services.  The settlement agreement does not stipulate that either entity needs to refer patients to the other entity.

Several factors mentioned by the OIG which make this arrangement copacetic are that both requestors are non-profit, tax exempt with no incentive to grant referrals to one another, the children's health system is obligated to pay the funds regardless of whether they are paid to the health system or some other third party, other safeguards exist to make sure that there are no incentives to grant referrals between the entities and the donations will go towards helping children and families, many of which are uninsured.

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

October 6, 2010

The OIG Publishes Two Favorable Advisory Opinions

Last week the Office of Inspector General (OIG) issued two Advisory Opinions addressing proposed programs that could potentially implicate the anti-kickback statute and the imposition of civil monetary penalties (CMPs).

The first OIG Advisory Opinion, 10-18, analyzed a proposed program by a health system which involved post-surgical free hotel accommodations to pediatric tonsillectomy patients insured by federal healthcare programs.  The health system provides services in a rural area and consists of four facilities that provide tonsillectomies.  The proposed program would offer the free overnight stay to pediatric tonsillectomy patients who are treated at the health system's Surgery Center.  All of the procedures performed at the Surgery Center will be by ear, nose and throat specialists (Clinic ENTs) who only perform tonsillectomies at hospitals in the Health System.  Even though the patients that stay at the adjacent hotel will be Federal healthcare program beneficiaries, neither Federal healthcare programs nor private insurers will be billed directly or indirectly for the costs.  The OIG's Advisory Opinion listed several components of the proposed program which contributed to its determination that the program would not constitute grounds for violation of the anti-kickback statute.  These included:

- The Clinic ENTs that perform the services do not have privileges at hospitals outside the Health System and do not perform tonsillectomies at hospitals outside the Health System.

- Clinic ENTs' salaries are not affected by the volume or value of the surgeries performed.

- The proposed program is not advertised to potential patients.  The patient only learns of the program after the Clinic ENT has been selected and the patient chooses which facility, of the four in the health system, that the procedure will be performed.

- The program is designed to overcome access barriers that exist for patients that reside in rural counties surrounding the health system and therefore could potentially improve quality of care for pediatric patients receiving tonsillectomies on an outpatient basis. 

Based upon a combination of reasons, the OIG concluded that the proposed program would likely not constitute as Federal healthcare program abuse and that it would not impose civil monetary penalties arising in connection with the anti-kickback statute for the proposed arrangement. 

The second OIG Advisory Opinion published by the OIG, 10-19, found that a nonprofit charitable organization could accept donations of cash and durable medical equipment from entities such as pharmaceutical manufacturers and DME suppliers and use those donations and funds to provide DME services to patients with hemophilia (Coagulation Disorder).

The nonprofit charitable organization would form a new, independent, tax-exempt charitable nonprofit that would provide financial grants and DME to entities that provide services and DME directly to certain individuals suffering from hemophilia.  The donors to the program would likely be pharmaceutical manufacturers, pharmacies and other providers that would provide services to patients suffering from hemophilia.  No restrictions will be allowed to be imposed on donations by donors, except for the specification that the donations be used to help those suffering from hemophilia.  Donors will not have knowledge of the specific use of their donation, but will be able to access the reports of the independent foundation.  The independent foundation will be controlled by a separate and independent board of directors with no financial ties to the Coagulation Disorder Industry.

The foundation would distribute financial assistance to (1) non-profit organizations serving those suffering from hemophilia that qualify as a public charity and (2) federally funded HTCs in the foundations' region.  Individuals will not be eligible to apply for financial assistance from the foundation.  The organizations that qualify for assistance from the foundation may only use the grants to support individuals or families affected by coagulation disorders and to fund ancillary services for patients, i.e. transportation.  Specific donations of DME would be provided directly to patients, unless the healthcare program already covered the provision of those items.  These items would be provided to uninsured individuals that require financial assistance.

The OIG found that the proposed arrangement had a minimal risk of generating improper remuneration.  To reach this decision, the OIG stressed that no donor or affiliate of the donor would be able to influence the foundation or its programs and that the charitable organization must be motivated by bona fidecharitable purposes.

If you would like any of your financial arrangements analyzed for Stark or anti-kickback compliance, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.