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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.

November 18, 2013

"Probe and Educate" Hospital Inpatient Audits Extended an Additional 3 Months

On November 12, 2013, CMS held a third open door forum (ODF) discussing the Fiscal Year (FY) 2014 Inpatient Prospective Payment System (IPPS)/Long-Term Care Hospital (LTCH) Final Rule (CMS-1599-F). As of November 4, 2013, the patient status probe review period that was previously applicable through December 31, 2013 has been extended through March 31, 2014. CMS has issued helpful guidance on questions and answers relating to patient status reviews, selecting hospital claims for patient status reviews, and reviewing hospital claims for patient status.

These "probe and educate" reviews will be conducted on a prepayment basis to assess whether hospitals are in compliance with the admission order requirements and 2-midnight benchmark. Because these reviews will be conducted on a prepayment basis, the MACs will deny any claims not meeting these three requirements. The initial sample probe reviews will consist of 10-25 claims per hospital with dates of admission from October 1 through December 31, 2013.

MAC review of the inpatient hospital claims will provide outreach and education about the inpatient rule and will help ensure that hospitals understand and comply with the Medicare requirements. Upon completion of the 10-25 claim reviews, if the MACs do not find any issues with the particular hospital's claim documentation then further probes will not be conducted for that hospital (unless there are significant changes in billing patterns for admissions).

If issues are found for a claim, the MAC will send a detailed denial letter to the provider explaining why the claim was denied. If there are moderate to significant concerns with a claim, the letter will include an offer for the MAC to call the individual provider to discuss the reasons for why the non-compliant claim was denied, to answer questions, and to provide providers with education and reference materials.

If the MACs identify an individual provider as having "moderate/significant" or "major" concerns during the initial review, then they will do a second probe review of 10-25 claims with dates of admission between January 1 and March 31, 2014. At the end of this six month period, if hospitals continue to have major issues then the MACs may select an additional 100-250 claims for review.

If you have any questions regarding the "probe and educate" reviews or compliance with the Final Rule, please contact an experienced healthcare attorney at Wachler & Associates at 248-544-0888 or wapc@wachler.com.

November 11, 2013

Open Door Forum on Final IPPS Rule Tomorrow at 1:00

Tomorrow from 1:00-2:00 pm Eastern Time, the Centers for Medicare & Medicaid Services (CMS) will hold a third open door forum (ODF) to discuss the Fiscal Year (FY) 2014 Inpatient Prospective Payment System (IPPS)/Long-Term Care Hospital (LTCH) Final Rule (CMS-1599-F).

On August 2, 2013, CMS issued the FY 2014 IPPS/LTCH Final Rule (final rule) which finalized proposals related to patient status during short-stay hospital cases, including the new standards for inpatient admission and the medical review criteria for payment of hospital short-stay inpatient services under Medicare Part A. On September 5, 2013, CMS issued sub-regulatory guidance regarding the final rule's requirements for hospital inpatient admission order and certification, which are conditions of payment under Medicare Part A. This sub-regulatory guidance was issued in part as a result of the significant confusion surrounding CMS's requirements for inpatient admission orders and physician certifications of inpatient services. CMS also posted subregulatory instructions and frequently asked questions, relating to the claim selection process and preliminary review guidelines, for conducting patient status reviews of claims with dates of admission beginning in October 2013.

Questions on the two midnight provision for admission and medical review may be sent to CMS before the ODF begins via email to IPPSAdmissions@cms.hhs.gov. Questions on Part B inpatient billing and clarifications regarding physician order and certification can be sent to Section3133DSH@cms.hhs.gov.

To access the ODF, the participant dial-in number is 1-866-501-5502, and the conference ID number is 98515298. For more information, please visit the ODF website. If you have any questions regarding the final rule or questions about the Medicare appeals process, please contact an experienced healthcare attorney at Wachler & Associates at 248-544-0888 or wapc@wachler.com.

October 21, 2013

OIG Report on "Questionable" Billing for Polysomnography Services May Lead to Closer Scrutiny of Sleep Laboratories

The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently issued a report addressing increased Medicare spending on polysomnography services. The OIG initiated this study in response to growing concerns of Medicare prescriber fraud.

A polysomnography is a type of sleep study that diagnoses sleep disorders such as sleep apnea. The claims submitted by sleep centers that conduct these studies have been under serious scrutiny by fraud investigators in recent years. In January 2013, American Sleep Medicine LLC, a sleep testing center operator based in Florida, agreed to pay $15.3 million to resolve allegations of false polysomnography claims submitted to Medicare, TRICARE, and the Railroad Retirement Medicare Program in violation of the False Claims Act (FCA).

According to the OIG's report, Medicare spending for polysomnography services rose 39 percent between the years 2005 and 2011. The OIG analyzed Medicare claims from hospital outpatient departments, as well as non-hospital providers such as independent diagnostic testing facilities and physician-owned sleep laboratories, starting in 2011. The OIG found that almost $17 million in Medicare claims for polysomnography services were inappropriate, meaning the claims did not meet one or more of three requirements for Medicare reimbursement, including claims that had inappropriate diagnosis codes, were same-day duplicate claims or were submitted with an invalid NPI. In addition, the report stated that out of 6,339 providers of polysomnography services, 180 providers exhibited patterns of questionable billing. "Questionable billing" patterns included providers that billed an unusually high percentage of: (1) same-day duplicate claims, beneficiaries who had polysomnography claims from one or more other providers in 2011, (3) diagnostic polysomnography claims with a titration claim for the same beneficiary on the following day, or (4) claims in which there was no visit note from the ordering provider in the preceding year.

The OIG made four recommendations to the Centers for Medicare & Medicaid Services (CMS):

  1. Implement claims processing edits or improve existing edits to prevent inappropriate payments;
  2. Recover payments for claims that did not meet Medicare requirements;
  3. Consider using measures of questionable billing from this study to identify providers for further investigations; and
  4. Take appropriate action regarding providers that exhibit patterns of questionable billing.

According to the report, CMS concurred with each of the four recommendations. As a result of CMS' concurrence, sleep study providers should expect greater scrutiny of polysomnography service claims in near future (e.g., increased CMS audit activity). As such, sleep study providers should review their current billing practices and compliance policies to ensure such practices and policies are in accordance with Medicare requirements. If you need assistance in implementing an effective compliance plan, or defending against an Medicare, Medicaid or third party payor audit, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.

October 3, 2013

Judge Orders Tuomey to Pay $237 Million for Stark and False Claims Act Violations

On September 30, 2013, Federal Judge Margaret Seymour of the United States District Court for the District of South Carolina ordered South Carolina's Tuomey Healthcare System to pay $276.8 million for violating both Stark law and False Claims Act (FCA) provisions; however, this ordered amount was subsequently reduced by $39 million to correct a clerical error. The payment order came after a May 8, 2013 jury verdict in which the jury found that Tuomey had submitted 21,730 Medicare claims which stemmed from illegal compensation arrangements with physicians to induce patient referrals to the hospital. Tuomey has already filed a motion announcing its intent to appeal to the 4th Circuit Court of Appeals.

The Stark law prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he or she has a financial relationship (ownership, investment or compensation). As this case demonstrates, the penalties for violating the Stark law - denial of payment, civil monetary penalty (CMP) of $15,000 per service, and $100,000 CMP for each arrangement or scheme - are severe and can also lead to even more extreme penalties under the FCA. What many providers may not know is that although the requisite intent must exist under the FCA, the Stark law is a strict liability statute that does not take into account the intent of the providers involved. As such, providers should evaluate potential business arrangements, or reevaluate current business arrangements, to ensure such arrangement is not in violation of the Stark law. Moreover, when an arrangement potentially implicates the Stark law, providers should also be sure to analyze the arrangement under the Anti-Kickback statute and other applicable fraud and abuse laws.

If you would like assistance in analyzing a potential or existing business arrangement under the Stark law, including a detailed opinion of whether your arrangement qualifies as an exception to Stark, or if you have any other questions relating to the Stark law, Anti-Kickback statute, False Claims Act or other fraud and abuse laws, please contact an experienced health care attorney via phone at 248-544-0888 or via email at wapc@wachler.com.

September 30, 2013

CMS Releases Comparative Billing Reports for Spinal Orthotics and Ordering Providers

The Centers for Medicare and Medicaid Services (CMS) recently released a national provider Comparative Billing Report (CBR) focused on spinal orthotics and ordering providers. This CBR was conducted in response to an Office of Inspector General (OIG) report on inappropriate Medicare payments for orthotics. The Medicare Durable Medical Equipment (DME) data obtained for this report span from dates of service beginning January 1, 2012 through December 31, 2012. The final data was retrieved on August 15, 2013 from the Integrated Data Repository (IDR).

Under contract by CMS, Safeguard Services LLC is the authorized producer of all CBRs. Safeguard sends CBRs to about 5,000 ordering providers to help providers prevent improper billings. This CBR provides comparative data to orthotic providers across the nation to compare orthotics providers in terms of coding and billing practice, as well as utilization patterns. The sample spinal orthotics CBR may be useful to review if your entity did not receive one from Safeguard.

The following Healthcare Common Procedure Coding System (HCPCS) codes were analyzed in this CBR:

• L0630: Sagittal control with posterior panel
• L0631: Sagittal control with anterior and posterior panels
• L0633: Sagittal-coronal control with posterior and lateral panels
• L0637: Sagittal-coronal control with anterior, posterior, and lateral panels

According to a FAQ page on the Safeguard website, the code L0631 was chosen because data analysis shows that Medicare claims and total allowances for L0631 have more than doubled from 2008 to 2011. L0630 is a comparable device to L0631, but is less costly, as well as less complex. Although Safeguard advises that CBRs are "not intended to be punitive or sent as an indication of fraud," based upon our experience, providers receiving CBRs may be prospective audit targets since their utilization of codes may exceed their peers. This report indicates that CMS is interested in encouraging providers to order devices that are consistent with a patient's medical needs, rather than overly complex or costly devices.

If you are a recipient of a spinal orthotics CBR, or are among the other provider types that have been identified to receive CBRs, Wachler & Associates can help you in evaluating your CBR analysis and in developing an appropriate compliance plan. Please contact an experienced health care attorney via phone at 248-544-0888 or via email at wapc@wachler.com.