Recently in Medicare Category

September 30, 2014

Medicare to Introduce More Star Ratings to Compare Providers

CMS recently announced that it will soon be adding additional star ratings to the Medicare.gov website by 2015. CMS has already implemented the star rating system to provide consumers quality and safety information regarding nursing homes and physician groups on a five-star scale. The system is supposed to allow consumers to make informed decisions about their provider, while giving providers something to strive for. CMS Deputy Administer for Innovation and Quality, Dr. Patrick Conway, stated that the star rating system is based on scientific standards of both accuracy and rigor. Because providers differ on the quality of care and services they offer to customers, CMS touts its star rating system as giving consumers a "snap-shot" of the care an individual provider offers. By 2015, CMS plans to add hospital groups and dialysis and homecare providers to the rating system.

While advocates of the consumer-oriented star-rating system are excited about the inclusion of more provider types, many providers are speaking out against the system. According to a recent article on Modern Healthcare, after being notified of dialysis and homecare providers' inclusion, a spokesman for Kidney Care Partners--a coalition of dialysis providers--claimed that the star rating system compares apples and oranges. The spokesman argued that the inaccurate comparison results in confused patients not really understanding what the amount of stars mean. Proponents of the rating system try to rebut views like those expressed by Kidney Care Partners, by arguing that the health care community should stress transparency, rather than worry about the imperfections in the rating system. Echoing these sentiments, Dr. John Santa, the Medical Director for Consumer Reports, stated that no provider will score well on every rating system, but the abundance of ratings will eventually provide a clearer picture of providers' quality of care and safety.

Although proponents of the star rating system continue to espouse its positive aspects, many providers remain concerned. Because providers can lose accreditation for scoring poorly on certain measures of safety and quality, and even face fines, these ratings are becoming more important. Several providers urge CMS to delay the inclusion of more provider types to the rating system until it can provide a more complete performance rating. They assert that the measurement differences may result in one provider scoring high in one program and low in another and, although the system does not have to be perfect, it must be reliable. Opponents say that to allow otherwise is to misguide patients and may potentially lead to unfair financial penalties on the entities.

If you have questions regarding the Medicare five-star rating system or how the anticipated inclusion of provider-types to the rating system may impact your practice, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. We will continue to monitor the rating system and notify you of any changes. To stay updated on healthcare news, subscribe to Wachler & Associates' health law blog by adding your email address and clicking "Subscribe" in the window on the top right of this page.

September 25, 2014

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

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

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

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

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

September 15, 2014

CMS Holds Conference Call on 68% Settlement Offer

On Tuesday, September 9, the Medicare Learning Network (MLN) hosted a Conference Call regarding the newly revealed 68% settlement offer from the Centers for Medicare & Medicaid Services (CMS) for short-stay inpatient status claims. In an effort to 'more quickly reduce the volume of inpatient status claims' pending in the appeals process, CMS offered an administrative agreement to any hospital willing to withdraw all of their pending short-stay inpatient status claim denial appeals in exchange for partial payment of 68% of the net allowable amount as long as the date of admission was prior to October 1, 2013 and the claim is either pending appeal or the appeal has been filed and is pending review. In its release, CMS further noted that only acute care hospitals and critical access hospitals are eligible to submit a settlement request; psychiatric hospitals, inpatient rehabilitation facilities, long-term care hospitals, cancer hospitals, and children's hospitals are not permitted to submit a settlement request.

The purpose of the Conference Call was to provide interested stakeholders an opportunity to speak with CMS representatives in order to ask questions and obtain a better understanding of how this settlement process will work. Wachler & Associates healthcare attorneys participated in the Conference Call and came away with a deeper understanding of how this process works, but there are still unanswered questions. First and foremost, submissions for settlement are due by October 31, 2014. If your entity cannot meet this deadline, you may ask CMS for an extension. Additionally, short-stay inpatient status claims pending at any level of the appeals process are eligible to be submitted for settlement.

In sum, eligible claims must also meet four requirements: (1) they must be pending in the appeals process or within the timeframe to appeal; (2) the date of admission for the claim must have been prior to October 1, 2013; (3) the denial must be based on a patient status review; and (4) the claim must not have been previously withdrawn or re-billed for payment under Part B. During the Conference Call participants requested clarification of whether the rebill for Part B must not have been submitted or whether it must not have been paid. CMS indicated that it would provider further clarification on this issue through the Frequently Asked Question (FAQ) page on CMS' website for hospitals. In agreeing to settle all claims for the 68%, the entity agrees to the dismissal of all associated claims (the entity may not pick and choose which ones to settle) and agrees that the settlement will serve as the final administrative and legal resolution of all eligible claims. However, this resolution does not resolve any potential False Claims Act reviews by the Department of Justice. Additionally, eligible claims include claims from any Medicare contractor so long as the denial was based on a patient status review.

A final point of emphasis pertains to whether interest will be paid under Section 935 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) upon such claims if they are settled. Representatives from CMS indicated that Paragraph 3 of the settlement agreement indicates that payment in full by CMS would not include 935 interest on the claims. If a hospital paid interest on an overpayment (i.e. the hospital prevented recoupment at the earlier stages of appeal, but interested in favor of CMS accrued on the alleged overpayment) during subsequent recoupment of an alleged overpayment, that interest will be included in the net allowable amount that is used to calculate the settlement. If this same interest accrued on the alleged overpayment, but the hospital has not begun to repay any of that interest, then that interest balance will be waived. Finally, if CMS does not make payment on the settlement within 60 days of finalization, interest will accrue and be paid to the entity.

The CMS settlement offer is an enticing offer for hospitals. By accepting the settlement, hospitals will receive reimbursement from the settlement in a much timelier manner than waiting for final adjudication of the appeals. Furthermore, hospitals will be able to conserve the resources required to challenge these denials. However, before choosing to settle, a hospital should weigh the costs and benefits, including calculating the amount of 935 interest the hospital could forego if it accepts CMS' settlement offer. For further information on this new settlement process please see our past blog post in addition to the CMS' FAQ Document on the topic and the PowerPoint presentation provided by CMS that accompanied the Conference Call.

If you have any questions regarding this process, or require assistance in pursuing a settlement, do not hesitate to contact the healthcare attorneys at Wachler & Associates, P.C. at (248) 544-0888 or at wapc@wachler.com.

September 8, 2014

CMS Announces Settlement Offer to Hospitals

In an effort to reduce the amount of cases currently pending appeal, specifically the backlog at the Administrative Law Judge (ALJ) level of appeal, the Centers for Medicare & Medicaid Services (CMS) announced an offer to hospital appellants to settle their patient status claim denials currently pending appeal. In exchange for hospitals' withdrawal of their pending appeals, CMS has offered to pay hospitals 68% of the net payable amount of the claims.

In its announcement, CMS lists a number of conditions that must be met for a hospital to be eligible for settlement, including:

  1. The provider must be either (1) an Acute Care Hospital, including those paid via Prospective Payment System, Periodic Interim Payments, and Maryland waiver, or (2) Critical Access Hospitals (CAH). Those entities which are not eligible for the settlement include: psychiatric hospitals paid under the Inpatient Psychiatric Facilities Prospective Payment System, Inpatient Rehabilitation Facilities (IRFs), long-term care hospitals (LTCHs), cancer hospitals and children's hospitals.
  2. The claim was not provided to a Medicare Part C (i.e., Medicare Advantage) enrollee.
  3. The claim was denied upon review by a CMS audit contractor (e.g., Recovery Audit Contractor (RAC), Medicare Administrative Contractor (MAC), Zone Program Integrity Contractor (ZPIC) or Comprehensive Error Rate Testing Contractor (CERT)).
  4. The claim was denied was based on the CMS contractor's finding that the patient was inappropriately treated as an inpatient as opposed to outpatient.
  5. The first day of the inpatient admission was before October 1, 2013.
  6. The claim denial was timely appealed, or the provider has not yet exhausted their appeal rights.
  7. The provider did not subsequently rebill and receive payment for the claim under Medicare Part B.

For those hospitals with eligible claims, CMS has provided instructions on its website detailing the process for hospitals to participate in the settlement offer. In order to take advantage of the settlement offer, hospitals must submit their settlement requests by October 31, 2014.

According to the Administrative Agreement (i.e., settlement agreement), CMS will pay the agreed amount to the hospital within 60 days from the date in which the binding settlement agreement is executed. Once the binding settlement agreement is entered into, the pending appeals associated with the settled claims will be dismissed and the settlement will serve as the final administrative and legal resolution of those claims.

This past July, the Department of Health and Human Services (HHS) introduced two new pilot programs - Settlement Conference Facilitation Pilot and Statistical Sampling Pilot - as alternative methods for eligible providers to resolve their appealed claim denials currently pending at the ALJ level of appeal. The recently announced settlement offer to hospitals is an added initiative implemented by HHS in an effort to reduce the ALJ backlog. CMS will be holding a national provider call on September 9, 2014, to further discuss the announced settlement offer. Wachler & Associates will be participating in that call. If you have any questions regarding the CMS settlement offer or pilot programs, or if you need assistance in the pursuing a settlement, please contact an experienced healthcare attorney at (248) 544-0888 or wapc@wachler.com.

August 26, 2014

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

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

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

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

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

August 1, 2014

Bipartisan House Bill Proposes Increased Medicare Coverage of Telemedicine

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

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

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

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

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

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

July 10, 2014

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

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

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

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

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

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

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

June 13, 2014

Physicians Nationwide Face Terminations as Insurance Plans Move to Narrow Networks

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

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

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

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

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

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

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

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

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


May 19, 2014

OIG Proposes Significant Changes to Provider Exclusion Authority

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

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

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

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

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

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

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

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

February 26, 2014

Medicare Therapy Cap Exception Extended

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

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

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

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

February 18, 2014

CMS Revises Medicare Policy Manuals Clarifying that Improvement Standards are Not Required for Coverage

On January 15, 2014, the Centers for Medicare & Medicaid Services (CMS), issued revisions to their policy manuals, including the Medicare Benefit Policy Manual, that clarify that "Improvement Standards" are not required for determining claims for Medicare coverage involving skilled care, including skilled nursing facilities (SNF), home health (HH), and outpatient therapy (OPT) benefits. The purpose of these revisions is to comply with the January 24, 2013 Jimmo v. Sebelius settlement agreement which required clarification that coverage of skilled nursing and skilled therapy services "...does not turn on the presence or absence of a beneficiary's potential for improvement, but rather on the beneficiary's need for skilled care." Citing the agreement's justification, CMS noted that, no "Improvement Standard" is to be applied in determining Medicare coverage for maintenance claims that require skilled care. Medicare has long recognized that even in situations where no improvement is possible, skilled care may nevertheless be needed for maintenance purposes (i.e., to prevent or slow a decline in condition). The Medicare statute and regulations have never supported the imposition of an "Improvement Standard" rule-of-thumb in determining whether skilled care is required to prevent or slow deterioration in a patient's condition. Thus, such coverage depends not on the beneficiary's restoration potential, but on whether skilled care is required, along with the underlying reasonableness and necessity of the services themselves. The manual revisions serve to reflect and articulate this basic principle more clearly.

Included with the manual revisions, CMS took the opportunity to introduce additional guidance for appropriate documentation in facilitating accurate coverage determinations for claims involving skilled care. CMS noted that, "While the presence of appropriate documentation is not, in and of itself, an element of the definition of a 'skilled' service, such documentation serves as the means by which a provider would be able to establish and a Medicare contractor would be able to confirm that skilled care is, in fact, needed and received in a given case."

The manual clarifications fulfill the first step required of CMS in the Jimmo settlement agreement. The agreement also sets forth an educational campaign, in which CMS agreed to disseminate written materials to contractors, adjudicators, providers, and suppliers, and conduct national conference calls with providers and suppliers as well as Medicare contractors, Administrative Law Judges, medical reviewers, and agency staff, to communicate the policy clarifications and answer questions. CMS has also committed to engage in accountability measures to ensure beneficiaries receive the care to which they are entitled. Such measures include review of a random sample of SNF, HH, and OPT coverage decisions to determine overall trends and identify any problems, as well as a review of individual claims determinations that may not have been made in accordance with the principles set forth in the settlement agreement.

If you have any questions regarding the revised manuals, please contact an experienced healthcare attorney at Wachler & Associates at 248-544-0888 or wapc@wachler.com.

January 23, 2014

CMS to Make Physician Payment Information Available on Case-by-Case Basis

On January 14, 2014, the Centers for Medicare & Medicaid Services (CMS) modified their policy regarding the disclosure of physician payment information under the Freedom of Information Act (FOIA). Effective March 18, 2014, CMS will now evaluate requests for individual physician payment information on a case-by-case basis.

CMS Principal Deputy Administrator, Jonathon Blum, cites the agency's commitment to greater transparency and the benefits numerous stakeholders have identified that would result from an increase in the availability of information as reasons for the change in policy. Some benefits CMS hopes the policy will lead to include:

• Provider collaboration on improved care management and lower costs in the delivery of health care;
• Increased ability of consumers to gain broader and more reliable measures of provider quality and performance; and
• Increased ability for journalists, as well as the public at large, to identify waste, fraud, and abusive practices.

The impetus for the change in policy came in May 2013 after a federal judge in Florida vacated a 1979 injunction that prohibited the Department of Health and Human Services from disclosing certain Medicare claims data for physicians. After a balancing of the interests, the judge determined that the public interest superseded physician privacy. The Court found the law had significantly changed since the issuance of the 1979 injunction, namely that under the Privacy Act, the scope of available injunctive relief had been more narrowly construed.

Blum, acknowledging concerns over the integrity of the data, notes that CMS is committed to protecting physician privacy in addition to ensuring the accuracy of data released, as well as developing measures to protect the data from misuse. The agency considered 130 comments from over 300 organizations in coming to its decision. However, at this time, CMS has not provided any guidelines or criteria on how the agency will determine whether or not to release individual physician data.

Wachler & Associates will continue to monitor any further developments and provide guidance related to the new policy as the implementation date of March 18, 2014 is quickly approaching. If you or your health care entity has any questions relating to the new policy or any other health care law questions, please contact an experienced healthcare attorney at 248-544-0888 or at wapc@wachler.com.

January 17, 2014

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

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

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

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

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

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

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

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

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

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

January 13, 2014

OMHA Announces Appellant Forum for February 12 to Discuss Increasing Efficiency in the ALJ Hearing Program

On Wednesday, February 12, at 10:00 am EST, the U.S. Department of Health & Human Services, Office of Medicare Hearings and Appeals (OMHA) will hold a Medicare Appellant Forum in the Cohen Auditorium of the Wilbur J. Cohen building at 330 Independence Ave. SW, Washington DC, 20024. The purpose of the forum will be to:

  • Inform OMHA appellants on the status of OMHA operations;
  • Discuss a number of initiatives designed to mitigate the growing backlog of OMHA-level appeals; and
  • Suggest measures that appellants can take to make the administrative appeals process work more efficiently.

OMHA administers the nationwide Administrative Law Judge (ALJ) hearing program for Medicare claim and entitlement appeals under the Social Security Act. From 2010 to 2013, OMHA's claims and entitlement workload has drastically increased to 184% of previous years. Despite this increase, the resources to adjudicate the new slew of appeals have remained relatively constant, and were recently reduced during budgetary sequestration. The OMHA reports that their backlog of pending appeals has grown from 92,000 claims for services and entitlement to 460,000 claims in just under two years, and that the rate of new appeals is increasing. While the OMHA's Central Operations Division averaged around 1,250 claims per week in January 2012, the OMHA recently reported a rate of receipt of over 15,000 claims per week.

The OMHA has responded to this increase by taking measures to mitigate its workload increase and by pursuing additional opportunities to increase its efficiency. On July 15, 2013, OMHA temporarily suspended the assignment of most new requests for an ALJ hearing in order to adjudicate nearly 357,000 claims for Medicare services and entitlements already assigned to 65 Administrative Law Judges.

The February 12 Appellant Forum will address such efficiency measures, and solicit input and suggestions from the appellant community on reducing the existing appeals backlog and improving the OMHA's processes.

Attendees must register online by 5:00 pm EST on Tuesday, January 28, and capacity will be limited to the first 400 registrants. OMHA is exploring the possibility of broadcasting the forum online as a webinar. Instructions for registering for the forum and additional event announcements can be found on OMHA's website.

Andrew Wachler, managing partner of Wachler & Associates PC, will be among the attendees of the February 12th forum. If you have any questions regarding the information provided at the forum, or if you have a question you would like addressed, please contact an experienced healthcare attorney at Wachler & Associates at 248-544-0888 or wapc@wachler.com.

December 13, 2013

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

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

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

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

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

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

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

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

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