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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.

    September 29, 2014

    Federation of State Medical Boards Releases Model Legislation to Expedite Physician Licensure in Lieu of Telemedicine Push

    As the demand for telemedicine increases across the country, states continue to grapple with licensure issues arising from physicians working across state lines. In an effort to resolve the dilemma, the Federation of State Medical Boards (FSMB) published model legislation designed to assist in the implementation of a multistate compact, by which physicians from one state can be expeditiously licensed in another state to practice telemedicine.

    FSMB's model legislation requires a minimum of seven states to participate, with each state providing representatives for a governing commission. When at least seven states have joined, the commission would openly share disciplinary and credentialing information in a joint effort to quickly license physicians that are already licensed in one of the other participating states. This sharing of information would allow the participating states to license physicians without being saddled with the responsibility of independently collecting the large amount of paperwork required to license a physician. The governing commission of the compact would not have any licensing power itself, but rather would serve to facilitate the quick transfer of information between participating states. As an example, if Illinois, Michigan, and Indiana joined the multi-state compact, a physician licensed in Michigan, wishing to practice telemedicine in Illinois and Indiana, would have the compact commissioner obtain the necessary credentialing information and approval from the Michigan medical board, collect the licensing fees mandated in Illinois and Indiana, and then process an expedited license.

    Members of the FSMB are hopeful for support of their model legislation because it ensures that licensure remains a state right and avoids federal intervention. A multi-state compact will hopefully solve the licensure dilemma, allowing physicians, for example, to use telemedicine technologies to offer specialized care to rural communities. One such state is Wyoming, which relies on telemedicine to care for its residents. The Executive Director of the Wyoming State Board of Medicine, Kevin Bohnenblust, stated that Wyoming has approximately 3,000 licensed physicians, but only 1,200 physicians that actually live in the state. As a prominent "importer" of telemedicine, Wyoming is hopeful that the FSMB policy takes effect. Bohnenblust also notes that states with renowned hospitals like Michigan, Minnesota, and Ohio, could benefit as "exporters" of telemedicine.

    Although there are few opponents of the FSMB model legislation, some are leery of establishing new governmental organizations. However, FSMB has considerable support from the American Medical Association, which recently stated that the multi-state compact legislation aligns with their efforts to modernize state licensure frameworks.

    As previously addressed on this blog, with the release of the model legislation, FSMB continues to be a strong supporter of integrating telemedicine practices across state lines. Providers interested in introducing telemedicine technologies into their practices should review state licensure laws, as well as any Fraud & Abuse issues that may arise from adding a new line of business to their practice. If you or your healthcare entity needs guidance regarding the practice of telemedicine, please contact a Wachler & Associates attorney by phone at 248-544-0888 or via email at wapc@wachler.com. Our firm will continue to keep you up to date on legislative developments applicable to telemedicine, as well as all other healthcare law news. If 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.

    September 25, 2014

    CMS Final Rule Provides Greater Flexibility for Meeting EHR Meaningful Use Requirements

    On August 29, 2014, the Department of Health and Human Services (HHS) published a Centers for Medicare & Medicaid Services (CMS) final rule allowing providers more flexibility in meeting the meaningful-use requirements for the electronic health records (EHR) incentive program. The final rule, which was an adoption of the May 2014 proposed rule, aims to assist providers in utilizing Certified EHR Technology (CEHRT) by giving eligible providers another year to continue using the 2011 Edition CEHRT, or a combination of the 2011 and 2014 Edition CEHRT. However, providers should be aware that in 2015 they are required to use the 2014 Edition CEHRT software.

    Additionally, the final rule extends Stage 2 of meaningful use through 2016, thus delaying implementation of Stage 3. For those providers who first became meaningful users of EHR in 2011 or 2012, Stage 3 of meaningful use is now scheduled to begin in 2017. According to CMS, the updates in the final rule will better enable providers to participate and meet meaningful use objectives, including:

    • Electronic prescribing;
    • Checking for drug allergies and interactions;
    • Providing clinical summaries to patients;
    • Reporting on key public health data; and
    • Reporting on quality measures.

    Wachler & Associates will continue to monitor CMS rule-making and guidance related to EHR meaningful-use criteria, as well as other breaking health care news. If you need help understanding the meaningful-use requirements or assistance with negotiating EHR contracts, please contact an experienced healthcare attorney at Wachler & Associates via phone at 248-544-0888 or email at wapc@wachler.com.

    August 29, 2014

    Reports Show Increase in Individuals Participating in Employer-Based Health Plans

    Since the passage of the Patient Protection and Affordable Care Act (ACA) in 2010, much of the media focus has been on individuals who were previously denied coverage because of preexisting conditions or financial barriers. Now, studies are focusing on the large group of individuals who, prior to the ACA, simply chose not to purchase health insurance. The reports demonstrate that due to the Individual Mandate portion of the ACA, which requires individuals to purchase health insurance, many more individuals are choosing to participate in their employers' health plans.

    The increased participation in employer health plans will inevitably cost employers. Most recently, Wal-Mart announced that a dramatic increase in employees signing up for insurance through the company will cost its stockholders $500 million -- up from the company's previous estimate of $330 million. Although Wal-Mart is experiencing the employer-based insurance shift on a large scale, many employers nationwide are expected to see a jump in participation in their health plans. Recently, the National Business Group on Health announced that large employers should expect to see a 6.5% rise in healthcare costs in 2015.

    Although The New England Journal of Medicine and members of the Urban Institute both note a rise in individuals signing up for insurance through their employers, other analysts predict that employers' costs will be too high, and that the employers will simply "dump" these employees into their state's health insurance marketplace. Many experts, however, expect that if such dumping were to occur, it would come from small employers who merely cannot afford to offer adequate health plans.

    If you have questions regarding the ACA or how the anticipated increased participation in employer-based health plans may impact your practice, please contact an experienced healthcare attorney at 248-544-0888 or contact us here. To stay 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.

    August 26, 2014

    Community Health Systems to Pay $98.15 million to Settle False Claims Act Allegations

    On August 4, 2014, the United States Department of Justice (DOJ) announced that Community Health Systems (CHS) agreed to pay $98.15 million to settle False Claims Act (FCA) allegations that CHS knowingly billed Medicare, Medicaid and TRICARE for inpatient hospital services that should have been billed as outpatient or observation services. Seven actions were filed against CHS by whistleblowers under the qui tam provisions of the FCA, which allows individuals to file suit on behalf of the government and, in turn, obtain a portion of the recovery. These seven actions were filed in six different jurisdictions and alleged that, between 2005 and 2010, CHS engaged in a corporate scheme to increase admissions of Medicare, Medicaid, and TRICARE beneficiaries even though the admissions were not medically necessary at an inpatient level of care. Rather, the United States alleged that the patients could have been cared for in less costly outpatient or observation settings.

    In addition to the $98.15 million settlement payment, CHS agreed to enter into a five-year Corporate Integrity Agreement with the Office of Inspector General (OIG) in which CHS is required to implement significant compliance protocols, including retention of an independent review organization (IRO) to review CHS's inpatient admission claims. In exchange, CHS will be released from any civil or administrative monetary claims the United States has for the covered conduct under the FCA, Civil Monetary Penalties Law, or Program Fraud Civil Remedies Act.

    According to the DOJ, this settlement agreement is the largest FCA recovery in the Middle District of Tennessee. The DOJ touted the Health Care Fraud Prevention and Enforcement Action Team's (HEAT) coordinated nationwide effort for exposing the FCA noncompliance. Since the establishment of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) in 2009, the DOJ has recovered over $20.2 billion in FCA cases, of which $14 billion has come from cases involving fraud against government health care programs.

    Wachler & Associates regularly counsels providers regarding the FCA, Stark Law, Anti-Kickback Statute, and other federal and state fraud and abuse laws. If you or your healthcare entity have any questions regarding the FCA, Stark Law, Anti-Kickback Statute and/or other federal and state fraud and abuse laws, please contact an experienced healthcare attorney, at 248-544-0888 or wapc@wachler.com.

    August 7, 2014

    FDA to Bolster its Regulation of Diagnostic Testing

    With the passage of the Food and Drug Administration Safety and Innovation Act (FDASIA) on July 9, 2012, Congress expanded the Food and Drug Administration's (FDA) authority to safeguard and advance public health. Exercising such authority, on July 31, 2014, the FDA notified Congress of its plan to publish a proposal to expand its oversight of laboratory developed tests (LDTs). LDTs are diagnostic tests, which are designed, manufactured, and used within a single laboratory. Previously, LDTs certified under the Clinical Laboratory Improvement Amendments (CLIA) could exist without FDA oversight. This exception existed because LDTs were primarily used for rare diseases. However, advances in molecular biology allowed laboratories to produce a broader range of LDTs, applicable to more common illnesses. The former exception has been touted by some as fostering laboratory independence, allowing for exponential innovation and accuracy in diagnostics. However, others like Senator Edward Markey (D-Mass.) claim that the newly implemented FDA oversight has been "long-overdue."

    As a result of support from individuals like Senator Markey, more than 11,000 LDTs, housed in 2,000 different laboratories, may fall into the FDA's expanded regulations. The FDA has cited LDTs for illnesses like Lyme disease and cancer, as justification for the new regulatory framework. By subjecting LDTs to such scrutiny, the FDA's stated goal is to eliminate faulty tests that produce inaccurate diagnoses and cause patients to seek unnecessary treatment, or delay vital treatment. However, opponents of the new regulation contend that the prior independence allowed laboratories to diagnose and measure disease with far greater accuracy than ever before.

    The FDA's regulatory expansion will take place over nine years and will first be applied to what are deemed the riskiest LDTs. However, some tests will remain excluded from FDA regulations. Such LDTs include those which treat rare diseases and those for which there is no FDA-approved test.

    In its announcement, the FDA stated its intent to publish guidelines detailing how laboratories can notify the FDA regarding their current manufacturing and use of LDTs. Once these guidelines are released, laboratories that currently utilize LDTs should notify the FDA about their tests in order to avoid legal repercussions. The FDA will allow currently available LDTs to continue during the reviewing process, in order to prevent any disruptions.

    If your laboratory utilizes LDTs or has any questions regarding the FDA's new regulations, please contact an experienced health care attorney at 248-544-0888 or email at wapc@wachler.com. Wachler & Associates will continue to keep you updated on breaking regulatory changes and other health care news.

    August 1, 2014

    Bipartisan House Bill Proposes Increased Medicare Coverage of Telemedicine

    A bill amending Title XVIII of the Social Security Act will be proposed soon, marking the culmination of bipartisan efforts in the House of Representatives. Representatives Glenn Thompson (R-Penn.) and Mike Thompson (D-Calif.) are prepared to announce a new telehealth bill, titled the Medicare Telehealth Parity Act of 2014, which would reduce the Social Security Act's current limitations on reimbursable telemedicine technologies.

    Currently, the Social Security Act only permits reimbursement for telemedicine uses in rural health professional shortage areas (HPSAs) and non-Metropolitan Statistical Areas (MSAs). Not only are these qualifications limiting, they are also difficult to discern. For example, in the 2000s, the Health Resource and Service Administration (HRSA) eliminated the "rural HPSA" category from its designations, resulting in confusion regarding the correct application of the term. The forthcoming bill seeks to slowly resolve these reimbursement complications through a cost-effective, four-year plan:

    • Within six months of the bill's passage, it would mandate that Medicare provide coverage for telemedicine in urban areas with a population of 50,000 or less. Additionally, the six month period would be used to increase care sites to include retail clinics.
    • Two years following the bill's passage, Medicare coverage would expand to urban areas with a population of 100,000 or less. Furthermore, the bill would include home telehealth to the list of care sites, while expanding reimbursable services to encompass physical and speech therapy.
    • Lastly, after four years have passed, the bill would make telemedicine reimbursable across the United States.
    In addition to the four-year plan, the bill seeks to officially add remote patient monitoring (RPM) to the Social Security Act's list of reimbursable services. The bill defines RPM as "the remote monitoring, evaluation, and management of an individual with a covered chronic health condition . . ., insofar as such monitoring, evaluation, and management is with respect to such condition, through the utilization of a system of technology that allows a remote interface to collect and transmit clinical data between the individual and the responsible physician . . . or supplier." By offering government reimbursement for RPM services, thereby expanding RPM use, the bill hopes to increase Medicare savings over time.

    Also, the Representatives' bill would task the Secretary of Health and Human Services (HHS) with developing standards for remote patient monitoring. Finally, the United States comptroller would be directed to conduct a study within two years of the bill's passage, to determine the efficacy and estimated Medicare savings from the expansion of telemedicine applications.

    The bill does not address Medicaid, the Children's Health Insurance Program (CHIP), or other federal health plans, nor does it comment on licensure or liability issues. However, studies show that incorporating reimbursement strategies for telemedicine in Medicare alone will result in significant cost savings, not only in transportation costs, but also in models of delivery and access to care. According to a study conducted by Stanford University, the implementation of telemedicine is estimated to generate 7.7% to 13.3% spending reductions per Medicare patient, per quarter.

    Wachler & Associates' health law attorneys will continue to monitor any further developments regarding the proposed bill and all other federal and state legislation. 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.

    July 10, 2014

    HHS Unveils Statistical Sampling Pilot Program for ALJ Hearings on Medicare Audit Appeals

    Last week, the Office of Medicare Hearings and Appeals (OMHA) announced the Statistical Sampling Pilot Program (Pilot Program). The Pilot Program offers Medicare providers an alternative route, along with the Settlement Conference Facilitation Pilot, to reach a final determination for claims pending at the administrative law judge (ALJ) hearing level without enduring the 2-3 year delay for hearing. Although the Pilot Program offers a time-saving and perhaps more efficient option for Medicare providers, engaging in the Pilot Program also comes with risks as Medicare providers may "put all of their eggs in one basket" and rely on a single ALJ to issue a decision that affects a large volume of claims. In some cases, the provider may know the identity of the ALJ prior to agreeing to statistical sampling, but in other cases the provider will not.

    The Pilot Program is available to Medicare providers that have requested an ALJ hearing following a Medicare Qualified Independent Contractor (QIC) reconsideration decision. At this time, the ALJ hearing requests must either be assigned to an ALJ or must have been filed between April 1, 2013 and June 30, 2013 and it must meet all jurisdictional requirements, including that it was filed timely. In order to be eligible for the Pilot Program, the Medicare provider must have a minimum of eligible 250 claims and the claims must be one of the following: (1) pre-payment claim denials; (2) post-payment non-RAC claim denials; or (3) post-payment RAC claim denials from one RAC. In addition, claims that are assigned to different ALJs or were requested in different consolidation groups may be incorporated into the request for statistical sampling.

    A Medicare provider that meets the eligibility requirements for the Pilot Program may request statistical sampling by submitting a "Request for Statistical Sampling" form that is available on OMHA's website. The provider must also submit a spreadsheet, a template is also available on OMHA's website, that provides detailed information about the claims requested to be included in the statistical extrapolation.

    After a request is submitted, if granted, a consent template will be sent to the Medicare provider. The consent template will request the Medicare provider to consent in writing to statistical sampling. After written consent is obtained, a pre-hearing conference will be held to confirm the consent, establish the universe of claims from which the sample will be taken and agree to other matters related to the hearing. Following the pre-hearing conference, the ALJ will issue an order and if no objections are received within 10 days of receipt of the order, the order will become binding. Once the pre-hearing conference order becomes binding, consent for the statistical sampling may not be withdrawn.

    After the pre-hearing conference order becomes binding, OMHA will combine the universe of claim appeals agreed to in the pre-hearing conference under a single ALJ appeal number. The appeal will be assigned to the next ALJ on the rotation unless all of the appeals had been assigned to an ALJ prior to the statistical sampling request. The random statistical sampling will be compiled by a trained and experienced statistical expert who will develop appropriate sampling methodology in accordance with Medicare guidance. At the hearing, the ALJ will review the sample units and make a decision regarding those units. It is important to note that either CMS or a CMS contractor may participate in the hearing. The decisions on the sample units will be extrapolated to the universe of claims at issue.

    The Pilot Program offers an opportunity to eligible Medicare providers with large volumes of claims to seek an alternative, and perhaps more efficient, avenue to final resolution of the claims. The new program is a welcomed creative development to solving the backlog of appeals waiting for assignment for ALJ hearing. However, Medicare providers should carefully consider before engaging in the process and fully understand the implications of agreeing to statistical sampling. Wachler & Associates will continue to provide updates on the developing Pilot Program. For more information on ALJ appeal strategies and the Pilot Program, please contact an experienced health care attorney at 248-544-0888 or wapc@wachler.com.

    July 9, 2014

    HHS Launches Pilot Program for Providers to Settle Medicare Overpayment Demands with CMS

    Recently, the Department of Health and Human Services (HHS) announced its new pilot program - Settlement Conference Facilitation (SCF) Pilot - to provide an alternative dispute resolution process for settling appealed Medicare claims denials. Through the SCF program, providers have the opportunity to discuss with the Centers for Medicare and Medicaid Services (CMS) the potential of a mutually agreeable resolution to the claims appealed to an Administrative Law Judge (ALJ) hearing. According to HHS, the settlement conference facilitator, who is an employee of the Office of Medicare Hearings and Appeals (OMHA), will use mediation principles to assist the appellant and CMS in reaching a mutual settlement agreement. If a settlement is reached between the appellant and CMS, the facilitator will draft the settlement document to be signed at the settlement conference by both parties. Once a binding settlement agreement has been executed, any pending ALJ hearing requests for the claims covered by the settlement agreement will be dismissed and no further appeal rights will be attached to those claims. On the other hand, if the parties are unable to reach a settlement agreement and the facilitator believes further efforts to reach an agreement will be unsuccessful, the SCF process will be concluded and the appealed claims will return to the ALJ level of appeal in the order the hearing request was originally received by OMHA.

    Initially, HHS is limiting eligibility for the SCF pilot program to claims by Medicare Part B providers who have filed requests for ALJ hearing in 2013 and are not currently assigned to an ALJ. For those eligible providers, the request for SCF must include all of the provider's pending ALJ appeals for the same item or service (i.e., all claims for the same item or service in which ALJ hearing requests were submitted in 2013). Appellants must include all appeals included in the applicable ALJ hearing requests, and may not request an SCF for some claims and proceed to the ALJ hearing for the remaining claims. Additional SCF eligibility requirements include that at least 20 claims must be at issue or, if fewer than 20 claims are at issue, at least $10,000 must be in controversy. Also, the amount of each individual claim must be less than $100,000. For claims subject to statistical sampling, the extrapolated overpayment amount at issue must be less than $100,000; however, HHS states that it will continue to explore expanding the SCF pilot program for larger extrapolated overpayment cases.

    Although the SCF process is only available for a limited group of claims at this time, those providers whose appeals are currently ineligible (e.g., Part A providers) for the SCF pilot program may nonetheless view these developments as a silver lining as countless appealed claims are currently awaiting ALJ hearings to be scheduled - claims in which CMS has likely recouped all of the alleged overpayment amount. With the substantial volume of claims currently backlogged at OMHA causing two to three year delays before the appealed claims are finally adjudicated, appellants may soon be provided a forum to reach mutually agreeable resolutions with CMS and receive the timely payment in which the provider is entitled.

    If you or your entity have questions related to the SCF pilot program, or would like assistance from experienced health care attorneys in representing you or your entity in the SCF process, please contact Wachler & Associates at 248-544-0888 or wapc@wachler.com.

    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.