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July 16, 2015

U.S. Court of Appeals for the Fourth Circuit Upholds $237 Million Judgment Against Toumey Healthcare System

On July 2, 2015, the U.S. Court of Appeals for the Fourth Circuit upheld a $237 million verdict against Toumey Healthcare System ("Toumey) for violations of the federal Stark law ("Stark") and, consequently, the federal False Claims Act. The verdict marks the latest decision in the government's longstanding legal battle against Toumey, a community hospital in South Carolina, and serves as a reminder to healthcare providers of the significant liability that can result from compensation arrangements that fail to comply with Stark's safe harbor requirements.

In this case, the lower court determined that Toumey entered into part-time employment agreements with physicians that violated Stark. The agreements violated Stark's limitations on physician compensation arrangements by varying with, or taking into account, the volume or value of the physicians' referrals to the hospital. Under the False Claims Act, claims submitted for payment arising out of referrals prohibited by Stark constitute false claims, and subject providers to treble damages. In this case, the jury found that Toumey knowingly submitted 21,730 false claims, which amounted to $39.3 million in Medicare payments. The court awarded treble damages as well as other penalties.

The Fourth Circuit's decision analyzed Toumey's argument that since Toumey relied upon the advice of lawyers in determining that the compensation arrangements were permissible under Stark, Toumey could not have knowingly violated the False Claims Act. In rejecting this argument, the Fourth Circuit highlighted the fact that Toumey consulted with multiple attorneys, one of which raised serious concerns about the compensation arrangements, and that Toumey effectively lawyer-shopped for legal opinions that approved the employment contracts. Accordingly, the case should provide notice to providers to proceed with caution if they are contemplating obtaining multiple legal opinions in order to determine that an arrangement is compliant with health care fraud and abuse laws because of how the opinions may be scrutinized in hindsight.

The Court also upheld the lower court's award of damages and other penalties. The Court determined that the damages properly took into account all referrals by the physicians to the hospital, not just those referrals addressed by the impermissible compensation arrangements, and also that the $237 million verdict did not violate the Excessive Fines Clause of the Eight Amendment or the Due Process Clause of the Fifth Amendment. Further, in a technical discussion of how the compensation arrangements violated Stark, the Court cited testimony that compensation arrangements that pay a physician an amount greater than the physician's collections demonstrates that the arrangements are not fair market value and instead evidences that the hospital intends to reward the physician for the physician's referrals to the hospital. Toumey argued that the compensation arrangement did not, on its face, vary with the volume or value of referrals. The Court, however, agreed with the government, finding that under Stark, aggregate compensation cannot vary with the volume or value of referrals, or otherwise take into account the volume or value of referrals. In addition to the payments being above fair market value, the physician's referrals for personally performed services included a facility fee payable to the hospital and, as such, the productivity bonus in the compensation arrangement varied based on the amount of referrals to the hospital.

In general, the Toumey case highlights the complexity in analyzing physician compensation arrangement under Stark, and demonstrates the amount of liability that can attach to impermissible financial arrangements between physicians and health care entities to which the physicians' refer patients. Wachler & Associates continues to stay up to date on all legal developments under Stark, as well as state laws governing physician referrals. Our attorneys regularly analyze physician compensation arrangements and other contracts under Stark and other healthcare fraud and abuse laws. If you or your health care entity have any questions regarding Stark, physician compensation arrangements, or other healthcare laws governing the relationships between healthcare providers, please contact an experienced healthcare attorney at (248) 544-0888 or via email at wapc@wachler.com. You may also subscribe to our health law blog to stay up to date on all developments in healthcare regulatory compliance by adding your email at the top right of this page.

July 9, 2015

Proposed Rule Shifts Medicaid Managed Care Enrollment Function to States

On June 1, 2015, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule revising the Medicaid managed care regulations. One of the key components of the proposed rule is the revision to the states' responsibilities relating to the screening and enrollment of network providers of managed care organizations (MCOs), prepaid inpatient health plans (PIHPs) and prepaid ambulatory health plans (PAHPs).

Specifically, the proposed rule provides that the state must enroll all network providers of MCOs, PIHPs and PAHPS (collectively, managed care entities (MCEs)) that are not already enrolled with the state to provide services to Medicaid fee-for-service (FFS) beneficiaries. The provisions would apply to all providers that order, refer or render health services in the context of Medicaid managed care to ensure these providers are appropriately screened and enrolled. As stated by CMS, the requirements contained in the proposed rule are to "ensure that there are no 'safe havens' for providers who, though unable to enroll in Medicaid FFS programs, shift participation from managed care plan to manage care plan to avoid detection."

While the screening and enrollment of network providers is currently a role performed by the MCE, CMS believes transferring this function to the state will eliminate the need for each MCE to perform duplicative screening activities. However, the proposed rule would not prevent the MCEs from carrying out their own provider screening beyond those performed by the state. In addition, the proposed system would enable states to apply the risk classification protocols to all providers that furnish services to managed care or Medicaid FFS beneficiaries, in which screened providers would be categorized as "limited," "moderate" or "high" risk, permitting site visits for moderate and high risk providers.

Even though the proposed rule would shift the screening and enrollment of network providers to the state, the rule would not require the network provider to also render services to Medicaid FFS beneficiaries. Finally, the proposed rule leaves unchanged the MCEs' duty to not discriminate against those providers that serve high-risk populations or specialize in conditions that require costly treatment.

Wachler & Associates will continue to monitor CMS' proposed rule and other developments in Medicaid managed care. If you or your health care entity have any questions regarding the Medicare, Medicaid, or managed care plan enrollment process, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. Subscribe to our health law blog to stay updated on the latest CMS news.

May 19, 2015

Senate Finance Committee Examines Medicare Appeals Backlog

On April 28, 2015, the U.S. Senate Finance Committee held a hearing to address the rising Medicare appeals claims backlog. At the hearing, Nancy Griswold, Chief Administrative Law Judge (ALJ) at the Office of Medicare Hearings and Appeals (OMHA), blamed the backlog on a lack of funding and an unprecedented amount of appeals. ALJ Griswold stated that the average processing time for each claim has soared to 550 days, more than quadrupling over the past five years. There are currently over 500,000 Medicare appeals pending review.

While appeals continue to stack up, OMHA's budget was increased from $69 million to $82.3 million over the past fiscal year (FY). Additionally, OMHA's staff has expanded from 492 employees to 514 employees for the same FY. However, ALJ Griswold claimed that this boost in resources is still not enough. In FY 2013, OMHA received 700,000 claims, which represents an astonishing increase from the 60,000 claims received just two years prior. Despite the staggering amount of claims, only 60 officers are assigned to handle cases.

Although Senate Finance Committee Chairman Orrin Hatch acknowledged the importance of preventing improper Medicare payments, he emphasized the seriousness of the backlog is due to the "insurmountable increase in appeals." Senator Hatch also noted that 60 percent of appeals are found in favor of defendants, and questioned how initial decisions are being made and whether providers are facing undue burdens.

At the hearing, ALJ Griswold urged senators to support President Obama's proposed budget, which would increase OMHA's budget by approximately $300 million. OMHA reported that the funding would be allocated towards doubling the office's capacity to process cases. In the alternative, ALJ Griswold suggested a refundable filing fee to prevent providers from filing claims just to "game the system." In support of ALJ Griswold, Sandy Coston, CEO of Medicare administrative contractor Diversified Service Options, suggested that CMS could reform the initial level of appeals in order to streamline access to subsequent appeals levels. Although Senator Hatch did not offer any endorsements, he continued to express the seriousness of the backlog in appeals and its detrimental effect on the Medicare system.

Wachler & Associates continues to monitor the OMHA appeal backlog, and our attorneys have attended two OMHA Medicare Appellant Forums hosted by OMHA and CMS in Washington D.C. Although we support the various initiatives and pilot programs presented by OMHA, we agree with ALJ Griswold that a significant increase in OMHA resources is needed to address the appeal backlog.

Despite the appeal backlog and processing time, Medicare providers and suppliers must continue to appeal Medicare contractors' overpayment determinations and preserve their appeal rights. Wachler & Associates represents healthcare providers and suppliers in a variety of healthcare matters, including appeals of Medicare overpayment determinations at all levels of review. If you or your healthcare entity have any questions regarding the Senate hearing, or seek help in defending an overpayment demand by a recovery audit contractor (RAC), please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. To remain up-to-date on healthcare regulatory developments, please subscribe to our blog by adding your email address in the window on the top right of this page.

April 3, 2015

CMS Offers Clarification to HHA Contradictory Guidance

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

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

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

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

March 2, 2015

CMS to Audit All Home Health Agencies

In response to a report issued by the U.S. Department of Health and Human Services Office of Inspector General ("OIG") titled Limited Compliance with Medicare's Home Health Face-to-Face Documentation Requirements, the Centers for Medicare and Medicaid Services ("CMS") has decided to audit all home health agencies ("HHAs") in the country. In its report, OIG detailed its findings stemming from a review of 644 home health face-to-face encounter documents that were analyzed to determine if they confirmed encounters and contained the required elements. OIG reported that 32 percent of home health claims that required face-to-face encounters did not meet Medicare requirements. OIG estimated that this resulted in $2 billion in inappropriate payments. After reviewing the study's results, OIG recommended that CMS:

  • Consider requiring a standardized form to ensure that physicians include all elements required for the face-to-face documentation;
  • Develop a specific strategy to communicate directly with physicians about the face-to-face requirement; and
  • Develop other oversight mechanisms for the face-to-face requirement.
At the end of the OIG report, CMS concurred with these three recommendations. In response, CMS reported that it is implementing an oversight plan of HHAs through the Supplemental Medical Review Contractor ("SMRC"), one of CMS's newest tools meant to ensure program integrity. CMS stated that "the SMRC will perform approximately five document-only reviews for every HHA in the country to validate that the most recent/valid face-to-face encounter is in the medical record." CMS reported that this will be a one-year, service-wide review of every HHA and CMS will provide further recommendations after reviewing the results.

Additionally, CMS has published proposed electronic and paper versions of its clinical documentation template to assist physicians in documenting their home health face-to-face encounters. Because it is the first time CMS has provided the healthcare industry templates for a progress note, it is soliciting comments on the templates. Those interested in the home health face-to-face proposed templates may participate in Special Open Door Forums occurring in March, April and May 2015. Should the templates be adopted, their use will be voluntary. CMS's proposal for the templates comes at a time when HHAs are revising their policies and protocols for face-to-face encounter documentation in light of the elimination of the physician brief narrative requirement in most cases effective January 1, 2015.

HHAs should be aware of the imminent nationwide SMRC audit. It is important that HHAs develop an effective compliance program that provides proactive measures to educate staff and certifying physicians on documentation requirements and prepare for an audit. If you have any questions regarding CMS's impending audit or need assistance in creating a compliance plan to meet the home health face-to-face encounter documentation requirements, please contact an experienced healthcare attorney via email at wapc@wachler.com or 248-544-0888.

February 20, 2015

CMS Considers Shortening the Meaningful Use Reporting Period

On January 29, 2015, the Centers for Medicare and Medicaid Services ("CMS") announced that it will consider shortening the meaningful use reporting period for electronic health record ("EHR") systems. Specifically, CMS stated that it intends to reduce the 2015 reporting period from 12 months to 90 days. Under the meaningful use incentive program, providers have faced the risk of a Medicare penalty if they failed to satisfy the program's requirements. A shortened reporting period of 90 days may increase compliance with Stage 2 of the program and reduce the reporting burden on providers. Additionally, providers can schedule their reporting period for the second half of 2015, providing additional time for providers to implement the EHR systems at Stage 2.

In a statement following CMS's announcement, the President of the American Medical Association ("AMA"), Steven J. Stack, MD, expressed the organization's support of the proposed shortening of the reporting period. However, Stack criticized the incentive program, stating that "EHRs are intended to help physicians improve care for their patients, but unfortunately, today's EHR certification standards and the stringent requirements of the meaningful-use program do not support that goal and decrease efficiency."

In its announcement, CMS also stated its intent to align the meaningful use reporting periods to the calendar year in an effort to give hospitals more time to integrate the 2014 Edition software and better coordinate with CMS quality programs. Although the proposed changes to the reporting period will not delay CMS's rollout of the forthcoming Stage 3 proposed rule, expected in March, CMS plans to limit the scope of the Stage 3 proposed rule to the criteria and requirements for meaningful use in 2017 and subsequent years.

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

February 17, 2015

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

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

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

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

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

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

January 29, 2015

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

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

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

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

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

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

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

January 28, 2015

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

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

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

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

With the new RAC contract awarded, DME, home health and hospice providers should be prepared for increased audit activity from the new RAC. If you are currently undergoing an audit and need assistance defending claims denials, or have any questions about how to proactively prepare for an audit or mitigate audit risk, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. To continue to stay updated on healthcare news, please subscribe to the Wachler & Associates health law blog by adding your email address and clicking 'Subscribe' in the window on the top right of this page.

January 13, 2015

House Republicans Release Proposal to Eliminate Two-Midnight Rule

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

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

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

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

December 22, 2014

Final Rule Tightens Provider Enrollment Policies, Expands CMS Authority

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

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

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

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

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

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

Wachler & Associates regularly counsels providers regarding CMS rules and regulations. If you have any questions about CMS' final rule, or how the new billing parameters may impact your practice, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. To continue to stay updated on healthcare news, please subscribe to the Wachler & Associates health law blog by adding your email address and clicking 'Subscribe' in the window on the top right of this page.

December 17, 2014

Medicare Pilot Program Requires Prior Authorization for Ambulance Transport Services

On December 1, 2014, the Centers for Medicare and Medicaid Services ("CMS") launched a three-year pilot program ("the program") in an effort to curb improper Medicare payments to ambulances providers. Under the program, CMS requires prior authorization for repetitive, scheduled, non-emergent ambulance transport claims billed using the following HCPCS codes: (1) A0425 - BLS/ALS mileage, per mile; (2) A0426 - Ambulance service, Advanced Life Support (ALS), non-emergency transport, Level 1; and (3) A0428 - Ambulance service, Basic Life Support (BLS), non-emergency transport. CMS defines a "repetitive ambulance service" as medically necessary ambulance transportation services that are furnished three or more times in a ten-day period, or at least once per week for at least three weeks. According to CMS, these services are often used by elderly beneficiaries that require transportation for dialysis, cancer, or wound treatment.

The prior authorization the process requires the ambulance provider to request provisional affirmation of coverage by CMS before a service is rendered to a beneficiary and before a claim is submitted for payment. CMS believes that prior authorization will ensure that the ambulance service is medically necessary and meets the applicable Medicare coverage criteria. According to CMS, the Medicare Administrative Contractor (MAC) will make every effort to review the prior authorization request and postmark decisions letters win ten business days. Each prior authorization decision may affirm up to 40 round trips per request in a 60-day period. The prior authorization request submitted by an ambulance provider must include:

  • The beneficiary's name, Medicare number, and date of birth;
  • The physician's name, national provide identifier ("NPI"), and address;
  • The provider/provider's name, NPI, and address;
  • Procedure codes;
  • Submission date of the prior authorization request;
  • Start of the 60-day period;
  • Indicate is the request is an initial or resubmission review;
  • Physician certification statement;
  • Number of transports requested;
  • Documentation from the medical record to support the medical necessity of repetitive transports;
  • Information on the origin and destination of the transports; and
  • Any other relevant document as deemed necessary by the Contractor to process the prior authorization.
For prior authorization requests denied by CMS, the ambulance provider can resolve any identified deficiencies in the request and resubmit the request; this can be done an unlimited number of times. The provider may also choose to provide the service and submit the claim for payment, even when the prior authorization is denied; however, any claim submitted will be denied, and payment can be sought through the Medicare appeals process. Finally, if an ambulance provider has not requested prior authorization before the fourth round trip, any subsequent claim will be stopped and reviewed on a prepayment review basis.

The initial stages of the pilot program apply only to ambulance providers located in South Carolina, New Jersey and Pennsylvania, and do not include ambulance transports included in a covered Part A stay or provided by an institutionally-based ambulance provider. However, even if currently outside the scope of the pilot program, providers should be alerted to CMS's recent scrutiny of ambulance transport services and may be a sign that providers could be targeted for Medicare audits in the future. If you are an ambulance provider and have any questions regarding the new prior authorization rules or the implications that the new pilot program may have on your practice, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com.

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.

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