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April 17, 2015

FDA Gives Finalized Guidance on Medical Device Data Systems, Mobile Apps, and Medical Image Storage and Communications Devices

The Food and Drug Administration (FDA) issued non-binding guidance on February 9, 2015 finalizing its position on regulatory compliance of medical device data systems (MDDS), medical image storage and communications devices and mobile medical applications. In its recently issued guidance, the FDA explained that it will not enforce compliance with the regulatory controls that apply to MDDS, medical image storage devices and medical image communications devices because the devices pose a low risk to the patients and play an important role in the advancement of digital health care. Under FDA regulations, MDDS is defined as hardware or software that electronically transfers or stores medical device data, electronically converts medical device data from one format to another, or electronically displays medical device data. A medical image storage device stores and retrieves medical images and a medical image communication device electronically transfers medical image data between medical devices.

As a result of the FDA's position, manufacturers of MDDS or medical storage and communication devices will not have to register with the FDA, submit to pre-market review or post-market reporting, and can avoid quality system regulation, thereby saving manufacturers time and money. The FDA further stated that it will not enforce compliance with pre-market notification for MDDS, or medical image storage and communication devices that would have otherwise required such notification under the regulations.

Additionally, on February 9, 2015 the FDA issued non-binding guidance specific to mobile apps. The issued guidance contains three appendices that explain and provide examples of apps that are within FDA enforcement, outside of FDA enforcement, and those over which the FDA abstains from enforcing the regulations. The first appendix gives examples of apps that are not "devices" under FDA regulations; the second appendix gives examples of apps that may meet the definition of "device," but but regulations will not be enforced as the apps are considered low risk to patients and users; and the third appendix gives examples of what the FDA considers "mobile medical apps" over which the FDA does intend to enforce its regulations. The FDA defined "mobile medical apps" as apps that meet the definition of a "device" and are intended to be used as an accessory to a regulated device or are intended to transform a mobile platform into a device. In its guidance on mobile apps, the FDA stated many mobile devices do not fall under its definition of a "device" in 21 USC § 321(h) and are therefore not regulated by the FDA. The FDA did, however, strongly recommend that manufacturers of mobile apps that may qualify as a "device" follow the FDA's Quality System regulation in developing and designing apps. Lastly, while the FDA acknowledged that many current mobile apps do not constitute "devices" under FDA regulations, or are simply not regulated by the FDA, current and new mobile medical devices are subject to FDA enforcement.

In sum, the dually issued FDA guidance on MDDS, medical image storage and communication devices, and mobile apps in large part constitutes an abstention on behalf of the FDA, perhaps signalizing the FDA's recognition that strict enforcement of FDA regulations on MDDS, medical image storage and communication devices, and mobile apps will unduly burden manufacturers, slow the development of digital health care and fail to provide any greater protection to the public. However, mobile medical apps are subject to FDA regulation and enforcement and developers are encouraged to engage in open dialogue with the FDA to discuss potential regulatory requirements.

If you have any questions relating to MDDS, medical image storage and communication devices, or mobile application compliance with FDA regulations or any other compliance issues, please contact a Wachler & Associates attorney at 248-544-0888 or at wapc@wachler.com. For further updates on FDA regulatory requirements and other healthcare news, please subscribe to Wachler & Associates' health law blog by adding your email address and clicking "Subscribe" in the window on the top right of this page.

April 3, 2015

CMS Offers Clarification to HHA Contradictory Guidance

On March 18, 2015, Wachler & Associates attorneys, Andrew Wachler and Jessica Forster, highlighted contradictory guidance released by the Centers for Medicare and Medicaid Services ("CMS") relating to home health agencies ("HHAs") face-to-face encounter documentation. When the calendar year ("CY") 2015 Home Health Final Rule ("Final Rule") went into effect on January 1, 2015, new rules for HHAs face-to-face encounter documentation were implemented. Most prominently, the revised Final Rule eliminated the brief narrative requirement in almost all cases for home health face-to-face encounter documentation. Although the brief narrative requirement was removed, CMS mandated that the certifying physician's medical record include all required elements for the physician certification. Additionally, CMS stated in the Final Rule that a HHA may communicate with and provide information to the certifying physician about the patient's homebound status and need for skilled care and the certifying physician could incorporate the information into his or her medical record for the patient.

In two separate CMS conference calls, representatives provided contradictory information with regards to physician documentation responsibilities. The first conference call held by CMS properly reinforced the Final Rule's statement that HHAs could provide information to the certifying physician that the physician could incorporate into his or her medical record (a) if the physician signed/dated the documentation and (b) if the physician's own entries corroborated the information from the HHA. The Final Rule and the first conference call both said that this information from the HHA would be considered by medical reviewers to determine if the certification requirements were met. It was only during the second conference call, on March 11, that CMS contradicted prior guidance by stating that the physician's own documentation must meet the certification requirements and that medical reviewers were advised of this instruction. The CMS representative reiterated that even if a certifying physician signs and dates a HHA's documentation that does not mean that the documentation becomes part of the physician's medical record. Wachler & Associates reached out to CMS for clarification.

On March 23, 2015, CMS clarified the contradiction. In its reply, CMS stated that the patient's medical record must support the certification of eligibility and documentation in the patient's medical record shall be used as a basis for certification of home health eligibility. Importantly, CMS also noted that reviewers will consider HHA documentation if it is incorporated into the patient's medical record and signed off by the certifying physician.

Wachler & Associates will continue to monitor and provide timely updates on important HHA developments. Interested parties should listen to the next CMS Special Open Door Forum, which is scheduled for April 28, 2015 at 1:30pm ET. If you have any questions regarding the Final Rule, or HHAs in general, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com.

February 17, 2015

CMS Modifies Manual Medical Review Process for Outpatient Therapy Claims Above Cap

The Protecting Access to Medicare Act of 2014 extended the process for exceptions to Medicare's outpatient therapy caps through March 2015. Exceptions to Medicare's outpatient therapy caps are allowed for medically necessary and reasonably therapy services. However, claims above $3,700 for physical therapy and speech language pathology services combined, and above $3,700 for occupational therapy services, are subject to manual medical review by recovery audit contractors (RACs). The caps are calculated per beneficiary, per year. While manual medical reviews of outpatient therapy claims above the cap were put on hold last year, existing RACs received approval on January 16, 2015 to resume sending additional documentation requests (ADRs) to Part B providers.

However, CMS recently introduced a new post-payment review system that requires RACs to review outpatient therapy claims using a new manual medical review process. RACs will now be required to review claims using a tiered approach to ADRs. The process allows for 100% review of provider claims above the $3,700 therapy caps ("eligible claims"), but prevents the RACs from requesting large and potentially unmanageable amounts of records at one time.

Beginning in January 2015, the new manual medical review process permits RACs to review 100% of a provider's eligible claims using a 5-step approach to ADRs. A RAC's first ADR may only review one claim, but additional ADRs may request records for an increasing percentage of claims. The second ADR may review up to 10% of eligible claims, the third ADR may review up to 25% of eligible claims, and the fourth ADR may review up to 50% of eligible claims. Finally, a RAC's fifth ADR to a particular provider may review 100% of the provider's total eligible claims. Please note that the new tiered approach retains the RAC's cycle of 45 days between ADRs.

The new manual review process meets the congressional mandate of a 100% review rate for outpatient therapy claims above the outpatient therapy cap. However, CMS believes the new manual review process will meet the congressional mandate in a more equitable manner. For now, the review process is limited to claims reviewed by existing RACs for claims made from March 1, 2014 to December 31, 2014. CMS has not yet finalized the process for claims made in 2015. The manual medical review process is also limited to claims made by Part B outpatient therapy providers, including but not limited to therapists' private offices, offices of physicians, Part B skilled nursing facilities (SNFs), home health agencies (HHAs), and hospital outpatient departments.

Wachler & Associates represents all types of therapy providers in a variety of matters, including responding to ADRs and appealing Medicare overpayment demands. If you or your healthcare entity has any questions regarding Medicare's new manual medical review process for therapy claims above the outpatient therapy cap, or seek help in defending an overpayment demand by a RAC, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. To stay up to date on healthcare regulatory developments, subscribe to our blog by adding your email address in the window on the top right of this page.

February 6, 2015

Pharmaceutical Company Pays $39 million to Settle Anti-Kickback and False Claims Allegations

On January 9, 2015, the Federal Bureau of Investigations and Department of Justice, along with several state Medicaid programs, announced that Daiichi Sankyo Inc. ("Daiichi"), a U.S. subsidiary of a Japanese pharmaceutical company, agreed to pay $39 million to settle alleged violations of the Anti-Kickback Statute and False Claims Act ("FCA").

In March 2010, a qui tam lawsuit was filed in the U.S. District Court for the District of Massachusetts. The allegation contained in the lawsuit related to speaker programs that Daiichi hosted between January 2004 and March 2011. The qui tam plaintiff, a former Daiichi sales representative, asserted that Daiichi inappropriately compensated physicians that participated in the speaker programs. The six primary allegations included:

  • The program honoraria recipient only spoke to member of his or her own staff in his or her own office;
  • Physicians took turns accepting speaker honoraria for duplicative discussions;
  • The audience include the honoraria's spouse;
  • The honoraria recipient did not speak at all because the event was previously canceled;
  • The program dinners exceeded Daiichi's internal cost limitation of $140 per person; and
  • Drugs that were promoted at the programs (Azor, Benicar, Tribenzor, and Welchol) were used for off-label purposes.
The Government contended that the meals, honoraria, and other remuneration paid to participating physicians amounted to illegal kickbacks that ultimately induced the physicians to prescribe the drugs for off-label use. Furthermore, this resulted in pharmacies unknowingly submitting false prescription drug claims because prescriptions for off-label uses are typically not eligible for reimbursement.

In addition to paying $39 million, Diiachi agreed to enter into a corporate integrity agreement that obligates it to implement dramatic internal reforms over the next five years. Specifically, the corporate integrity agreement mandates that Diiachi enact compliance programs to prevent similar improper practices from reoccurring. For the qui tam plaintiff's services, the former employee will receive $6.1 million of the Government's recovery.

Wachler & Associates regularly counsels providers regarding the FCA, Anti-Kickback Statute, and other federal and state fraud and abuse laws and assists in developing compliance programs to address these laws. If you or your healthcare entity have any questions regarding the FCA, Anti-Kickback Statute, and/or other federal and state fraud and abuse laws, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com.


January 29, 2015

HHS Sets Timelines for Focus of Reimbursement to Shift from Quantity to Quality

On January 26, 2015, the U.S. Department of Health and Human Services ("HHS"), for the first time ever, announced a timeline and corresponding goals to shift the basis of Medicare reimbursement away from the quantity of care provided towards the quality furnished to beneficiaries. With the passage of the Patient Protection and Affordable Care Act ("ACA") in 2010, Congress created several new payment models, including Accountable Care Organizations ("ACOs"), primary care medical homes, and new models of payment bundling for care. These models all share the commonality that they incentivize physicians to coordinate care for their beneficiaries, maintain quality, and control costs. With the proliferation of these models that focus on quality over quantity, HHS was compelled to reform the Medicare reimbursement process.

Specifically, HHS announced its goal of tying 30 percent of fee-for-service Medicare payments to quality output through alternative payment models, like ACOs or bundled payment arrangements, by the end of 2016. Furthermore, HHS plans on increasing that amount to 50 percent by the end of 2018. If this goal is met, half of all payments to physicians and hospitals will be made through alternative payment models by 2018. Additionally, HHS set a timeline for tying 85 percent of fee-for-service, or traditional, Medicare payments to quality output by 2016 through the Hospital Value Based Purchasing and Hospital Readmissions Reduction Programs. This number is also set to increase to 90% by 2018.

To accomplish this, HHS has created the Health Care Payment Learning and Action Network ("the Network"). The Network is an organization made up of health care stakeholders including private payers, consumers, providers, employers, and state Medicaid programs. The Network, which will hold its first meeting in March 2015, plans to expand alternative payment models nationwide into all areas of health care. HHS hopes that the intensity exhibited by the Network will even surpass its initial goals for program expansion.

In a separate announcement, the President of the American Medical Association, Robert Wah, MD, stated that the HHS timeline "aligns with the [AMA's] commitment to work toward innovative care delivery reform."

In 2011, Medicare essentially made zero payments to providers through alternative payment models. However, today the use of alternative payment models has increased to about 20 percent of all Medicare payments. HHS has already noted significant savings from the use of alternative payment models--reporting a $417 million savings to Medicare as a result of ACO programs. Moreover hospital readmissions have been reduced by eight percent, which is 150,000 fewer readmissions from January 2012 to December 2013.

If you or your healthcare entity have any questions regarding the implementation of new alternative payment models, please contact an experienced healthcare attorney by phone at 248-544-0888 or via email at wapc@wachler.com. Wachler & Associates will continue to keep you updated on HHS and Medicare news. If you are interested, please subscribe to Wachler & Associates' health law blog by adding your email address and clicking "Subscribe" in the window on the top right of this page.

January 28, 2015

CMS Announces New RAC Contract for DME, Home Health and Hospice Claims

On December 30, 2014, the Centers for Medicare & Medicaid Services (CMS) announced that they had awarded the Region 5 Recovery Audit Contract (RAC) to Connolly, LLC. CMS contracts with RACs to identify and correct improper payments. Connolly, which has been the RAC for Region C, was awarded the Region 5 contract which covers claims for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS), home healthcare and hospice providers. With the awarding of the new RAC contract focused on DME, home health and hospice providers, these provider types can expect increased scrutiny of their Medicare claims.

CMS also outlined a number of "improvements" to the RAC program that will take effect with each new RAC contract awarded, beginning with the Region 5 contract awarded on December 30, 2014.

One of the "improvements" brought by the new RAC program is that the CMS has reduced the RAC look-back period to 6 months from the date of service for patient status reviews where hospitals submitted the claim within 3 months of the date of service. Previously, the look-back period for RACs was from 3 years and hospitals had to submit a claim within one year from the date of service in order to comply with the timely filing rules, leaving hospitals with the inability to rebill denials from patient status reviews. Another improvement is that the CMS has established new Additional Documentation Request (ADR) limits based on a provider's compliance with Medicare rules. Specifically, the ADR limits will align with providers' denial rates (i.e., providers with low denial rates will have lower ADR limits), and ADR limits will be adjusted as a providers' denial rates decrease.

With the new RAC contract awarded, DME, home health and hospice providers should be prepared for increased audit activity from the new RAC. If you are currently undergoing an audit and need assistance defending claims denials, or have any questions about how to proactively prepare for an audit or mitigate audit risk, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. To continue to stay updated on healthcare news, 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.

January 13, 2015

House Republicans Release Proposal to Eliminate Two-Midnight Rule

In November 2014, Republicans in the U.S. House of Representatives circulated a "discussion draft," which proposed significant reforms to the process by which Medicare reimburses hospitals for short stays. Perhaps most notably, the GOP proposal would eliminate the two-midnight rule. Since its enactment, the two-midnight rule has remained controversial among healthcare providers. Under the two-midnight rule, an admission is appropriate only when the patient remains in the hospital for two midnights. However, since its adoption, the rule has created confusion and elicited criticism from providers who claim that it undermines their clinical decision-making process. Acknowledging the issue, the Centers for Medicare and Medicaid Services (CMS) limited enforcement of the two-midnight rule and solicited stakeholders for suggestions on improving it.

The discussion draft also proposes the establishment of a new Medicare payment system for hospital stays. Under the proposal, the payment system would go into effect in fiscal year 2020 and unify the currently separate inpatient and outpatient payment systems. During the five years before the implementation, CMS would be tasked with developing a transitional, per-diem payment system for short-term hospital stays. Additionally, CMS would restrain Recovery Audit Contractors (RAC) until the new payment system is adopted. This reprieve is important when establishing a new payment system because of the RAC program's onerous presence in the healthcare industry. Just last year, the RAC program recouped over $3 billion in Medicare overpayments, and audit appeals have created such a backlog that many appellants are waiting over three years for a decision. The backlog of appeals violates the statutory requirement for Administrative Law Judges to decide Medicare appeals within 90 days of the request for hearing.

Also included in the GOP's discussion draft is a partial elimination of the Patient Protection and Affordable Care Act's (ACA) moratorium on the expansion of physician-owned hospitals. Currently, the law prohibits new physician-owned hospitals, expansion of existing physician-owned hospitals, and an increase in the percentage of physician ownership in existing physician-owned hospitals. Any reduction of the physician-owned hospital limitation would be welcomed news in the physician community. Further, in an effort to curb costs, the proposal also includes provisions that would promulgate a nationwide bundled payment program. Upon analyzing these proposals, many stakeholders believe that the circulation of the discussion draft indicates the direction of the anticipated Medicare debate in Congress and expect several of these provisions to be at the forefront of discussions in the next congressional session.

Wachler & Associates has been involved in policy formation regarding the two-midnight rule and we believe that any change to the rule will have widespread impact on providers and the Recovery Audit program. Our firm will continue to monitor breaking national healthcare news and provide timely updates. If you have questions regarding the discussion draft, the two-midnight rule, the moratorium on physician-owned hospitals, or any other health law compliance matter, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. To remain updated on healthcare news, subscribe to Wachler & Associates' health law blog by adding your email address and clicking "Subscribe" in the window on the top right of this page.

December 22, 2014

Final Rule Tightens Provider Enrollment Policies, Expands CMS Authority

On December 3, 2014, the Centers for Medicare and Medicaid Services ("CMS") released a final rule that broadens its authority to deny providers or suppliers from enrolling in Medicare and revoke providers already participating. The final rule, which is scheduled to go into effect on February 3, 2015, permits CMS to deny or revoke enrollment of providers with abusive billing patterns or practices, deny enrollment of providers affiliated with unpaid Medicare debt and deny or revoke enrollment of providers if a managing employee has been convicted of certain felonies.

CMS plans to identify improper billing by analyzing several factors such as:

  • The percentage of denied claims;
  • The reason for the denials; and
  • The length of any billing irregularities.

Providers and suppliers affiliated with entities with unpaid Medicare debt may prevent the enrollment denial or revocation if they agree to a structured repayment plan or pay the debt in full. The purpose of this provision is to prevent entities from incurring substantial Medicare debt, exiting the program and then re-enrolling as a new entity. Currently, CMS can only deny enrollment to those who have overpayments. The final rule explicitly expands this power to include Medicare debt, which includes overpayments as well as other financial obligations.

The final rule also authorizes CMS to deny or revoke enrollment to entities that continue to retain a managing employee that has been convicted of a certain felonies within the past ten years. CMS identified felonies that it deems detrimental to beneficiaries and the Medicare program, including assault, income tax evasion, and embezzlement.

The final rule also restricts reimbursement for ambulance suppliers by eliminating their ability to bill Medicare for the year prior to their enrollment. Additionally, the final rule brings ambulance providers into the same fold as practitioners by requiring that they submit all claims within sixty days of enrollment revocation. CMS estimates that these provisions will save Medicare $327 million annually.

Wachler & Associates regularly counsels providers regarding CMS rules and regulations. If you have any questions about CMS' final rule, or how the new billing parameters may impact your practice, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. To continue to stay updated on healthcare news, 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.

December 12, 2014

CMS Issues Proposed Rule Postponing ACO Penalties

On December 1, 2014, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule that would postpone penalties against accountable care organizations (ACOs) for three years. The proposed rule is one of the latest measures CMS has taken to encourage ACOs to stay in the Medicare Shared Savings Program. In 2012, as part of the rollout of the Patient Protection and Affordable Care Act, the Medicare Shared Savings Program was initiated in an effort to curb spending, while improving quality of care. Since its enactment, industry stakeholders have pushed for leniency, primarily because the Medicare Shared Savings Program penalizes ACOs after the first three years unless the ACOs voluntarily take on financial risk earlier, in exchange for larger bonuses if they perform well. While policymakers supported the penalties as a means of incentivizing change in the healthcare market, providers, particularly less experienced providers, pushed back--arguing that a more moderate approach would ease the financial risk and foster more growth. Recently, the National Association of ACOs released the results of a survey, which reported that approximately 200 of the 300 ACOs in the program were somewhat or highly unlikely to continue if they were required to accept penalties.

With the issuance of the proposed rule, CMS conveyed that it wants less experienced ACOs to remain in the program. By postponing the penalties, CMS acknowledged that some ACOs might not be ready to accept the financial risks and fear these providers might exit the program in lieu of exposing their entity to liability.

However, ACOs must abide by specific criteria if they want to take advantage of the postponement. Under the proposed rule, ACOs must have reduced their spending in their first two years in the program and be prepared to assume the financial risk of penalties after six years. Additionally, CMS plans to encourage ACOs to exit the safer track and take on more risk by decreasing the safe track bonuses from fifty percent to forty percent. Furthermore, CMS proposed a third track, which would implement new methods to determine which patients are included in the ACO. Specifically, the ACOs would start the year with a list of patients, and manage those patients' costs and care. This new system should benefit ACOs because CMS will identify the patients at the start of the year, allowing for more focused improvement efforts. Lastly, the third track will also include potential bonuses and penalties.

Wachler & Associates frequently counsels healthcare providers regarding ACOs, compliance with ACO requirements, and other healthcare fraud and abuse laws. If you have any questions regarding ACOs or how CMS's proposed rule may impact your healthcare entity, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com.

December 5, 2014

Deadlines for Certification with the American Board of Radiology Approaching Quickly

The American Board of Radiology's ("ABR") Board Eligibility Policy, implemented on January 1, 2012, limited the period of time that may elapse between the completion of residency training and achievement of Board Certification. Because a number of radiologists had completed their residencies but not yet achieved Board Certification when the policy went into effect, the ABR established a transitional phase-in period with specific time limits on the Board Eligibility period.

Importantly, the dates chosen by the ABR as the deadlines for achieving certification for certain radiologists are quickly approaching. For diagnostic radiology and radiation oncology, the termination dates for board eligibility status are as follows:

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As a result, radiologists who completed their training in 2004 or before but continue in the examination process are facing possible termination of "board eligibility" as soon as the end of this year. After the period of board eligibility expires, radiologists who have not achieved Board Certification will no longer be considered by the ABR to be "board eligible," and will no longer be permitted to designate themselves as such for credentialing purposes.

Moreover, re-entry into the certification process will require substantial effort. To return to "board eligible" status, the candidate must complete an additional year of training in a department with an Accreditation Council for Graduate Medical Education (ACGME)-accredited or Royal College of Physicians and Surgeons of Canada (RCPSC)-accredited diagnostic radiology or radiation oncology residency program. Additionally, the ABR must approve the additional year of training before it begins and the training must begin after expiration of board eligibility. During this one-year period, the candidate's status will be "not certified, not board eligible." Following the one-year training, the program director must attest to the candidate's successful completion. Once the ABR receives confirmation, the candidate will reenter the certification process and must pass the Core and Certifying examinations. Candidates will have a six-year period to pass the examinations.

Wachler & Associates will continue to monitor and provide timely updates on important ABR developments. If you have any questions regarding your board eligibility status, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. To remain updated on healthcare news, subscribe to Wachler & Associates' health law blog by adding your email address and clicking "Subscribe" in the window on the top right of this page.

November 12, 2014

CMS Announces Increased Reimbursement for Telehealth

On October 31, 2014, the Centers for Medicare and Medicaid Services (CMS) released its CY 2015 Physician Fee Schedule Final Rule. The rule included several important changes as it relates to telehealth services. With respect to reimbursement rates, in the final rule CMS increased Medicare payments to telehealth originating sites by 0.8 percent.

In addition, the final rule provides seven new procedure codes that cover the following telehealth services:

  • Psychotherapy services (CPT codes 90845, 90846, and 90847);
  • Prolonged services in the office (CPT codes 99354 and 99355); and
  • Annual wellness visits (HCPCS codes G0438 and G0239).
For billing purposes, the originating site fee will be $24.83. CMS also introduced new CPT code 99490, which allows physicians to bill Medicare for chronic care management. The monthly, unadjusted, non-facility fee will be $42.60. Most importantly, CPT 99490 is considered a physician service and is, therefore, available nationwide and not restricted to rural-only telehealth.

Although these changes in the final rule have been received by many telehealth advocates and providers as welcomed developments, CMS did not eliminate the requirement for patients to be located in a rural area in order to receive telehealth services, despite suggestions from many commenters in response to the 2015 Physician Fee Schedule proposed rule to expand the reach of telehealth.

If you or your healthcare entity have any questions regarding telehealth or implications of the final rule on your telehealth practice, or are interested in introducing telehealth into your practice, please contact an experienced healthcare attorney by phone at 248-544-0888 or via email at wapc@wachler.com. Wachler & Associates will continue to keep you updated on telehealth developments, as well as other healthcare news. If you are interested, please subscribe to Wachler & Associates' health law blog by adding your email address and clicking "Subscribe" in the window on the top right of this page.

November 4, 2014

Office of Medicare Hearings and Appeals Hosts Second Medicare Appellant Forum

On October 29th, the Office of Medicare Hearings and Appeals (OMHA) hosted its second Appellant Forum in Washington, D.C. OMHA is responsible for the Administrative Law Judge (ALJ) level of the Medicare administrative process, and thus operates the third level of appeals for Medicare audit denials. The Appellant Forum was intended to provide updates to Medicare audit appellants on the status of OMHA operations and to relay information regarding OMHA initiatives to reduce backlog in the processing of Medicare appeals.

Representatives from Wachler & Associates attended the Appellant Forum and gained valuable information for appellants facing delays in Medicare ALJ appeals. OMHA's Chief ALJ, Hon. Nancy Griswold, explained the historical backdrop that led to OMHA's current backlog in appeals and described OMHA's attempts to find a "holistic solution" to ALJ workload.

Judge Griswold also updated providers on statistics regarding OMHA's appellant workload. She explained that Medicare Part A and Part B appeals amount to 99% of the appeals pending at the ALJ level. Further, that despite increased productivity by ALJs, OMHA currently receives 4 times the amount of appeals per day as the ALJ's are able to adjudicate per day. In January 2014, OMHA received 14,000 appeal receipts per week. The unprecedented amount of appeals has caused OMHA to fail to meet its 90-day statutory requirement for adjudication. As of September 2014, the average wait time for an ALJ decision was 514 days, which again marked a significant increase from the fiscal year 2013 average.

The Appellant Forum highlighted several OMHA initiatives to address ALJ workload and pending appeals. First, OMHA received an 18.6% increase in appropriations for FY 2014, which allowed OMHA to open a Kansas City Field Office and increase adjudication staff and other resources. Additionally, OMHA has several IT initiatives under way to streamline the appeals process and improve efficiency. OMHA's IT initiatives include an "ALJ Appeal Status Information System" or AASIS, which provides appellants access to basic information regarding their appeals. OMHA hopes to roll out AASIS by the end of 2014. AASIS is OMHA's interim solution until their permanent appeal portal is in place. OMHA's permanent electronic appeal portal will be named the Electronic Case Adjudication and Processing Environment, or ECAPE. ECAPE, which is still in the development phase, will allow appellants to electronically file requests for hearing, submit electronic evidence, share records, communicate with OMHA, view ALJ assignment status, and other functions. ECAPE will be OMHA's long term solution to the modernizing the Medicare audit ALJ appeal process.

The Appellant Forum also updated appellants on two important pilot programs that were introduced by OMHA during the initial Appellant Forum in February. OMHA's Statistical Sampling pilot is intended to allow appellants to adjudicate large volumes of appeals by drawing a random sample of claims to adjudicate before an ALJ, and then extrapolating the results of the sample to the universe of claims at issue. Jason Green, Director of OHMA's Program Evaluation and Policy Division, explained that no appeals have been adjudicated via this method and that OMHA is exploring ways to tweak the pilot's strict eligibility criteria in order to make the pilot more available to appellants. OMHA's other pilot program, the Settlement Conference Facilitation (SCF) Pilot, follows a mediation model and brings appellants and CMS together to work towards a mutually agreeable resolution of the claims. Mr. Green, who our firm views as an invaluable person in OMHA's attempt to resolve the ALJ backlog, explained that only one SCF has occurred and the parties failed to reach an agreement. Mr. Green is hopeful that the forthcoming SCF conferences will be more successful.

In all, the Appellant Forum served to update providers and suppliers on OMHA's ALJ workload and their efforts to reduce current backlog. OMHA acknowledged that their current ability to meet the 90-day requirement negatively affects the provider community, and that they continue to look for holistic solutions to reduce workload to a sustainable volume.

Wachler & Associates continues to stay up to date on issues facing Medicare audit appellants. Our attorneys work with OMHA on a regular basis and provide input on the ALJ appeals process. We currently represent providers appealing audits through the Settlement Conference Facilitation pilot program, and have experience using statistical samples to appeal large volume audits. Our firm will continue to update you regarding developments in OMHA's ALJ appeal backlog and any other developments in the Medicare audit landscape.

If you or your healthcare entity have any questions regarding OMHA's Appellant Forum or Medicare appeals pilot programs, or need assistance in defending Medicare, Medicaid or Third Party Payer audits, please contact an experienced healthcare attorney at (248) 544-0888 or by visiting our website, www.wachler.com.

October 28, 2014

CMS Extends Fraud and Abuse Waivers for ACO Shared Savings Program

On October 17, 2014, the Centers for Medicare and Medicaid Services (CMS) extended its interim final rule regarding fraud and abuse waivers for accountable care organizations (ACOs) that participate in the Medicare Shared Savings Program. The Medicare Shared Savings Program was one of the initial steps taken under the Affordable Care Act to both increase quality and lower costs in the Medicare program. ACOs that participate in the Medicare Shared Savings Program can share in the savings generated to Medicare.

Originally, the interim final rule was published in the November 2, 2011 Federal Register, and had the typical three-year period before becoming a final rule. The continuation of the interim final rule extends the timeline for an additional year, establishing a new deadline of November 2, 2015. The interim final rule offers five waivers to ACOs, which allow healthcare entities to form and operate ACOs without fear of violating federal fraud and abuse laws. The ACO waivers include:

  • An ACO participation waiver;
  • An ACO pre-participation waiver;
  • A compliance with the Physician Self-Referral (Stark) law waiver for the Gainsharing Civil Monetary Penalties (CMP) and Anti-Kickback Statute (AKS);
  • A shared savings distribution waiver; and
  • A patient incentive waiver.

    CMS offered these exemptions to the Stark law, AKS, and Gainsharing CMP to encourage ACOs to participate in the Medicare Shared Savings Program. Noting the success of the waivers, CMS extended the deadline in an attempt to prevent disruptions in the ongoing operations of ACOs. Additionally, CMS was concerned that the expiration of the interim final rule would result in considerable legal uncertainty for ACOs and, in turn, place the success of the Medicare Shared Savings Program at risk. In its announcement, CMS adamantly affirmed its commitment to establishing ACO waivers.

    CMS's deadline extension also allows time for further comments from providers, policymakers, and others with a stake in the interim final rule. Specifically, CMS requested input regarding:

  • Whether the existing waivers serve the needs of ACOs and Medicare;
  • How and to what extent ACOs are using the waivers;
  • Whether the waivers adequately protect the Medicare program and beneficiaries from the types of harms associated with referral payments or payments to reduce or limit services; and
  • Whether there are new or changed considerations that should inform the development of additional notice and comment rulemaking.

    Wachler & Associates regularly counsels healthcare providers regarding compliance with ACO requirements, the Stark Law, AKS, and other fraud and abuse laws. If you have any questions regarding ACOs or how CMS's interim final rule and ACO waivers may impact your health care entity, or seek assistance in commenting on any of the provisions, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com.

  • October 13, 2014

    OIG Releases Proposed Rule Affecting Anti-Kickback Statute Safe Harbors

    The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently published a proposed rule that affects providers and suppliers seeking to comply with the federal Anti-Kickback Statute (AKS) and Civil Monetary Penalty (CMP) provisions. The proposed rule alters existing safe harbors, codifies statutory changes, and adds new protections for arrangements that the OIG believes present low risk to federal health care programs.

    The AKS provides criminal penalties for individuals or entities that knowingly and willfully offer, pay, solicit, or receive remuneration in order to induce or reward the referral of business reimbursable under Federal health care programs. The law prohibits all types of remuneration, including kickbacks, bribes, and rebates. Due to the extremely broad reach of the statute, Congress authorized the OIG to develop safe harbor regulations that protect industry payment and business practices that, if structured properly, would not be treated as criminal offenses under the AKS even though they may induce referrals of business under the Federal health care programs. In authorizing these safe harbors, Congress intended that the safe harbor regulations be updated periodically to reflect changes in business practices and technology in the health care industry. The proposed rule will also codify statutory changes emanating from the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and the Affordable Care Act of 2010.

    Specifically, the proposed rule applies to safe harbors or exceptions related to 1) referral services, 2) cost-sharing waivers, 3) agreements between Medicare Advantage (MA) plans and Federally Qualified Health Centers (FQHCs), 4) the Medicare Coverage Gap Discount Program, and 5) free or discounted local transportation services.

    Referral Services - The proposed rule makes a technical correction to the safe harbor for referral services. As currently written, the safe harbor's language resulted in an unintended ambiguity that some viewed to permit referral services to adjust their fees based on the volume of referrals made to a provider. The proposed rule alters the language to now prohibit payments based on the volume or value of referrals to, or other business generated by, either party for the other party. The rule clarifies that referral services cannot adjust fees based on the volume of business generated for a health care entity.

    Cost-Sharing Waivers - The OIG has longstanding guidance that demonstrates the potential abuse of cost-sharing waivers in the context of the AKS. Waivers of cost-sharing also implicate the CMP prohibition against beneficiary inducements. The proposed rule seeks to except from liability arrangements that meet requirements relating to (1) certain waivers or reductions by pharmacies of any cost-sharing imposed under Medicare Part D, and (2) emergency ambulance services owned and operated by a State, a political subdivision of a State, or a federally recognized Indian tribe. Accordingly, the emergency ambulance safe harbor will not apply to contracts with private outside ambulance providers or suppliers. Also, in order to meet the safe harbor for waivers or reductions of cost-sharing under Medicare Part D, a pharmacy must demonstrate that (1) the waiver is not advertised or part of a solicitation, (2) the pharmacy does not routinely waive the cost sharing, and (3) before waiving the cost sharing, the pharmacy determines in good faith that the beneficiary has a financial need or the pharmacy fails to collect the cost-sharing amount after making reasonable effort to do so. However, if the waiver is made on behalf of a subsidy-eligible individual, requirements (2) and (3) will not apply.

    FQHCs and MA Organizations - The Medicare Modernization Act amended the AKS to protect any remuneration between a Federally Qualified Health Center (FQHC) and an Medicare Advantage (MA) organization pursuant to a written agreement. The amended law requires that the written agreement between the two entities specifically provide that the MA organization will pay the contracting FQHC no less than the level and amount of payment that the plan would make for the same services if the services were furnished by another type of entity. The proposed rule would incorporate these changes by implementing this exception into the safe harbor regulations pursuant to a new section, 42 CFR 1001.952(z).

    Medicare Coverage Gap Discount Program - The proposed rule will protect discounts in the price of applicable drugs furnished to applicable beneficiaries under the Medicare Coverage Gap Discount Program, so long as the manufacturer participates in, and is in full compliance with, the Discount Program. The proposed rule would incorporate by reference certain definitions found in the Medicare Coverage Gap Discount Program law.

    Free or Discounted Local Transportation Services
    - The new rule proposes to establish a new safe harbor to protect free or discounted local transportation (within 25 miles) services provided to Federal health care program beneficiaries. The proposed rule requires that the transportation services only be offered to established patients, for medically necessary services, and be determined in a manner unrelated to the past or anticipated volume or value of Federal health care program business. The OIG proposes to limit the protection of the safe harbor to an "eligible entity," which may exclude DME suppliers, pharmaceutical companies, and laboratories. The OIG also expressed concerns and sought comments as to whether the safe harbor should be available to the home health industry. Additionally, the safe harbor will include several restrictions that limit providers' ability to offer free transportation based on the volume or value of a patient's anticipated federal health care program business. Further, the safe harbor will not apply to air, luxury, or ambulance level-transportation. Lastly, the transportation services cannot be marketed, cannot involve marketing, and cannot accept per-beneficiary payments for transportation.


    Please note that these changes are all a part of the OIG's "proposed rule," and therefore are open to provider input via the OIG comment solicitation process. Also, please be aware that the proposed rule includes changes to the OIG's CMP authorities regarding beneficiary inducements and "gainsharing" that are not addressed in this blog.

    Wachler & Associates PC counsels healthcare providers nationwide regarding compliance with the Anti-Kickback State and safe harbors. If you or your healthcare entity seek clarification as to how the OIG's proposed rule may impact your healthcare entity, or seek assistance in commenting on any of the provisions found in the proposed rule, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com

    October 1, 2014

    OCR Offers Guidance on HIPAA Privacy Rule and Same-sex Marriage

    In September 2014, the U.S. Department of Health and Human Services Office for Civil Rights (OCR) released guidance to assist covered entities in understanding their obligations under the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule in light of the Supreme Court's 2013 decision in United States v. Windsor. In Windsor, the Supreme Court struck down Section 3 of the Defense of Marriage Act (DOMA), which restricted interpretations of "spouse" and "marriage" in federal law to opposite-sex marriages, as a violation of the Due Process Clause of the Fifth Amendment. As a result, OCR opined that covered entities and applicable business associates must take into account lawfully married same-sex couples when applying federal law.

    OCR noted that the Privacy Rule's definition of "family members" includes the terms "spouse" and "marriage." Under the Privacy Rule, a spouse is defined as any individual who is in a legally valid marriage sanctioned by a state, territory, or foreign jurisdiction (assuming that the marriage performed in a foreign jurisdiction would be recognized by a U.S. jurisdiction). OCR clarified that "marriage" includes same-sex marriages, a family member includes dependents of that marriage, and that these terms apply to individuals who are legally married, "whether or not they live or receive services in a jurisdiction that recognizes their marriage."

    OCR also provided two examples how this clarified definition of a family member would be applied to specific provisions in the Privacy Rule. Specifically, §164.510(b) Standard: uses and disclosures for involvement in the individual's care and notification purposes allows protected health information to be shared with a patient's spouse and family members. OCR opined that in light of Windsor, covered entities must consider legally married same-sex spouses, regardless of where they live, to be family members.

    In addition, §164.502(a)(5)(i) Use and disclosure of genetic information for underwriting purposes prohibits health plans from disclosing or using genetic information for underwriting purposes. Applying Windsor, OCR stated that the genetic tests of a same-sex spouse of the individual, or the manifestation of a disease or disorder in the same-sex spouse of the individual would fall within this prohibition.

    OCR concluded by indicating that it planned to provide more written guidance or rulemaking that would address the topic of same-sex spouses acting as personal representatives under the Privacy Rule.

    Wachler & Associates continues to monitor and provide timely updates on important developments under HIPAA. If you have questions regarding OCR's guidance, how the Windsor decision may impact your practice, or a more general HIPAA inquiry, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. To stay updates on healthcare news, subscribe to Wachler & Associates' health law blog by adding your email address and clicking "Subscribe" in the window on the top right of this page.