Recently in Compliance Category

July 7, 2014

CMS Affirms Physicians May Bill Certain Pharmacy Services as "Incident To" But Highlights Recent Regulatory Amendments Regarding Compliance with State Law

In a March 25, 2014 letter to the American Academy of Family Physicians (AAFP), CMS Administrator Marilyn Tavenner responded to an inquiry from the AAFP asking whether, if all of the "incident to" rules are met, may a physician bill Medicare for a Part B covered service provided by a pharmacist in the physician's practice.

In its January 2014 letter, AFFP noted the "increasing emphasis on team-based care in family medicine" particularly in the context of a "patient-centered medical home." Due to such changes, AAFP advised CMS that family medicine practices were employing pharmacists as part of the patient care team. Pursuant to the plan of care developed by the physician, these pharmacists were having and documenting direct, face-to-face encounters with patients where they reviewed "applicable patient history and medications" and counseled patients on the "risks and benefits of pharmaceutical treatment options" and "instructions for improving pharmaceutical treatment compliance and outcomes." The AAFP took the position with CMS that such encounters would meet the definition of an established patient evaluation and management services ("E/M service") and would be billed as an E/M service if the physician had provided the service. The AAFP also reviewed applicable Medicare rules on "incident to" billing, specifically section 60 of chapter 15 of the Medicare Benefit Policy Manual and stated that it "found nothing in Section 60 that would exclude pharmacists from this definition." Accordingly, AAFP requested confirmation that a physician who met all of the "incident to" rules would be permitted to bill Medicare for a Part B covered service provided by a pharmacist in the practice.

In her response, Administrator Tavenner stated that CMS agreed with AAFP's position that if all the requirements of the "incident to" statute and regulations were met, a physician may be reimbursed under Medicare Part B for services provided by pharmacists in the practice as "incident to" services.

Administrator Tavenner offered further guidance on this issue by directing AFFP's attention to the regulations at 42 CFR 410.26, which contained two new provisions as a result of CMS rulemaking for the calendar year 2014 physician fee schedule (PFS). Specifically, a phrase was added to the definition of "auxiliary personnel" in 42 CFR 410.26(a)(1), which requires that auxiliary personnel must "meet[] any applicable requirements to provide the services, including licensure, imposed by the State in which the services are being furnished" and a new section was added, 42 CFR 410.26(b)(7), which provides that, "[s]ervices and supplies must be furnished in accordance with applicable State law." Administrator Tavenner also referred AAFP to the CY 2014 PFS final rule and comments, found at 78 Fed. Reg. 74410, for more information. In light of these new provisions, she advised the AAFP to consider "applicable state laws" in addition to the other "incident to" requirements when considering when it is appropriate to bill for services "incident to" the physician's services.

As a result of this guidance from CMS and recent regulatory amendments, physicians and other providers wishing to bill under the "incident to" rules must carefully review not only the "incident to" rules themselves but also consider closely whether the "incident to" services are being furnished in compliance with applicable state laws such as licensure requirements for auxiliary personnel.

Wachler & Associates regularly counsels providers regarding the rules and regulations involving Medicare reimbursement, including "incident to" billing. If you have questions about "incident to" billing, or how these recent developments may impact your practice, please contact an experienced healthcare attorney at 248-544-0888 or at wapc@wachler.com. Please subscribe to the Wachler & Associates health law blog by adding your email address and clicking "Subscribe" in the window on the top right of this page.

July 3, 2014

CMS Proposes to Eliminate the Narrative Requirement for Documented Face-to-Face Encounters for Home Health Agencies

In a recently released proposed rule, the Centers for Medicare & Medicaid Services (CMS) proposes to eliminate the narrative requirement from the home health face-to-face encounter documentation requirement. Under the Patient Protection and Affordable Care Act (ACA) and implementing regulations, the certifying physician must document that the physician himself or herself or an allowed nonphysician practitioner conducted a face-to-face encounter with the beneficiary no more than 90 days prior to the home health start of care date or within 30 days of the start of home health care. As part of the home health certification requirements, the documented face-to-face encounter must include a brief narrative of why the clinical findings of the encounter support that the patient is homebound and in need of intermittent skilled nursing services or therapy services.

According to CMS, the narrative requirement was adopted in an effort to achieve greater physician accountability in certifying a patient's eligibility to receive home health care as well as establishing the patient's plan of care. However, as CMS noted in the proposed rule, the home health industry is experiencing numerous problems meeting the narrative requirement. Accordingly, since the effective implementation of the face-to-face encounter requirement in April 2011, many home health agencies have seen an increased number of claims denied by Medicare audit contractors due to inadequate narratives supporting the services. In its proposed rule, CMS acknowledges some of the challenges faced by home health agencies in meeting the face-to-face narrative requirement, including:

• A perceived lack established standards for compliance that can be understood and applied by physicians and home health agencies;
• Frustration in the industry of having to rely on physicians to satisfy the face-to-face requirement without incentives to encourage physician compliance;
• Concerns that the narrative requirement is redundant when detailed evidence to support the need for homebound status and medical necessity is available in clinical records; and
• The narrative requirement was not explicitly codified in the Affordable Care Act.


In agreeing with the industry's complaints, CMS now proposes to eliminate the narrative requirement for the documented face-to-face encounter. However, CMS noted that there should be sufficient evidence in the patient's medical record to demonstrate that the patient meets Medicare eligibility criteria for home health services. Also, CMS reaffirms in its proposed rule that the certifying physician would still be required to certify that a face-to-face encounter occurred no more than 90 days prior to the start of care date for home health services or within 30 days of the start of the home health services, and that the face-to-face encounter was related to the primary reason the patient requires home health services.

Finally, in situations where skilled nursing visits for management and evaluation of the patient's plan of care are ordered by the physician, the proposed rule provides that the physician must still include a brief narrative that describes the clinical justification for the management and evaluation service as part of the certification/recertification process.

If finalized in its current form, the provisions in the proposed rule would eliminate the brief narrative requirement for documented face-to-face encounters. However, home health providers should implement the necessary compliance protocols to ensure the medical documentation contains sufficient information to support the patient's need for home health services. Failure to meet this standard or any of the other certification requirements could result in an increased risk of claims being denied by Medicare audit contractors. If you or your entity has any questions related to the face-to-face encounter or certification/recertification requirements, or need assistance in defending against or proactively preparing for a Medicare audit, please contact an experienced healthcare attorney at 248-544-0888 or at wapc@wachler.com.

June 16, 2014

OIG Recommends Increased Audits of E/M Services by CMS

In May of 2014, the Office of the Inspector General (OIG) released a report detailing its findings regarding Medicare payments for evaluation and management (E/M) services. E/M services are performed by physicians in order to assess and manage a beneficiary's health. The OIG found that coding errors in documents for routine patient E/M services have resulted in the Medicare program paying out billions of dollars in improper payments each year. Earlier in 2014, the OIG reported that the overall Medicare program lost about $50 billion during 2013. In conducting this study, 63 percent of the claims sampled by the OIG were for established patient office/outpatient visits. Only 4 percent of the visits the OIG analyzed were for initial or subsequent skilled nursing care.

The OIG reports that for the 2010 fiscal year, Medicare payments for E/M services totaled $32.3 billion, which accounted for almost 30 percent of all Part B payments. The OIG also noted that in 2012, physicians began to increase their billing of higher level codes, which resulted in higher payment amounts. In its report, the OIG found that 55 percent of E/M services were incorrectly coded and/or lacked sufficient documentation, including: 26 percent of E/M claims were up-coded; 15 percent of E/M claims were down-coded; 12 percent of E/M claims were insufficiently documented; and 7 percent of E/M claims were undocumented altogether. In order to ensure that payments for E/M services are properly coded and supported by sufficient documentation, the OIG made the following recommendations to CMS: (1) educate physicians on coding and documentation requirements for E/M services; (2) continue to encourage contractors to review E/M services billed for by high-coding physicians; and (3) follow up on claims for E/M services that were paid for in error.

As indicated by this report, providers can expect greater scrutiny of their E/M claims by CMS audit contractors. In our experience, CMS audit contractors routinely down-code the level of E/M service billed by providers. Often times, these services are down-coded because CMS determined that the level of E/M service billed is not supported by the accompanying medical records (e.g., the visit note did not support the level of medical decision making component required by the code that was billed). With the increased audit attention relating to E/M services, providers must ensure that they are thoroughly documenting the services provided, and that each component of the E/M service is supported by the medical record. Failure to do so could leave providers vulnerable to audit contractors.

If you are currently undergoing an audit by CMS and need assistance defending claim denials, or have questions about how to proactively prepare for an audit or mitigate audit risk, please contact an experienced health care attorney at Wachler & Associates via phone at 248-544-0888 or via email at wapc@wachler.com.

June 13, 2014

Physicians Nationwide Face Terminations as Insurance Plans Move to Narrow Networks

In the past year, thousands of health care providers across the country have been excluded without cause from their insurance plan's provider networks. The proliferation of narrow networks - defined as health insurance plans that limit the doctors and hospitals available to their subscribers - has caused a backlash amongst providers, who claim the insurers' terminations will squeeze beneficiaries on access to care, and disrupt longstanding patient-physician relationship, emergency department care, and referral networks.

Although the Affordable Care Act did not create narrow networks, the reform law accelerated the trend by limiting insurer's ability to continually lower benefits and exclude unhealthy individuals. Without other ways to compete, controlling providers and limiting choice is the insurers' best way to lower premiums and thus compete on the exchanges. Insurers claim that narrow networks control costs and allow for higher quality, better coordinated care.

In most cases, however, patients choose insurance plans based on the plan's access to a specific provider network. Patients subscribe and re-subscribe to one-year commitments with the primary intent to access their long-term primary care physicians or other regularly seen providers. Patients often build relationships with these providers over several years, even decades. Now, without notice or the ability to switch their plan, the patients' physician is suddenly out-of-network and cost-prohibitive.

For physicians, a termination from a single insurance provider can be career threatening. Physicians receiving terminations and non-renewals lose critical access to patient groups and are excluded from the referral networks they developed throughout their career.

Providers across the country are reporting terminations, often without cause, from Medicaid, Medicare Advantage, and private insurance plans. Medicaid Managed Care and Medicare Advantage plans often cover the most vulnerable patient populations. These patients will suffer from losing their primary care physicians and often lack the ability to effectively manage their own healthcare. In some states, Attorney Generals and provider groups are challenging the insurance providers in Court, and asking state agencies to take action.

Our firm currently represents physicians challenging terminations via their insurance plans' appeal processes. However, as the appeal processes are often limited to determining if the insurance provider followed the termination or nonrenewal procedures in their provider agreements, we have reached out to state regulators and healthcare agencies to seek assistance in protecting provider and patient rights. The insurance plans' ability to move to a narrow network is not the issue. Instead, the real issue is that in the narrowing of networks, patients must have right to keep their primary care provider in the plan or otherwise be allowed to disenroll and transfer plans to continue to see their primary care physician. Medicare and Medicaid authorities, including the states' contracts with the plans, recognize patients' right to provider choice. Those rights are enhanced with regard to primary care physicians. Provider terminations sever long standing physician-patient relationship and may lead to lower quality, less personalized care. Further, with the increase in enrollment under the Affordable Care Act, the large volume of terminations will significantly reduce access to care, a primary objective of government-provided health care.

We are challenging whether the insurance providers, specifically those operating Medicaid Managed Care and Medicare Advantage plans, are breaching the requirements of the Social Security Act and other Medicare and Medicaid laws. Further, we believe providers and patients have extensive rights emanating out of contracts between states and the insurance plan. Our position is that all laws, regulations, codes, and policies regarding the insurance providers' operation of Medicaid and Medicare Advantage plans serve to define the relationship between the state, the plan, the provider, and Medicare and Medicaid beneficiaries. Insurance companies terminating plans also may have breached common law contract principles by the manner in which they induce patients via providers that the plan has already determined to terminate.

Please let our firm know if you have received a network termination or nonrenewal, and seek assistance in challenging the action via an appeal to the insurance plan or other action. Wachler & Associates has over 25 years of experience representing healthcare providers across the country. Our firm has successfully challenged insurance company actions countless times, often obtaining extremely beneficial resolutions for our clients. Further, our attorneys' industry relationships allow us to connect with state representatives and other healthcare groups to together and efficiently challenge these improper methods of termination.

If you would like to speak to one of our experienced health care attorneys, please contact us via our website or call our offices at 248-544-0888. Our attorneys are currently challenging network terminations and will be happy to assist in your appeal.


May 19, 2014

OIG Proposes Significant Changes to Provider Exclusion Authority

Last week, the Office of the Inspector General (OIG) released a Proposed Rule that changes its provider exclusion authority and significantly alters certain provider exclusion procedures and the substantive bases for exclusion from a Federal healthcare program. The Proposed Rule was released in conjunction with another Proposed Rule on the same date regarding Civil Monetary Penalties (CMPs). Comments regarding the rules are due on July 8.

§ 1128 of the Social Security Act grants the OIG authority to exclude certain individuals and entities from participation in Federal healthcare programs. If the OIG determines that an individual or entity has engaged in certain prohibited conduct, it must ban such a person or entity from participation in Federal healthcare programs for a statutorily mandated five year minimum period. However, many bases for exclusion are merely "permissive", where the OIG retains discretion in deciding whether to exclude an individual or entity.

The Proposed Rule provides the OIG with three new bases upon which they may permissively exclude a provider or entity: the failure of ordering, referring, or prescribing providers to furnish payment information under Section 1128(b)(11); knowingly making, or causing to be made, false statements, omissions, or misstatements of material fact on a federal health care program application under Section 1128(b)(16); or convictions in connection with obstruction of a healthcare audit under Section 1128(b)(2).

The Proposed Rule also provides the OIG with the power to issue testimonial subpoenas during exclusion investigations - a power that the OIG previously lacked. The Proposed Rule would give any member of the OIG staff the power to compel testimony of witnesses and production of evidence as it relates to an exclusion action. For certain permissive exclusions that do not require a conviction, this expanded authority will give the OIG the ability to more effectively investigate alleged improper conduct.

Finally, in the Proposed Rule, the OIG takes the position that there is no statute of limitations for its actions pursuant to § 1128(b)(7) (false claims). Usually, governmental actions under the False Claims Act are subject to a 10 year statute of limitations period that begins on the date of the occurrence. Under the Proposed Rule, OIG provider exclusion actions arising from False Claims Act proceedings could go beyond 10 years. However, the OIG also recognizes that the age of the claim will be one factor in weighing the trustworthiness of the individual or entity.

The OIG also has issued a number of modifications to exclusion proceedings:

  • The OIG has adjusted its aggravating and mitigating factors for higher dollar amounts of government losses;
  • The OIG seeks to provide an alternate mechanism for providers who have been excluded on the basis of actions against their licenses - one of the more common bases for exclusion - to regain the right to participate in Federal healthcare programs if they have obtained another license from a different board;
  • The OIG seeks to expand the rights of parties to make an oral argument prior to the imposition of an exclusion under Section 1128(b)(16);
  • Lastly, the OIG seeks to streamline many of its definitions under the exclusion regulations in an effort to reduce confusion.

Wachler & Associates' health law attorneys will continue to monitor any further developments regarding the Proposed Rule and all other federal and state regulations. If you have any questions about how your entity will be impacted by the final rule or any other regulation, please contact an experienced health care attorney at Wachler & Associates via phone at 248-544-0888 or via email at wapc@wachler.com.

May 8, 2014

New Michigan Regulations to Increase Transparency in Healthcare Provider Disciplinary Process

On July 1, 2014, new healthcare licensing regulations take effect and are expected to lead to an increase in transparency in the disciplinary process for healthcare providers. The new regulations will eliminate the ability of the chairperson of the Michigan Board of Medicine, in addition to other state healthcare licensing boards, to unilaterally end investigations of physicians, nurses and other healthcare professionals. The changes are intended to prevent any investigator with a conflict of interest from unilaterally ending an investigation. The regulations appear in Michigan Senate Bills 575 through 578, and were co-sponsored by two Republican Senators, Tonya Schuitmaker and Rick Jones. Senators Schuitmaker and Jones believe that the new rules will lead to greater transparency in the disciplinary process for healthcare professionals. For example, Senate Bill 576 (Public Act 96) will require board members to disclose conflicts of interest that exist between them and a healthcare provider under investigation. Please note that despite these regulatory changes, state officials do not expect the new regulations to increase the volume of investigations into Michigan healthcare providers.

Additionally, under Senate Bill 575 (Public Act 95), at least three board members must review and approve a request to end a state licensing investigation into a healthcare professional. The new regulatory regime, through Senate Bill 578 (Public Act 98), also provides the Michigan Department of Licensing and Regulatory Affairs ("LARA") with additional tools in the provider disciplinary process. In the state of Michigan, LARA is the governmental department charged with investigating potential licensing violations; however, disciplinary subcommittees have the final say on whether a provider's license will be suspended or revoked. Under the new rules, if a board's chairperson agrees that public health and welfare are in jeopardy, then LARA may overrule the decision of the disciplinary subcommittee of the healthcare licensing board. Further, in the new system, the State will have 30 days to challenge any disciplinary recommendation made by a subcommittee.

The impetus for these new regulations is the case of George Shade, a former chairman of the Michigan Board of Medicine, who dismissed two investigations into Dr. Robert Alexander, a Muskegon area doctor whose abortion clinic was shut-down for multiple violations of public health codes. Mr. Shade also supported Dr. Alexander's attempts to regain his license after his release from federal prison and assisted Dr. Alexander in obtaining a job at a Detroit area hospital. Under the new licensing investigation scheme, however, Mr. Shade's ability to shield Dr. Alexander from an investigation will be severely limited.

Wachler & Associates' health law attorneys
will continue to monitor any further developments in the disciplinary process for healthcare providers in Michigan and beyond. If you have any questions pertaining to the new disciplinary regulations or are the subject of an investigation, please contact an experienced health care attorney at Wachler & Associates via phone at 248-544-0888 or via email at wapc@wachler.com.

April 14, 2014

OIG Finds Limited Compliance with Face-to-Face Home Health Requirements

In a report released on Thursday, April 10, the Office of the Inspector General ("OIG") found that, thus far, there has been limited compliance with the face-to-face documentation requirement for home health providers. As a result, the OIG determined that Medicare paid $2 billion to home health providers that should not have been paid. In an effort to increase compliance with the face-to-face requirement, the OIG has outlined specific recommendations that CMS could implement which would impact home health providers. The OIG's findings and recommendations should serve as an alert to home health providers to carefully review their compliance with face-to-face encounter documentation requirements.

The Patient Protection and Affordable Care Act ("ACA") included language that established the face-to-face encounter requirement. Although initially scheduled to be effective January 1, 2011, the Centers for Medicare and Medicaid Services (CMS) delayed implementation until April 1, 2011.

The face-to-face encounter documentation requirement provides that for initial certification periods only, a home health agency must obtain documentation from the certifying physician that the physician had a face-to-face encounter with the patient. The face-to-face documentation must be signed and dated by the physician. It must include the date the encounter occurred, and include a brief narrative that describes why the patient is homebound and why the skilled services are medically necessary to treat the patient's illness or injury. A home health agency's reimbursement for the home health services for an initial certification period is dependent upon the certifying physician's proper documentation of the face-to-face encounter.

The study conducted by the OIG examined Part A home health claims from January 1, 2011 through December 31, 2012 in an effort to determine the extent to which certifying physicians documented face-to-face encounters with beneficiaries. Based on the study, the OIG concluded that compliance with the face-to-face requirement has been limited and inconsistent. Specifically, the OIG concluded that mandated documentation did not meet Medicare requirements for 32% of home health claims that required face-to-face encounters which, according to the OIG, resulted in $2 billion in payments that should not have been made. The OIG further noted that face-to-face documentation was missing in 10% of claims, which totaled $605 million in payments that should not have been made. Lastly, the OIG found that of the face-to-face documents that were submitted, 25% of the documents were missing one of the required elements, usually the signature of the certifying physician.

The OIG also noted that physicians inconsistently completed the narrative content portion of the face-to-face documentation and that CMS oversight over the face-to-face documentation requirement was minimal because CMS does not have a specific program to oversee compliance with the requirement.

In an effort to increase compliance with the face-to-face documentation requirement, the OIG recommended the following policies be implemented:

  • CMS should consider requiring the use of a standardized form that includes all elements required for face-to-face documentation to serve as a default. The OIG notes that this should not be an onerous mandate.
  • CMS should develop a strategy that encompasses formal training and outreach to providers about the importance of compliance with face-to-face documentation.
  • Lastly, the OIG recommends that CMS work with the payment contractors to develop new review procedures to ensure compliance with the requirement of face-to-face documentation. The OIG notes that this is especially important given CMS's plans to implement the face-to-face requirement for durable medical equipment.

The OIG's report and recommendations reaffirm our experience that Medicare contractors are focusing more intently on home health agencies' compliance with the face-to-face encounter documentation requirements. Although compliance is dependent upon the certifying physician's documentation, it is vital that home health agencies review records for initial certification periods for face-to-face encounter documentation that meets the requirements. Specifically, home health agencies should review the narrative portion of the face-to-face encounter documentation to confirm that it sufficiently describes the beneficiary's homebound status and the reasons supporting the medical necessity of the skilled services. The brief narrative section of the face-to-face encounter documentation is the most subjective component to the documentation requirement and, therefore, many contractors deny payment for entire episodes of care based on the fact that the brief narratives are insufficient. In order to try to prevent these initial denials and/or have success challenging the denials during the Medicare appeals process, it is very important that the face-to-face encounter's brief narrative meets the stated objectives.

Wachler & Associates will continue to monitor any further developments regarding the face-to-face documentation requirement. If you have any compliance questions pertaining to the face-to-face encounter or other home health audit risk areas, or need assistance in defending claim denials during any stage of the Medicare appeals process, please contact an experienced health care attorney at Wachler & Associates via phone at 248-544-0888 or via email at wapc@wachler.com.

February 26, 2014

Medicare Therapy Cap Exception Extended

On December 18, 2013, Congress enacted legislation extending the Medicare therapy cap until March 31, 2014. The 2014 outpatient therapy cap limits are $1,920 for physical therapy and speech-language pathology services combined, and $1,920 for occupational therapy services. In order to qualify for an exception to the therapy cap limits and continue to receive Medicare reimbursement, therapists must first document the need for medically reasonable and necessary services in the beneficiary's medical record and, separately, the therapist must indicate on the Medicare claim for services that the outpatient therapy services above the therapy cap are medically reasonable and necessary. Further, starting January 1, 2014, the Medicare outpatient therapy cap limits will also apply to therapy services performed in critical access hospitals.

Providers that meet or exceed the $3,700 threshold in therapy expenditures will be subject to a manual review. The manual review process for 2013 is not expected to change in 2014. Under the manual medical review process, Recovery Audit Contractors (RACs) will conduct either prepayment or postpayment review for claims exceeding $3,700 depending on the state. Currently, only Florida, California, Michigan, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina and Missouri are subject to prepayment review, while the rest of the nation is subject to postpayment review.

A bill that is currently working its way through Congress seeks to permanently repeal the therapy caps. The Medicare Access to Rehabilitation Act has bipartisan support and its sponsors argue that an arbitrary cap on outpatient services without regard to clinical need discriminates against some of the most vulnerable and needy Medicare recipients.

Wachler & Associates will continue to monitor the situation and provide guidance on developments in Medicare therapy cap policy. If you or your health care entity need help developing compliance plans or reviewing and refining existing audit defense strategies, please contact an experienced healthcare attorney at 248-544-0888 or at wapc@wachler.com. If you would like to subscribe to the Wachler & Associates Health Law Blog, please add your email address and click subscribe in the window on the top right of this page.

January 17, 2014

OIG Approves Industry Stakeholders' Contributions to a Patient Assistance Program under the Anti-Kickback Statute

The Department of Health and Human Services (HHS), Office of Inspector General (OIG) recently released an advisory opinion that highlights long-standing OIG guidance as to how industry stakeholders can contribute to independent, bona fide charitable assistance programs. In this case, the patient assistance program ("Requestor") provides grants to patients suffering from a specific disease for insurance premiums and other expenses not covered by insurance. The Requestor is a supporting organization of a nonprofit charitable foundation ("Foundation") that exists solely to support the disease.

The Requestor's main source of funding is the Foundation. However, all funds received from the Foundation are ultimately donations by pharmaceutical manufactures of the drugs used to treat the disease. The Requestor thus sought an advisory opinion to determine if such an arrangement would be grounds for civil monetary penalties under section 1128A(a)(5) of the Social Security Act ("Act"), covering improper beneficiary inducements, or other provisions of the Act as those sections relate to the Federal anti-kickback statute.

In the advisory opinion, AO No. 13-19, the OIG reiterates long-standing OIG guidance that industry stakeholders may contribute to the health care safety net for financially needy patients, including beneficiaries of Federal health care programs, by contributing to independent, bona fide charitable assistance programs. The OIG also states that such programs should not exert influence over donors, and donors should not have links to the charity that could directly or indirectly influence the charity's operations or subsidy programs. Further, such programs cannot function as a conduit for payments from donors to patients, impermissibly influence beneficiary choices, or engage in practices that effectively subsidize a donor's particular product.

In this arrangement, the OIG acknowledges that earmarking donations for a rare disease with a low number of treatment options increases the risk that the charity could serve as an improper inducement to patients that use the donor's products. However, in approving the arrangement, the OIG highlighted several factors that sufficiently decrease the risk of improper beneficiary inducement.

The OIG's decision was based on the following facts:

  1. The Requestor does not refer patients to any donor or to any provider, supplier, product, or plan and multiple products from more than one manufacturer are available to treat the disease;
  2. The Requestor does not provide assistance for copayments or deductibles, but instead pays insurance premiums and certain expenses not covered by insurance, and therefore not influencing how patients ultimately choose a provider or services;
  3. No donor or affiliate exerts direct or indirect control over the Requestor, and thus the Requestor has absolute and independent discretion over the use of donor contributions;
  4. Awards of assistance are truly independent from donors due to objective, verifiable, and uniform measure of financial need that is applied in a consistent manner and used to determine eligibility for the program;
  5. Awards of assistance are made without regard to any donor's interest or the patient's choice of providers, suppliers, products, and insurance plans, or whether to receive any services at all; and
  6. Donors do not receive any data that would allow them to correlate their donations with the amount or frequency of the use of their products or services.

Based on these factors, the OIG concluded that the arrangement does not constitute grounds for civil monetary penalties under section 1128A(a)(5)'s prohibition on beneficiary inducement. The OIG also found that, although prohibited remunerations could exist if the intent to induce or reward referrals of Federal health care business were present, the OIG will not impose sanctions under the Federal anti-kickback statute.

This advisory opinion demonstrates that proper safeguards that may be used to allow donors to contribute to healthcare charitable assistance programs that may ultimately result in increased utilization of their products or services.

Wachler & Associates has over 30 years of experience structuring healthcare arrangements to fit within federal and state regulations. If you or your healthcare entity have any questions regarding beneficiary inducements or the Federal anti-kickback statute, or wish to have your arrangement reviewed by our anti-kickback lawyers, please contact our health law attorneys at 248-544-0888.

January 14, 2014

OIG Releases Report Regarding Clinicians Associated with High Cumulative Part B Payments

The Office of the Inspector General (OIG) recently released a study detailing problems associated with overpayments to clinicians who provide Medicare Part B services. The study specifically focused on what the OIG referred to as "high cumulative payment" clinicians, who are clinicians receiving total annual payments of more than $3 million for Part B services during CY 2009. The OIG recognizes that this subset of providers poses a greater risk for improper payment or fraud in the Medicare system and will seek to implement new programs and policies to detect those problems.

The study found that from 2008 to 2011, both the number of Medicare Part B clinicians generating high cumulative payments, as well as the total amount of those payments, increased almost 78%. Most importantly, the study identified 303 clinicians who supplied more than $3 million in Part B services in 2009. Medicare administrative contractors (MACs) and Zone Program Integrity Contractors (ZPICs) further identified 104 specific individuals of the 303 (34%) for improper payments reviews. By the end of 2011, MACs and ZPICs reviewed 80 of the 104 clinicians and identified $34 million in over payments. Repercussions for these clinicians included suspended licenses and mandatory prepayment reviews, and even two indictments. The OIG recommends that CMS establish a cumulative payment threshold above which a clinician's claims would be selected for review as well as implementing a procedure for timely identification and review of clinicians' claims that exceed the cumulative payment threshold.

The OIG views the results of this investigation into high cumulative payment clinicians as a more useful method of identifying potentially improper payments. As a result of this study, clinicians who are reimbursed through Medicare Part B should ensure that their billing practices are in compliance with Medicare documentation and reimbursement rules, as well as determine whether their utilization rates differ significantly from their peers.

If you need assistance determining how this study may affect your practice, or if you have any other health care law questions, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888 or at wapc@wachler.com.

December 13, 2013

CMS Advisory Opinion Approves Proposed Hospital Expansion under Stark Law's Whole Hospital Exception

The Centers for Medicare & Medicaid Services ("CMS") recently released a favorable advisory opinion, CMS AO-2013-03, that interprets the "whole hospital" exception to the physician self-referral prohibition commonly known as the Stark Law. CMS determined that the proposed arrangement, which adds a new observation unit and 14 observation beds to a physician-owned hospital, complies with the "whole hospital" exception's restriction on facility expansions.

In general, the Stark Law prohibits the referral of Medicare patients for designated health services ("DHS") to an entity in which the referring physician has a financial relationship. The law also prohibits the entity that furnishes DHS as a result of a prohibited referral from billing Medicare, the beneficiary, or any other entity.

The Stark Law contains several exceptions to which the self-referral prohibition does not apply, including the "whole hospital" exception under Section 1877(d)(3). The "whole hospital" exception allows referring physicians to have physician ownership or investment interests in a hospital provided that the referring physician is authorized to perform services at the hospital and the ownership or investment interest is in the hospital itself.

The Patient Protection and Affordable Care Act ("ACA") adds an additional restriction to the "whole hospital" exception. Section 6001(a)(3) limits the expansion of such hospitals' facility capacity by requiring that "the number of operating rooms, procedure rooms, and beds for which the hospital is licensed at any time on or after [March 23, 2010] is no greater than the number of operating rooms, procedure rooms, and beds for which the hospital is licensed as of such date."

The preamble to the final rule implementing this section, however, clarified that the term "for which the hospital is licensed" only referred to beds, and that the prohibition applied to operating and procedure rooms whether licensed or not. Thus, physician-owned hospitals that rely on the "whole hospital" exception to the Stark Law are prohibited from increasing the number of operating rooms, procedure rooms, or licensed beds in that hospital.

In the Advisory Opinion, the hospital certified that the new beds would not be used as operating rooms or procedure rooms. Most importantly, the State in which the hospital is located does not require observation beds to be licensed by the State.

CMS acknowledged the preamble discussed above, and pointed to the fact that the Hospital will not pay any "license fees" or change its current number of licensed beds under the State's regulatory scheme. Accordingly, CMS concluded that the addition of the observation unit and 14 observation beds will not result in any new "licensed" beds, and that the proposed arrangement does not violate the Stark Law and ACA restriction against facility expansion.

In this case, state specific licensing laws affected CMS's analysis of the "whole hospital" exception. The Advisory Opinion demonstrates the widespread risks inherent in any arrangement that involves physicians who have financial relationships with entities to which they refer DHS. Wachler & Associates has represented healthcare providers and suppliers in Stark Law matters since the law's inception. We pride ourselves on staying up to date with Stark Law regulations, interpretations, and advisory opinions. If you or your healthcare entity have any questions regarding the Stark Law or Anti-Kickback Statute, or wish to have your arrangement reviewed by our Stark Law attorneys, please contact our health care lawyers at 248-544-0888 or wapc@wachler.com.

November 25, 2013

CMS Releases Update on Medicare Claim Denials for Incarcerated Beneficiaries

On November 20, 2013, CMS released an update regarding the Medicare denials for claims submitted by providers and suppliers for beneficiaries who were allegedly incarcerated during the dates of service. The large volume of denials, which occurred during this past summer, were incorrect as CMS acknowledged that the systems that track whether a beneficiary is ineligible for Medicare services due to incarceration were incorrectly updated. Medicare providers and suppliers nationwide were impacted by this error as Medicare Administrative Contractors (MACs) automatically denied and in many cases recouped alleged improper claims for services provided to incarcerated beneficiaries. Although CMS acknowledged the errors in late July 2013, it is not until now that Medicare providers and suppliers have received concrete information that addresses how the errors will be fixed and how correct claims will be paid appropriately. CMS is now making strides to refund improper collections and to implement fundamental changes to its claims processing systems. Medicare Administrative Contractors (MACs) will be responsible for reprocessing claims denied in error. Please see our earlier blog posts regarding CMS's efforts to recoup reimbursement for services provided to incarcerated beneficiaries here.

According to a FAQ Sheet available on CMS's website, CMS anticipates that incorrectly denied or cancelled claims associated with allegedly incarcerated beneficiaries from June through August of 2013 will be refunded to suppliers via an automated process by the beginning of December. Medicare provider claims denied due to the incorrect information regarding incarcerated beneficiaries between June through August of 2013 will also be reprocessed by the MACs. According to the FAQ bulletin, CMS expects the reprocessing to be completed by the end of December.

Suppliers and providers should be aware that repayments "may not exactly match the original payment that was made for the claims." Factors such as CMS business processes, outstanding payments, or changes in a beneficiary's paid deductible amounts may be reflected in the final claim repayment amounts remunerated to the affected providers.

In addition to the information regarding the reprocessing of the claims, CMS stated in the FAQ that MACs are to disregard appeal filing deadlines for any claims that remain denied after the reprocessing. Providers can now wait for claims denials or overpayments related to incarcerated beneficiaries to be reprocessed by CMS, and can file appeals for denied claims regardless of previous appeal filing deadlines.

Wachler & Associates will continue to keep you updated on CMS's efforts to reprocess incarcerated beneficiary claim denials. If you or your health care entity have any questions regarding CMS's reprocessing efforts, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888 or wapc@wachler.com.

November 18, 2013

"Probe and Educate" Hospital Inpatient Audits Extended an Additional 3 Months

On November 12, 2013, CMS held a third open door forum (ODF) discussing the Fiscal Year (FY) 2014 Inpatient Prospective Payment System (IPPS)/Long-Term Care Hospital (LTCH) Final Rule (CMS-1599-F). As of November 4, 2013, the patient status probe review period that was previously applicable through December 31, 2013 has been extended through March 31, 2014. CMS has issued helpful guidance on questions and answers relating to patient status reviews, selecting hospital claims for patient status reviews, and reviewing hospital claims for patient status.

These "probe and educate" reviews will be conducted on a prepayment basis to assess whether hospitals are in compliance with the admission order requirements and 2-midnight benchmark. Because these reviews will be conducted on a prepayment basis, the MACs will deny any claims not meeting these three requirements. The initial sample probe reviews will consist of 10-25 claims per hospital with dates of admission from October 1 through December 31, 2013.

MAC review of the inpatient hospital claims will provide outreach and education about the inpatient rule and will help ensure that hospitals understand and comply with the Medicare requirements. Upon completion of the 10-25 claim reviews, if the MACs do not find any issues with the particular hospital's claim documentation then further probes will not be conducted for that hospital (unless there are significant changes in billing patterns for admissions).

If issues are found for a claim, the MAC will send a detailed denial letter to the provider explaining why the claim was denied. If there are moderate to significant concerns with a claim, the letter will include an offer for the MAC to call the individual provider to discuss the reasons for why the non-compliant claim was denied, to answer questions, and to provide providers with education and reference materials.

If the MACs identify an individual provider as having "moderate/significant" or "major" concerns during the initial review, then they will do a second probe review of 10-25 claims with dates of admission between January 1 and March 31, 2014. At the end of this six month period, if hospitals continue to have major issues then the MACs may select an additional 100-250 claims for review.

If you have any questions regarding the "probe and educate" reviews or compliance with the Final Rule, please contact an experienced healthcare attorney at Wachler & Associates at 248-544-0888 or wapc@wachler.com.

November 11, 2013

Open Door Forum on Final IPPS Rule Tomorrow at 1:00

Tomorrow from 1:00-2:00 pm Eastern Time, the Centers for Medicare & Medicaid Services (CMS) will hold a third open door forum (ODF) to discuss the Fiscal Year (FY) 2014 Inpatient Prospective Payment System (IPPS)/Long-Term Care Hospital (LTCH) Final Rule (CMS-1599-F).

On August 2, 2013, CMS issued the FY 2014 IPPS/LTCH Final Rule (final rule) which finalized proposals related to patient status during short-stay hospital cases, including the new standards for inpatient admission and the medical review criteria for payment of hospital short-stay inpatient services under Medicare Part A. On September 5, 2013, CMS issued sub-regulatory guidance regarding the final rule's requirements for hospital inpatient admission order and certification, which are conditions of payment under Medicare Part A. This sub-regulatory guidance was issued in part as a result of the significant confusion surrounding CMS's requirements for inpatient admission orders and physician certifications of inpatient services. CMS also posted subregulatory instructions and frequently asked questions, relating to the claim selection process and preliminary review guidelines, for conducting patient status reviews of claims with dates of admission beginning in October 2013.

Questions on the two midnight provision for admission and medical review may be sent to CMS before the ODF begins via email to IPPSAdmissions@cms.hhs.gov. Questions on Part B inpatient billing and clarifications regarding physician order and certification can be sent to Section3133DSH@cms.hhs.gov.

To access the ODF, the participant dial-in number is 1-866-501-5502, and the conference ID number is 98515298. For more information, please visit the ODF website. If you have any questions regarding the final rule or questions about the Medicare appeals process, please contact an experienced healthcare attorney at Wachler & Associates at 248-544-0888 or wapc@wachler.com.

October 31, 2013

CMS Reaches Four Settlements Under the Stark Self-Referral Disclosure Protocol in August and September

The Centers for Medicare & Medicaid Services (CMS) recently announced four settlements via the Voluntary Self-Referral Disclosure Protocol (SRDP) under the federal Stark Law. CMS reached three Stark law settlements in August 2013 and on additional settlement in September 2013, totaling approximately $178,000.

On August 19, 2013, CMS settled Stark law violations by a Louisiana physician group practice. Under the SRDP, the Louisiana practice disclosed that it violated the Stark Law because two of its physician arrangements failed to satisfy the requirements of the in-office ancillary services exception to the Stark Law. The violations were settled for $13,572.

On August 20, 2013, CMS reached a settlement with a non-profit community hospital located in Minnesota which disclosed that its arrangement with a physician group practice for the rental of office space and performance of support services failed to satisfy the requirements of the applicable exception under the Stark Law. The Minnesota hospital's violations were settled for $9,570.

On August 29, 2013, CMS settled two Stark law violations by a California acute-psychiatric hospital. The California hospital disclosed under the SRDP that it violated the physician self-referral law because its arrangements with two physicians to provide psychiatric services did not satisfy the requirements of any applicable Stark law exception. The violations were settled for $67,750.

Lastly, on September 10, 2013, CMS reached a settlement with an acute care hospital located in North Carolina which disclosed Stark law violations due to the following three arrangements: (1) its arrangement with a physician to provide medical director services; (2) its arrangement with a physician group to provide medical coding and consulting services; and (3) its arrangement with a physician and a physician group practice for the lease of office space, as none of the above arrangements met the requirements of any applicable Stark law exception. CMS and the North Carolina hospital settled these violations for $87,110.

CMS maintains a list of these settlements as well as other select Stark law violations resolved under the SRDP online. Wachler & Associates attorneys have regularly counseled hospitals and other providers in navigating the Stark Law since 1995. The high amount of settlements throughout 2013 may indicate that CMS is directing increased attention towards hospitals resolving Stark law violations under the SRDP. For more information on the Stark Law, or for assistance with Stark compliance measures for your healthcare entity, please call an experienced healthcare attorney at 248-544-0888.