Articles Posted in Health Law

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The Office of the Inspector General (OIG) issued an unfavorable advisory opinion with respect to a joint venture between a pharmacy and long term care facilities.

The proposed arrangement would include a long term care pharmacy incorporated in the requestor’s market area. The owners of the long term care pharmacy would include an employee of the requestor and one or more long term care facility owners. The requestor provides services to long term care facilities and the employee is a pharmacist for the requestor and also serves as a consultant to long term care facilities.

Under the proposed arrangement, the long term care facilities and the employee would receive shares in this new company based on capital contributions and services provided. The newly incorporated pharmacy would enter into a contract with the requestor where it would pay the requestor a management fee for providing office space, day to day management of operations, inventory storage and billing services. The new corporation would not have any employees. Some of the products and services delivered to customers by the new corporation would be covered and reimbursed by federal healthcare programs.

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The percentage of physicians in the United States using electronic health records (EHR) has increased by nine percent (20% to 29%) over the past twelve months. The push towards electronic records has been firmly supported by the current and previous presidential administrations. The Obama Administration aims to have at least 50 percent of Americans using EHRs by 2014 in an attempt to reduce health care costs and medical errors.

This month, the United States government will begin distributing incentive payments to hospitals and doctors who opt to use EHRs. These incentive plans could pay out as much as $31.3 billion. If health care providers meet government standards for the EHRs, they may be eligible to receive up to $44,000 over six years through Medicare and up to an additional $63,750 over five years from Medicaid. Additionally, the federal government plans to reduce Medicare reimbursements to health care providers who fail to make the electronic switch by 2015.

If you need help understanding the meaningful use requirements, HIPAA security or assistance with negotiation of EHR contracts, please contact a Wachler and Associates attorney at 248-544-0888.

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On May 4, 2011, the Seventh Circuit Court was faced with the issue of whether a doctor’s actions violated the anti-kickback statute (United States of America v. Borrasi). Dr. Roland Borrasi was convicted of Medicare fraud after he accepted payments in the form of a salary from a psychiatric hospital in exchange for referring patients to the facility. Over a time period of three years, Borrasi and four other physicians were paid a sum of $647,204 for referring hundreds of patients to the hospital.

In an effort to conceal these bribes, the physicians were placed on the hospital’s payroll, given false titles and job descriptions, and asked to submit false time sheets. Through testimonial evidence, the court found that the physicians were not expected to perform any duties listed in their job description. Moreover, the bribed physicians attended very few meetings, were rarely seen at the facility, and were not expected to perform any of their administrative duties. The facts of the case led the jury to find Borrasi guilty of Medicare-related bribery in violation of 42 U.S.C. § 1320a-7(b)(1).

On appeal, the Seventh Circuit denied Borrasi’s argument for interpreting the statute. Borrasi argued the court to adopt a “primary motivation” rule, where a defendant shall be found not guilty if the primary motivation behind the payments was to compensate for bona fide services provided. Instead, the court held that if part of the payment compensated past referrals or induced future referrals, that portion of the payment violates the statute. Therefore, so long as some amount of the payments made to Borrasi and the other physicians were made not pursuant to a bona fide employment relationship, then the statute has been violated.

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Two hospitals in Anoka County have fired 32 employees for accessing the medical records of patients without permission or a legitimate reason to do so. The employees accessed the medical records of certain patients that were hospitalized due to a massive drug overdose stemming from a party; the overdoses were considered a high-profile case. The HIPAA privacy regulations require hospitals to apply a “minimum necessary” rule, i.e., employees are only permitted to access information that they have a need to know in order to perform their job duties. The HIPAA Security Rule also requires hospitals and other covered entities to have the capability to audit employees’ access. The HIPAA Privacy Rule also requires hospitals and other covered entities to have appropriate disciplinary policies in place when violations of the rule are found. For questions regarding HIPAA compliance or for assistance with developing a HIPAA Privacy or Security compliance program, please contact a Wachler & Associates attorney at 248-544-0888.

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Recovery Audit Contractors (RAC) recovered $237.8 million in the six-month period that ended in March. This amount is already three times more than the amount of money recovered in the previous year. According to recent estimates, CMS alleges that the total sum of Medicare improper payments exceeds $47 billion annually. If you have been audited by a RAC, ZPIC, MAC, carrier or other Medicare contractor and need assistance with the defense of the audit, please contact a Wachler & Associates attorney at 248-544-0888.

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U.S. attorneys have issued letters to state officials addressing the illegality of medical marijuana. The letters were sent to several states (Washington, California, Colorado, Montana, and Rhode Island) warning them that everyone from licensed growers to regulators could be subjected to civil and criminal prosecution. These warnings have cause Washington and New Jersey to reassess their medical marijuana laws. Even though medical marijuana is still illegal under federal law, over a dozen states have enacted laws that make the substance legal within the state.

In 2009, Justice Department officials stated, “prosecutors should not focus federal resources on individuals whose actions are in clear and unambiguous compliance with existing state laws providing for the medical use of marijuana.” Although public policy indicated that compliance with state law would not lead to federal prosecutions, the possibility of such action was not completely out of the question. These recent letters appear to institute a more aggressive policy, which is causing states to reevaluate laws and other issues regarding medical marijuana.

Gov. Chris Gregoire, governor of Washington and chair of the National Governors Association, intends to work with other governors in an attempt to change federal law to classify medical marijuana as a Schedule 2 substance, categorizing it with morphine or oxycodone. All in all, these federal letters have caused states to take a step back from the progress they have currently made with medical marijuana and are now becoming more hesitant to enact new laws do to the stronger possibility of federal prosecution, which is something the Obama administration originally claimed would not be an issue.

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The Centers for Medicare & Medicaid Services (CMS) recently published a checklist for physicians and treating practitioners to follow in order to help them comply with documentation requirements for the face-to-face examination that must occur prior to the physician ordering a Power Mobility Device (PMD) for a Medicare beneficiary. The checklist contains the information that is essential for Medicare in determining whether payment should be made for a PMD. However, it is vital to note that the checklist is merely a guide and does not replace the underlying medical records. The following is the checklist offered by CMS:

  • Signs/Symptoms that limit ambulation;
  • Diagnoses that are responsible for these signs/symptoms;
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Registration for the meaningful use incentive program began January 1, 2011 with more then 20,000 doctors registering for the program. This program was implemented as a means to incentivize physicians and hospitals to utilize electronic medical record systems. Certain metrics were established and participants must comply with them for 90 consecutive days in order to qualify for any monetary payments. Starting on April 18th, physicians and hospitals may attest to meeting the required criteria. If they are deemed to have met these criteria, they will be eligible for incentive pay up to $44,000 over the next five years.

Achieving meaningful use is also important for physicians wishing to participate in the Medicare Shared Savings program through an Accountable Care Organization (ACO) since many of the quality performance standards are aligned with the “meaningful use” criteria in the HITECH EHR incentive program. Further, ACOs participating in the Shared Savings Program will be required to demonstrate that 50% of the ACO’s primary care physicians are “meaningful users” as set forth in the HITECH EHR incentive program.

For any further information about participating or complying with the HITECH Medicare or Medicaid EHR incentive programs or for assistance with ACO formation or participation, please contact a Wachler & Associates attorney at 248-544-0888.

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The Durable Medical Equipment (DME) Competitive Bidding Program was implemented as a means to lower costs and improve beneficiary services in the DME industry. It consists of a bidding and selection process based on certain criteria determined by CMS. The Round 1 Rebid competition went into effect in 2009 across 9 Metropolitan Statistical Areas (MSAs) (basically large metropolitan areas). Focus now turns to Round 2, which will increase the MSAs involved by 91, bringing the total to 100. CMS anticipates that the Round 2 contracts and payment amounts will become effective January 1, 2013. A list of the current and projected MSAs where the program is or will be implemented is available on the CMS website.

We will continue to provide updates on Round 2 as the information becomes available. Compliance with the program and its participation requirements are critical to all DME providers in the MSAs. If you have any questions or concerns, please contact a Wachler & Associates attorney at 248-544-0888.

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Those practices with electronic health record systems (EHR) in place appear to be very happy with the results. A survey conducted by the Medical Group Management Association found that 72% of practices with implemented EHR systems were “satisfied” with the results. Further, those practices which have optimized their EHR systems have reported an 82% level of satisfaction.

If you have any questions or concerns about the compliance or regulatory issues involved with the implementation of a EHR system, please contact an attorney at Wachler & Associates at 248-544-0888.

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