Wachler & Associates Health Law Blog

On May 17, 2013, the Department of Health and Human Services (HHS) released an interim final rule, which lowers payments to providers for services furnished to individuals enrolled in the Pre-Existing Condition Insurance Plan (PCIP). The new rule will require providers to accept Medicare rates for services provided to PCIP participants instead of the commercial rates providers have received since the plan's inception.

The PCIP was established under the Patient Protection and Affordable Care Act (PPACA) which was enacted in March 2010. The plan was intended to be a temporary bridge to provide health insurance to uninsured individuals with pre-existing conditions until 2014. In 2014, most health insurance providers will be required under PPACA to offer coverage to all individuals, regardless of pre-existing conditions. Initially, HHS predicted that up to 400,000 individuals would enroll in PCIP, and Congress provided $5 billion in funds for the program. In fact, only 135,000 individuals have enrolled in the program, but due to the cost of the claims per enrollee being higher than originally projected, most of the $5 billion provided by Congress has been exhausted.

Several changes have already been instituted since the PCIP's creation in order to reduce costs, including ceasing referral payments to agents and brokers, changing provider networks, offering only a single plan option, increasing the maximum out-of-pocket limit for in-network services, and an increase in coinsurance once the enrollee's deductible has been met. Furthermore, the federally administered PCIP suspended its acceptance of new enrollment applications on February 15, 2013 until further notice.

Beginning June 15, 2013, services furnished to enrollees in the federally administered PCIP program will be paid at Medicare payment rates, or if Medicare payment rates cannot be implemented, then 50 percent of billed charges or at relative value scale pricing. HHS did note that prescription drugs, organ/tissue transplants, dialysis, and durable medical equipment benefits will continue to receive the commercial value payment these services have received since 2010. Furthermore, the new rule generally prohibits doctors and hospitals from increasing charges to consumers or PCIP enrollees to make up the difference resulting from this rule.

When this final interim rule becomes effective, providers will be paid less to treat PCIP enrollees. Providers will be forced to choose between treating PCIP patients and receiving less for their services, or to not treat PCIP enrollees at all. HHS alleged that the decrease in PCIP revenue providers experience will be offset by the uncompensated treatment providers would be forced to provide if the PCIP did not exist.

The interim final rule will not change the costs to the federal government; rather the rule specifies how HHS plans to spend the remaining $5 million appropriated by Congress. The rule did not specify what will happen if the $5 million runs out completely before 2014. For further information regarding the effect of this interim rule, or any question regarding billing for federal health care programs, please contact an experienced Wachler & Associates healthcare attorney at 248-544-3111.

On May 13, 2013, the Department of Justice (DOJ) announced that C.R. Bard Inc. agreed to pay the United States $48.26 million to resolve allegations that Bard knowingly caused false claims to be submitted to Medicare in violation of the False Claims Act (FCA). Bard is a corporation based out of New Jersey which develops, manufactures, and markets medical products. The claims that purportedly violated the FCA were for brachytherapy seeds used to treat prostate cancer.

The government alleged that from 1998 to 2006, Bard delivered illegal remuneration in the form of grants, rebates, fees, marketing assistance, and/or free medical equipment to customers and physicians to induce them to purchase Bard's brachytherapy seeds, in violation of the Anti-Kickback Statute. The government argued that the hospital bills submitted to Medicare for these seeds were rendered false due to Bard's illegal kickback activity. The government alleged that Bard was liable for causing the submission of those false claims.

This settlement also resolves a lawsuit filed by Julie Darity, a former manager at Bard. Darity brought her claim under the whistleblower provisions of the False Claims Act, which allows private citizens to bring suits for false claims on behalf of the United States and share in the recovery obtained by the government. The former manager will receive $10,134,600 as her share of the civil settlement.

Furthermore, Bard has agreed to pay an additional $2.2 million and to take several remedial steps to enhance its corporate compliance program to prevent similar illegal actions in the future. For example, Bard has agreed to refine its Code of Conduct and other written policies to further promote Bard's commitment to full compliance with all Federal health care program requirements.

Wachler & Associates healthcare attorneys regularly counsel providers in proactively addressing potential kickback violations and defending providers against government allegations. If you or your healthcare entity need assistance in developing an effective compliance plan, or assistance in Medicare, Medicaid or third party payor audit defense, please contact our experienced healthcare attorneys at 248-544-0888.

On May 8, 2013, in a retrial of a 2010 case, a federal jury found that Tuomey Healthcare System (Tuomey) in Sumter, SC violated both the Stark Law and the False Claims Act (FCA). The jury found that Tuomey violated the FCA by submitting 21,730 claims to the Medicare program that were tainted by illegal compensation arrangements which induced physicians to refer patients to the hospital in violation of the Stark Law.

The underlying employment arrangements were made for 19 surgeons who each received base pay, significant benefits, and potentially two bonuses. The jury agreed with the government's contentions that the pay was not consistent with fair market value and was not commercially reasonable. The government argued that the excess compensation was evidence that the employment agreements took into account the volume or value of the physicians' referrals to Tuomey.

The jury assessed damages against Tuomey in the amount of $39,313,065, which is the full amount of the Medicare claims at issue. In addition, under the FCA, the government may seek up to three times the amount of damages plus $11,000 per claim, meaning Tuomey could potentially face up to $357 million in liabilities under the FCA. However, since Tuomey is a community hospital, they are likely to receive a penalty less than that amount. Each side will now submit motions interpreting what they think are the appropriate amount of damages, with a final damage amount coming sometime in the future.

This case should encourage providers to further evaluate potential business arrangements, or reevaluate current business arrangements, to ensure the arrangement does not run afoul of the Stark Law, Anti-Kickback Statute, False Claims Act or other fraud and abuse laws. Although the majority of penalties assessed for violating the FCA are reached through settlements, the jury's findings in Tuomey may result in a greater number of these cases reaching a jury verdict, which would likely result in substantially larger penalties. If you have any questions relating to the Anti-Kickback Statute, Stark Law or other federal or state fraud and abuse regulations, please contact an experienced Wachler & Associates healthcare attorney at 248-544-0888.

Blue Cross Blue Shield of Michigan (BCBSM) is auditing physicians who have conducted in-office Drug of Abuse (DOA) screening test. The purpose of these BCBSM audits is to determine whether the services, treatment, devices, and procedures that the physician billed to BCBSM conformed to Current Procedural Terminology (CPT) codes at the time of billing.

In auditing physicians who billed drug screening procedure codes, BCBSM is alleging that those physicians have incorrectly billed under current CPT codes for dates of services prior to the effective date of the current billing policies. In these cases, BCBSM sent notices to physicians enclosing current copies of the Physician Office Laboratory List (POLL) - a list of payable laboratory services allowed to be performed in the physician office setting - instead of the relevant POLL covering the audited time period. The drug screening procedure code at issue is CPT code 80101 [drug screen, qualitative; single drug class method (e.g., immunoassay, enzyme assay), each drug class], which is not listed on the current POLL. Instead, BCBSM states that codes 80104 and G0434 are the proper and payable drug screening tests when performed in the physician's office. BCBSM is seeking returns of alleged overpayments from these physicians who billed 80101 in the office setting, as opposed to billing the lesser-paying drug screening procedure codes.

BCBSM may not hold physicians retroactively accountable for recent changes in billing. We are currently representing a number of physicians that have been audited by BCBSM. Based upon our review, we believe these audits can be successfully defended and the amount for overpayment substantially reduced. If you have been audited by BCBSM, we believe we can help, as we are currently representing physicians in similar cases and have been successfully defending providers against BCBSM audits since 1980. For further information on BCBSM audits, please contact an experienced Wachler & Associates healthcare attorney at 248-544-0888.

On May 8, 2013 the Office of Inspector General ("OIG") for the Department of Health and Human Services issued an Updated Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs ("the Updated Bulletin") to replace and supersede a bulletin issued in 1999.

The Updated Bulletin reiterates, clarifies and/or provides guidance on many points, including the following with regard to the effect of exclusion on participation in Federal health care programs:

• Payment cannot be made from a Federal health care program for items or services furnished by an excluded person or at the medical direction or on the prescription of an excluded person.
• Exclusions and payment prohibitions continue to apply to an excluded person even if he or she switches professions during the exclusion period (e.g., an individual excluded as a pharmacist cannot go on to obtain a medical degree and furnish services to patients covered by federal health care programs).
• An excluded provider may refer a patient to a non-excluded provider if the excluded provider does not furnish, order, or prescribe any services for the referred patient, and the non-excluded provider provides all treatment and submits all bills to the Federal health care programs.
• Exclusions and payment prohibitions extend beyond direct patient care. For example, an excluded person could not prepare surgical trays, review treatment plans, input prescription information for pharmacy billing or be involved in any way in filling prescriptions for drugs that are billed to a Federal health care program, or provide transportation services paid for by a Federal health care program, such as working as an ambulance driver or dispatcher.
• Excluded providers are prohibited from providing administrative or management services that are payable by a Federal health care program, even if the services are not separately billable. Some examples of management and administrative roles that an excluded provider could not perform include: chief executive officer, chief financial officer, general counsel, director of health information management, director of human resources, physician practice office manager, health information technology services and support, strategic planning, billing and accounting, staff training and human resources unless wholly unrelated to federal health care programs.
• The payment prohibition extends to volunteer positions. For example, an excluded health professional could not volunteer at a hospital or hospice where services are payable by a Federal health care program.
• A provider may employ or contract with excluded providers for items or services that are solely furnished to non-Federal healthcare program beneficiaries. In such a situation, the excluded providers do not have to be paid out of a separate account. However, there can be no claim submitted or payment received from a Federal health care program for services or items provided directly or indirectly by the excluded provider.
• Providers should confirm at the point of service that the ordering or prescribing physician is not excluded. The OIG further cautions that some excluded providers may still have a Drug Enforcement Agency (DEA) license. The OIG also cautions against relying on Medicare Part D plans and/or state agencies to have edits in place to identify excluded providers since reliance on a third party does not relieve the provider of responsibility with regard to any overpayments or civil monetary penalties related to services ordered or prescribed by an excluded provider.
• From a practical standpoint, an excluded provider cannot retain greater than 5% ownership interest in a provider entity, nor can an excluded provider hold an administrative or management position.
• OIG urges providers to screen potential employees or contractors by using the OIG List of Excluded Individuals/Entities (LEIE). Although there is no statutory or regulatory requirement to check the LEIE at any specific intervals, the OIG suggests monthly screening to best minimize potential overpayment and CMP liability. The OIG further suggests that providers maintain documentation of all name searches performed and additional searches conducted.
• In determining who to screen, a provider is expected to look at each job category and contractual relationship and determine whether the item or service is payable directly or indirectly, in whole or in part by a Federal health care program. If the answer to this question is yes, then all persons in that job category or with a similar contractual relationship should be screened to best minimize CMP liability.
• The OIG cautions providers who rely on third parties to conduct screening that the provider will retain liability for CMP. Where health care workers are contracted through another entity, such as a staffing agency, the OIG states that a provider may reduce or eliminate CMP liability if it can demonstrate that it reasonably relied upon the staffing agency's agreement by contract to perform LEIE screening. The OIG further cautions that any such delegation should be documented in the agreement between the parties and the provider should exercise due diligence in ensuring that the agency is meeting the contractual obligation.
• The LEIE is the primary database that should be used for the purposes of exclusion screening (as opposed to the NPDB or SAM).
• Providers who identify potential CMP liability for contracting with or employing an excluded provider could use the OIG's Provider Self-Disclosure Protocol (SDP) to disclose and resolve potential CMP liability.

For further information regarding the effect of exclusion on a provider's ability to contract with or be employed with a health care entity that bills federal health care programs, please contact an experienced Wachler & Associates' health law attorney.

On May 3, 2013, the Office of Inspector General (OIG) released a memorandum describing hospice general inpatient care (GIP) provided to Medicare patients in 2011, for which Medicare paid $1.1 billion. According to the memorandum, the OIG will be conducting an in-depth medical record review to evaluate the appropriateness of GIP provided by hospices. The study will be focused on the accuracy of reimbursement for GIP and the proportion of GIP provided in different settings, specifically Medicare-certified hospice inpatient units, hospitals, and skilled nursing facilities.

This ongoing study is a continuation of prior studies released by the OIG, which show that the amount of GIP services provided differs significantly depending on the setting. For example, hospices that have their own inpatient units provided GIP to 35% of their Medicare patients. In contrast, hospices that have to outsource GIP care sent only 12% of their Medicare beneficiaries to receive that care. Furthermore, hospices that provided GIP in their own inpatient units recorded 50% longer patient stays and three times the proportion of Medicare payments for GIP services than did hospices that have to outsource GIP care.

The memorandum states that the OIG will begin a new study which will use actual beneficiary medical records to determine the accuracy of reimbursement. In addition to its own investigations, the OIG advised CMS to ensure that the hospices not currently providing GIP are still providing beneficiaries with appropriate access to the types and amount of care needed at the end of their lives. These studies are part of OIG's continuing investigations related to Medicare hospice care. In 2011, Medicare paid $13.7 billion for hospice services on behalf of 1.2 million beneficiaries, and both of those numbers are expected to increase with the aging of the baby boomer generation.

Despite this report not containing recommendations to CMS, as OIG reports typically include, the OIG intends to provide CMS with recommendations in a follow-up report after the OIG completes its medical record review. Once the OIG makes its recommendations to CMS, hospice providers can anticipate increased audit scrutiny surrounding hospice GIP, including the over-utilization of inpatient hospice stays for hospice providers that have their own inpatient units. The way hospice providers should respond to this increased scrutiny is to increase their compliance activities in this area.

Wachler & Associates healthcare attorneys regularly counsel providers, including hospice providers, in proactively addressing potential audit risk areas and defending providers against Medicare audits. If you or your healthcare entity need assistance in developing an effective compliance plan, or assistance in Medicare, Medicaid or third party payor audit defense, please contact our experienced healthcare attorneys at 248-544-0888.

As mandated by the American Taxpayer Relief Act of 2012, Medicare Part B outpatient therapy providers now face manual medical review of claims at or above a $3700 statutory cap. Due to some confusion in the provider community, the Centers for Medicare and Medicaid Services (CMS) published a Frequently Asked Questions to clarify the new therapy manual medical review process.

In the FAQ, CMS explains that the manual medical review process is triggered when a beneficiary's services for that year exceed one of two threshold caps dictated in Section 603 of the Act. The cap for Occupational Therapy (OT) services is $3700 per year, per beneficiary. Separately, the combined cap for Physical Therapy (PT) and Speech Language Pathology (SLP) is $3700 per year, per beneficiary. CMS also points out that although physical therapy and speech language pathology services are combined to trigger the cap, the medical review of those claims will be conducted separately.

The FAQ states that the cap and manual medical review process applies to all Part B Outpatient Therapy settings and providers, including private practices, Part B skilled nursing facilities (SNFs), home health agencies (HHAs), outpatient rehabilitation facilities, rehabilitation agencies and hospital outpatient departments.

Therapy providers will continue to submit claims to their Medicare Administrative Contractor (MAC) but the manual medical review process will be completed by CMS' Recovery Auditors, who began processing manual medical review of PT claims on April 1st, 2013.

A distinction in the manual medical review process exists, however, depending on whether the provider is in a Recovery Auditor Prepayment Review Demonstration state or not. Therapy providers in the demonstration states - Florida, California, Michigan, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina and Missouri - will receive their Additional Documentation Request (ADR) from the MAC but will send that additional documentation to the Recovery Auditor. The prepayment review then must, by law, be completed by the Recovery Auditor within 10 days of receiving the additional documentation. Providers in other states will face "immediate post-payment review." Their MAC will pay the claim once received and any ADR will come directly from the Recovery Auditor, who will again complete the manual medical review and notify the MAC of the payment decision within 10 days.

The CMS FAQ also acknowledged the existing $1900 therapy cap and made clear that "no Recovery Auditor is approved for therapy review between $1900 and $3700." CMS noted that such a review could occur in the future but that it is currently outside this mandate.

The outpatient therapy manual medical reviews and ADRs will be per claim. The Recovery Auditors will be paid a contingency fee and operate under existing policy guidelines. Of note, they are required to use Registered Nurses and/or therapists when conducting medical necessity and coverage decisions, and certified coders in coding determinations. Importantly, in CMS FAQ answer 19, CMS states that additional documentation limits will not apply to therapy pre and post payment reviews.

Therapy providers may appeal their adverse manual medical review determinations through their MAC, and the Medicare administrative appeals process remains unchanged. Providers must prepare for inevitable documentation requests and account for manual medical reviews in their Medicare audit compliance systems.

Wachler & Associates' healthcare attorneys regularly counsel therapy providers in a variety of matters. If you or your healthcare entity has any questions regarding CMS' new outpatient therapy manual medical review process, or otherwise need assistance with a Medicare audit or RAC compliance plan, please contact our healthcare attorneys at 248-544-0888.

On April 17th, 2013, the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS) released an update to its Provider Self-Disclosure Protocol (SDP).

The SDP was established in 1998 to incentivize healthcare providers and suppliers to voluntarily disclose potential fraud related to payments received under Federal health care programs. All healthcare entities who are subject to the OIG's Civil Monetary Penalty (CMP) authorities are eligible to use the SDP.

The SDP dictates the procedures that healthcare providers must follow to identify potentially fraudulent conduct, determine damages, and report to the OIG. Successful use of the SDP leads to a settlement that reduces the healthcare entity's liability under the OIG's CMP provisions. To this end, the updated SDP states the OIG's belief that providers who disclose fraud through the SDP deserve to pay less than they would be required to pay pursuant to an investigation initiated by the government. Notably, the updated SDP explicitly references the OIG's general practice of imposing a multiplier of 1.5 times the single damages in CMP settlements of SDP cases; however, the OIG expressly reserves the right to determine whether a higher multiplier is warranted in each case. In addition, the OIG states that corporate integrity agreements are typically not required for providers utilizing the SDP in good faith.

The OIG reports that through the SDP, the OIG has resolved over 800 disclosures and returned more than $280 million to the U.S. government. The most commonly disclosed instances of healthcare fraud include submissions of false or inflated Medicare claims, receipt of federal healthcare payments by entities that employ persons excluded from Medicare, and payments to doctors meant to induce referrals. These instances commonly result from violations of the Anti-Kickback Statute. Arrangements that solely violate the Stark Law are not to be disclosed using the SDP and should instead be disclosed through CMS' Self-Referral Disclosure Protocol. However, the SDP is available for hybrid offenses that violate both the Anti-Kickback Statute and Stark Law. Because many arrangements that implicate the Stark Law also implicate the Anti-Kickback Statute, it is important for providers who suspect possible fraud to carefully analyze these arrangements so that the correct course of action can be taken.

Further, the OIG recognizes self-disclosure as the result of an effective compliance plan. As compliance plans are increasingly required as a condition to participation in Federal healthcare programs, the implementation of a proper compliance plan is recommended for reducing government scrutiny. Overall, it is important that health care providers maintain an effective and well-developed compliance plan that includes processes for detecting, reporting and correcting potential misconduct.

If you need assistance in analyzing established or prospective business arrangements under the Anti-Kickback Statute, Stark Law or other federal or state fraud and abuse laws or regulations, or need help developing an effective compliance plan, please contact an experienced health care attorney at Wachler & Associates at (248) 544-0888.

Intermountain Healthcare, the largest health system in Utah, has agreed to pay $25.5 million to resolve claims that it violated the federal Stark law and False Claims Act by engaging in inappropriate financial relationships with referring physicians.

In 2009, Intermountain disclosed to federal officials that the system may have illegally paid bonuses to 37 doctors based on their patient referrals. If true, Intermountain would have been in violation of the Stark law. In addition, Intermountain disclosed that it compensated more than 170 doctors in the absence of written agreements, including via rentals of office space in several cities without written lease agreements. In total 209 physicians were involved in the violations, which spanned over a 10 year period.

Intermountain discovered the violations through its regular review process, and reported them to the government in 2009. Intermountain cites the complexities of the Stark law's regulations as one cause of its noncompliance. According to Intermountain's Chief Medical Officer Dr. Wallace, Intermountain should have more closely monitored the situation and although Intermountain's management realized that penalties could be significant, they chose to self-disclose the issues.

Intermountain's self-disclosures ultimately led to a $25.5 million settlement agreement, which is one of the largest recent healthcare settlements with the Department of Justice. Freeman Health System of Joplin, Missouri entered into a similar settlement agreement with the Department of Justice last November for $9.3 million. Notably, Intermountain has not admitted to any wrongdoing in the settlement agreement nor has there been determination of liability on the part of Intermountain or the physicians involved.

The partnership between the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative and the Department of Justice has led to intensive efforts to prevent and reduce Medicare and Medicaid fraud. As illustrated by these recent settlements, the False Claims Act has proven to be a very effective tool for the government, and has resulted in recoveries in excess of $14.2 billion since the partnership began in 2009.

If you need assistance determining how the Stark law and False Claims Act may affect your practice or how to set up a regular review process, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.

On March 22, 2013, the Centers for Medicare and Medicaid Services (CMS) released Change Request 8185 to implement CMS Ruling (CMS-1455-R) and provide Medicare contractors with additional guidance for accepting claims rebilled from Part A to Part B. The CMS Ruling, which was released on March 13, 2013, permits hospital providers to rebill under Part B for Part A inpatient claims denied as not reasonable and necessary.

The Change Request reiterates the numerous revisions to the Part B payment policy when a Part A claim is denied as not reasonable and necessary. While the CMS Ruling remains in effect, the Change Requests instructs hospitals to submit Part B inpatient claims with the condition code "W2." By attaching the "W2" condition code, the hospital is acknowledging that the Part B claim is a duplicate of the Part A claim that was previously denied, no payment shall be made for items or services included on the Part A claim, and the beneficiary will be refunded for any amounts collected from the beneficiary with respect to the Part A claim. Furthermore, by including the "W2" condition code, the hospital attests that no appeals are pending with respect to the previously submitted Part A claim and that any previous appeal of the Part A claim has become final, binding or dismissed, and no further appeal will be filed on the Part A claim. Any Part B inpatient claim submitted under the CMS Ruling that does not include condition code "W2" will be rejected by the contractor. The effective date of the Change Request mirrors that of the CMS Ruling, which took immediate effect on March 13, 2013. However, the implementation date of the Change request is July 1, 2013. Despite the delayed implementation date of the Change Request, hospitals may submit their Part B claims prior to the implementation date, according to CMS.

Wachler & Associates will continue to monitor the developments of CMS's revised policy on Part B billing following the denial of a Part A inpatient hospital claim. If you have any questions regarding these developments or questions regarding the Medicare appeals process, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.

The Office for Civil Rights (OCR) enforces the Health Insurance Portability and Accountability Act (HIPAA) and oversees health information privacy in the Department of Health and Human Services (HHS). On Tuesday, a notice was published in the Federal Register asking for input and comments on the OCR's HIPAA Audit Review Survey. The Information Collection Request (ICR) collected in this online survey looks at 115 Covered Entities (health plans, clearinghouses and providers) that were audited in 2012 by OCR.

The survey looks to collect information on just how effective these audits are and solicits opinions on the audit process itself. As part of that review, the online survey will be used to:

• Measure the effect of the HIPAA Audit program on covered entities
• Gauge their attitudes towards the audit overall and in regards to major audit program features, such as the document request, communications received, the on-site visit, the audit-report findings and recommendations
• Obtain estimates of costs incurred by covered entities, in time and money, spent responding to audit-related requests
• Seek feedback on the effect of the HIPAA Audit program on the day-to-day business operations
• Assess whether improvements in HIPAA compliance were achieved as a result of the Audit program

The information, opinions, and comments collected using the online survey will be used to produce recommendations for improving the HIPAA Audit program. In addition to seeking feedback on the planned survey, the Federal Register Notice asks for public comment on the estimated burden of the proposed survey. Read the published notice here for more details and for details on how to respond and comment. The comment period closes 60 days from the March 19, 2013 registration date.

Learn more about HIPAA audit process and compliance for covered entities on the HHS website. You can also learn more by visiting the OCR's HIPAA Audit Protocol program information section.

If you are a HIPAA covered entity or business associate and need assistance with complying with the HIPAA Privacy and Security Rules, please contact one of Wachler & Associates' experienced health law attorneys.

Medicare administrative contractors (MACs) are expected to begin recouping money for annual wellness visits (AWV) erroneously paid to both facilities and physicians for the same visit.

For the past two years, CMS has erroneously allowed an AWV on a professional and institutional claim for the same patient on the same day. In some cases, this resulted in double billing to CMS. The erroneous collecting began with dates of service processed on or after April 4, 2011, and could continue through March 31, 2013 because the new policy will not take effect until April 1, 2013. CMS will recoup the double payments made from January 1, 2011 through March 31, 2013 from whoever billed the second claim. The new policy, Change Request 8107, will only allow payment for the professional service, regardless of whether it is paid on a professional or institutional claim.

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

On January 31, 2013, the Senate Finance Committee released a report aimed at combating waste, fraud and abuse in Medicare and Medicaid. In May of 2012, the Senate Finance Committee invited interested stakeholders to submit white papers offering recommendations and innovative solutions to improve program integrity efforts, strengthen payment reforms, and enhance fraud and abuse enforcement efforts. In response, a variety of healthcare industry experts, including Wachler & Associates, submitted nearly 2,000 pages of input and recommendations. Wachler & Associates submitted instances of egregious contractor errors, including improper recoupment of alleged overpayments, contractors sending appeals correspondence to the wrong addresses and improper referral of alleged overpayments to the Department of Treasury. Based on the Finance Committee's review, the white papers discussed five broad themes: improper payments, beneficiary protection, audit burden, data management, and enforcement.

Improper payment issues were discussed by 44 percent of health insurers and providers who submitted white papers. Solutions regarding improper payment issues included allowing reimbursement at the outpatient service level if inpatient status is denied or for certain types of complex cases; and clarifying the guidance on or abolishing outpatient observation status. Beneficiary protection was discussed by 57 percent of insurers and providers, many of whom discussed the use of outpatient observation status by hospitals to avoid recovery audit contractor's (RAC) scrutiny of claims, as well as provider and patient frustration with payer documentation requirements, which may lead them to forfeit certain courses of treatment or care. Furthermore, 60 percent of providers and insurers discussed audit burden issues, and were specifically concerned with the number of audit entities involved, the volume and complexity of payment rules and regulations, whether payment rules are applied consistently and whether audit entities are inappropriately overturning medical necessity decisions, audit entities interactions with providers during the audit process, difficulty communicating with audit entities during the audit process, and financial burden of payment suspensions and the impact on business.

Ninety-four percent of white papers included recommendations to combat waste, fraud, and abuse. Some of the recommendations included were:

• Clarifying the circumstances in which use of care and the setting for care is appropriate such as when it is appropriate to use inpatient care versus outpatient
• Making numerous process changes to how the various CMS audit contractors operate to ensure they are doing so efficiently and effectively
• Balancing the incentives for Medicare contractors to identifying overpayments with penalties for contractors whose findings are overturned on appeal through the CMS administrative process; and
• Creating an advisory panel to provide clinical input as a component of contractor oversight.

In light of the increased attention to support initiatives to detect fraud and abuse, now is the time for health care providers to analyze their current compliance programs and policies. If you need assistance in developing an effective compliance plan or appealing an adverse Medicare audit determination, please contact an experienced health care attorney at Wachler & Associates attorney at 248-554-0888.

The Health and Human Services Department (HHS) and the Department of Justice (DOJ) recovered a record $4.2 billion from healthcare fraud investigations last year, according to their jointly issued Health Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2012. DOJ and HHS reported that it deposited the $4.2 billion to U.S. Department of Treasury and Centers for Medicare & Medicaid Services (CMS) accounts. On average over the last three years, the federal government has recovered $7.90 for every dollar it spends investigating healthcare fraud and abuse. This is the highest three-year average return on investment in the 16-year history of the Health Care Fraud and Abuse (HCFAC) Program.

The bulk of these recoveries, it appears, are from pharmaceutical and device manufacturers and wholesalers. In July 2012, GlaxoSmithKline paid over $3 billion in a settlement deal to resolve its criminal and civil liability arising from the company's failure to report certain safety data, its alleged false price reporting practices, and its unlawful promotion of certain prescription drugs. In November 2011, Merck Sharp & Dohme paid $950 million to resolve its criminal and civil liabilities related to its promotion and marketing of the painkiller Vioxx. In April 2012, McKesson Corporation paid $190 million to resolve claims that it violated the FCA by reporting inflated pricing information for a large number of prescription drugs, causing Medicaid to overpay for those drugs.

The DOJ also reported the number of its enforcement actions. In 2012, the DOJ opened 1,131 new criminal and 885 new civil healthcare fraud investigations. The DOJ also reported that 826 criminal defendants were convicted of healthcare fraud-related crimes during the FY 2012. Furthermore, the Office of Inspector General (OIG) excluded 3,131 individuals and entities based on criminal convictions for crimes related to Medicare and Medicaid, patient abuse or neglect, and as a result of licensure revocations.

HHS and the DOJ claim that the record recoveries stem from the new anti-fraud programs, including the anti-fraud task force implemented in 2009, the Health Care Enforcement Team initiatives and Strike Forces, and the CMS Command Center. The HCFAC report noted the success of Health Care Enforcement Team initiatives, including the Strike Forces of investigators and prosecutors in nine cities: Miami, FL; Los Angeles, CA; Detroit, MI; Houston, TX; Brooklyn, NY; Baton Rouge, LA; Tampa, FL; Chicago, IL; and Dallas, TX. According to the DOJ, these Strike Forces filed 117 criminal charges against 278 defendants; obtained 251 guilty pleas; litigated 13 jury trials (with guilty verdicts against 29 defendants); and sentenced 201 defendants to prison terms averaging more than 48 months of incarceration. Furthermore, CMS also established the Command Center to improve health care-related fraud detection and investigation, drive innovation, and help reduce fraud and improper payments in Medicare and Medicaid. From May 2011 through the end of 2012, more than 400,000 providers were subject to the new screening requirements and nearly 150,000 lost the ability to bill the Medicare program due to the Affordable Care Act requirements and other proactive initiatives.

In light of the record number in recovery amounts and the increased funding to support initiatives to detect fraud and abuse, now is a better time than ever for health care providers to analyze their current compliance plans and policies. If you need assistance in developing an effective compliance plan to detect and prevent fraud and abuse, or have any other health care law questions, please contact an experienced health care attorney at Wachler & Associates attorney at 248-544-0888.

On January 30, 2013, the Department of Health and Human Services (HHS) announced a proposed rule to provide women with coverage for recommended preventative care, including contraceptives, without charging the beneficiary a co-pay or deductible. A prior proposed rule regarding contraceptive coverage was issued in March 2012, followed by a public comment period. The recently released proposed rule reflects the various feedback and comments submitted by the public to HHS.

In addition to providing women with preventative care, without cost-sharing, the proposed rule also seeks to accommodate religious objections to contraceptive coverage by religious organizations. First, the proposed rules would simplify the criteria defining a "religious employer" so that it follows an Internal Revenue Code definition and primarily includes churches, other houses of worship, and their affiliated organizations. As such, eligible religious organizations, such as religious nonprofit hospitals, may be exempt from providing coverage for contraceptives. In order to be considered an eligible religious organization, the proposed rule requires that an organization must:

1. Oppose providing coverage for some or all of any contraceptive services required to be covered under Section 2713 of the PHS Act, on account of religious objections;
2. Be organized and operate as a nonprofit entity;
3. Hold itself out as a religious organization; and
4. Self-certify that it meets these criteria and specify the contraceptive services for which it objects to providing coverage.

If eligible, the religious nonprofit hospital would not have to contract, arrange, pay or refer for any contraceptive services in which the organization has objections to on religious grounds. Meanwhile, participants of the health plan would be afforded contraceptive coverage through separate individual health insurance policies, without cost-sharing.

For eligible nonprofit hospitals that provide insured group plans, the hospital would submit the self-certification to the health insurance issuer and, thereafter, the plan participant would automatically be provided separate contraceptive coverage through an individual market at no additional cost. With respect to nonprofit hospitals that provide self-insured health plans, the hospital would notify the third party administrator, after which, the administrator would work with a health insurance issuer to provide separate contraceptive coverage for the plan participant.

Currently, HHS is seeking public comments on the newly proposed rule. The deadline for submitting comments is April 8, 2013.

As discussed above, a religious nonprofit hospital must be considered eligible in order to fall under the exemptions to providing contraceptive coverage for its plan participants. If you have questions regarding eligibility requirements, need assistance with self-certifying, or have any concerns pertaining to the proposed rule and/or the exemptions, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.