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On June 14, 2011, the Office of Inspector General (OIG) issued an unfavorable advisory opinion addressing an existing and a proposed arrangement involving contracts between a durable medical equipment (DME) supplier and several independent diagnostic testing facilities (IDTF). The DME supplier (Requestor) provides continuous positive airway pressure supplies (CPAP), which may be prescribed by a physician for patients diagnosed with obstructive sleep apnea. The study may be performed at the IDTFs, and a patient must select a DME supplier to supply the equipment after being prescribed the CPAP.

The existing arrangement involves contracts between Requestor and several IDTFs, some of which have physician investors, where the IDTFs are permitted to display and provide equipment from multiple DME suppliers. The patients are given a list of local DME suppliers, and are advised by IDTFs their right to select which supplier will provide them with the equipment. The contracts only apply to non-federally insured patients. If a non-federally insured patient chooses Requestor’s DME, an IDTF staff member will prepare the CPAP for the patient, along with educating the patient on how to properly use the equipment. For completing these tasks, Requestor pays the IDTF a per-patient fee. Each contract between Requestor and IDTF is non-exclusive and is set for a term of at least one year. Furthermore, Requestor may only terminate the contract for breach or for cause, but the IDTF may terminate the contract at any time.

The proposed arrangement would be similar to the existing arrangements, except for the following three elements: (1) the proposed arrangement would include federally-insured patients; (2) IDTF would be paid a flat monthly/annual fee; and (3) Requestor would have the ability to terminate the contract if it is unsatisfied with the number or patients receiving the services.

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On Tuesday, the Obama Administration announced that it decided to abandon its “mystery shopper” survey. The survey was created as a way to address concerns about the shortage of primary care doctors, a problem that could continue to grow if more than 30 million Americans gain health care coverage as expected by the Obama Administration. The decision not to move forward with the survey came after doctors and politicians criticized the project for needlessly wasting taxpayer dollars, along with a number of privacy issues. According to Senator Mark Steven Kirk, Republican of Illinois, there have already been a number of reputable studies confirming the difficulties for Medicare patients to find doctors to see them. Kirk was joined by a number of others who ultimately persuaded the Obama Administration to put the survey on what a spokesman for the health department labeled as an “indefinite hold.”

Physicians should understand their options when dealing with Medicare patients. Physicians can choose to limit the number of Medicare patients that they see. Physicians can also choose to be “nonparticipating” or can choose to “opt-out” of Medicare. If you are a physician with questions about your Medicare participation options, please contact a Wachler & Associates attorney at 248-544-0888.

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The Centers for Medicare & Medicaid Services (CMS) recently issued an advisory opinion stating that a physician recruitment arrangement including a non-competition provision meets the requirements of the physician recruitment exception under the Stark law. The approved non-compete arrangement restricts the physician from establishing, operating, or providing professional medical services at any location within a twenty-five-mile radius of the hospital for one year.

Under the Stark law, the original Stark physician recruitment exception required that a practice not impose additional restrictions on a recruited physician other than conditions related to the quality of care. However, in Stark III, CMS stated that it now believes that categorically prohibiting non-compete provisions from recruitment arrangements makes it difficult to recruit physicians, and that practices may be unable to hire physicians despite receiving a hospital’s financial assistance in compliance with the Stark physician recruitment exception. CMS provided several factors that determine whether a non-competition provision imposes practice restrictions that “unreasonable restrict” a physician’s ability to practice medicine in the geographic service area. In Advisory Opinion 2011-01, CMS found that: 1) the time period restriction of one year was reasonable, 2) the distance requirement was reasonable based on the hospital’s geographic service area, 3) the physician would still be permitted to practice at certain hospitals both within and outside the hospital’s service area during the one year period, and 4) the non-competition provision complies with state a local laws.

The advisory opinion provides health care entities with a framework for structuring non-competition provisions under the requirements of the Stark law physician recruitment exception. Wachler & Associates regularly advises clients on Stark, fraud and abuse, and the anti-kickback law. If you have any questions regarding the physician recruitment exception, the Stark law in general, or other Stark exceptions please contact a Wachler & Associates attorney at 248-544-0888 or visit www.wachler.com

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The Obama administration has labeled the increasing shortage of primary care doctors as a “critical public policy problem.” In an effort to address this issue, the administration intends to assemble a team of “mystery shoppers” to pose as patients, call doctors’ offices, and request appointments in order to see how difficult it is for people to obtain care when their health problems arise. In addition to better understand the problematic shortage of primary care doctors, the survey will also attempt to discover whether doctors are accepting patients with private health insurance while at the same time refusing to attend to those insured by government health care programs.

The survey will be conducted by a federal contractor who will call 4,185 doctors’ offices. The number of surveys will be evenly conducted throughout nine states: Florida, Hawaii, Massachusetts, Minnesota, New Mexico, North Caroline, Tennessee, Texas, and West Virginia. Each office will be called at least twice, one call from a person claiming to be privately insured while another federally insured, inquiring about whether the office is accepting new patients. Some mystery shoppers will pretend to be in need of a routine checkup, while others will claim to have symptoms necessary of more urgent care. Furthermore, mystery shoppers will not identify themselves as government workers and will block the caller ID of the incoming calls. A third call will be made to eleven percent of doctors, in which the callers will identify themselves as calling on behalf of the U.S. Department of Health and Human Services. The caller will ask doctors about which types of insurance they accept and then compare those answers with the mystery shopper calls, noting any discrepancies. The survey data collected will be kept confidential and will not identify any individual doctors. With last year’s passing of the new health care law, it is predicted that more than 30 million people will obtain health care coverage. Therefore, the federal government finds it necessary to conduct this mystery shopper survey in an effort to fully understand the shortage of primary care doctors and ultimately fix the problem.

Physicians should understand their options when dealing with Medicare patients. Physicians can choose to limit the number of Medicare patients that they see. Physicians can also choose to be “nonparticipating” or can choose to “opt-out” of Medicare. If you are a physician with questions about your Medicare participation options, please contact a Wachler & Associates attorney at 248-544-0888.

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A group of U.S. senators is seeking an inquiry into the expansion and potential abuse of physician-owned distributorships (PODs). PODs are entities that allow doctors to purchase ownership shares in an organization that buys products used in surgery. In separate letters to the Centers for Medicare & Medicaid Services (CMS) and the U.S. Department of Health and Human Services (HHS), the report states that the Senate Finance Committee has received “numerous allegations” of physicians who performed more surgeries than medically necessary, or who used implants that were of “inferior quality or not best suited for the procedure,” due to their financial interest in PODs.

The Report asks each department to review the POD industry’s compliance with fraud and abuse and anti-kickback laws. Physicians who control the choice of medical devices may use their ability to generate referrals for hospitals in order to induce them to buy medical devices from companies in which the physicians have ownership. Further, the committee believes that the recently released regulations for accountable care organizations may “provide an inadvertent loophole allowing less reputable POD models to fall under the Stark and anti-kickback law waivers envisioned for ACOs.”

Physician-owned distributorships, according to a 2006 OIG opinion, carry “the strong potential for improper inducements.” The Senate committee noted that hospitals, physicians and medical device manufactures would benefit from “clear legal guidance.” For more information regarding PODs and their compliance with fraud and abuse and anti-kickback laws, please contact a Wachler & Associates attorney at 248-544-0888 or visit our website at www.wachler.com

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The Centers for Medicare and Medicaid Services (“CMS”) are using Comparative Billing Reports as a tool to educate providers about their individual billing practices. Comparative Billing Reports (“CBRs”) show individual providers how their billing patterns for various codes and procedures compare to the state average and the national average for providers within the same field (e.g. physical therapists and chiropractors). These comparative studies are designed to help providers review their coding and billing practices and utilization patterns, and take proactive compliance measures. CMS has stated that “the CBR is not intended to be punitive or sent as an indication of fraud. Rather it is intended to be a proactive statement that will help the provider identify potential errors in their billing practice.”

CMS awarded Safeguard Services, LLC the contract for producing the CBRs and has recommended that CBRs be sent out to certain provider types that have been identified as a vulnerability in the Medicare Program. As of now, the provider types that have been identified to receive CBRs are physical therapists, chiropractors, ambulance, hospice, podiatry, and sleep studies. A maximum of 5,000 providers will be selected to receive CBRs in each provider class.

CBR data analysis involves the same data-mining tools used by Medicare audit contractors to identify candidates for audit. If you have received a CBR or are a possible candidate to receive a CBR in the future, CMS may consider you a statistical outlier in comparison to your peers, subjecting you to an increased risk of audits. It is important to review the information provided, ensure the data reported is accurate and integrate any necessary compliance measures. CBRs are to be used as a tool for providers to look at their individual billing patterns in comparison to peers in their specialty, identify any potential errors and take proactive compliance efforts. Upon receiving a CBR, it is vital that providers evaluate the information and design a proper compliance plan to address any vulnerabilities and prepare for or defend against potential future audits. If you are a recipient of a CBR or are among the provider types that have been identified to receive CBRs (i.e. physical therapists, chiropractors, ambulance, hospice, podiatry, and sleep studies), please contact a Wachler & Associates attorney at 248-544-0888 to discuss evaluating the CBR analysis and development of an appropriate compliance plan that will reduce audit risks.

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On June 8, 2011, the Health Information Technology Policy Committee (“HITPC”) advised the U.S. Department of Health and Human Services (“HHS”) to push its deadline for Stage 2 meaningful use requirements to 2014. The current deadline is 2013 for providers who achieve Stage 1 meaningful use requirements in the 2011 payment year. Upon reviewing the Meaningful Use Workgroup’s recommendations, HITPC acknowledged that requiring providers who achieve Stage 1 requirements in 2011 to meet Stage 2 requirements in 2013 can be seen as penalizing early adopters. Therefore, as a way to prevent providers from delaying Stage 1 attestation, HITPC urged HHS to allow those who meet Stage 1 in 2011 an additional year to meet the requirements of Stage 2.

The American Hospital Association (“AHA”), one of the organizations that provided comments to the Meaningful Use Workgroup, proposed that Stage 2 be pushed back until three-fourths of eligible providers are compliant with Stage 1. In addition, AHA recognized that less than 2% of responding providers confirmed that they were able to meet the minimum meaningful use requirements when the initial incentive payments became available. The organization also noted that initiating Stage 2 requirements too quickly may cause providers to become overwhelmed and decreases their ability to properly comply.

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

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Wachler & Associate’s attorney Amy Fehn, as a member of the ABA’s ACO Task Force, recently participated in the drafting of comments on CMS’ proposed regulations for ACO participation in the Medicare Shared Savings Program. The proposed regulations will govern the way in which ACOs will contract with CMS to become responsible for the delivery of care to an assigned population of Medicare fee for service beneficiaries. The ABA’s ACO Task Force prepared comments to help CMS properly develop ACOs by highlighting some of the problematic areas of the proposed regulations. Click here to view the full version ABA’s comments on the ACO proposed regulations.

For assistance with interpreting the ACO Shared Savings program regulations, or for assistance with creating an infrastructure conducive to ACO participation, please contact a Wachler & Associates attorney at 248-544-0888.

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DCS Healthcare added 11 new approved issues for medical necessity reviews for providers in Region A states. The recently approved new issues may be reviewed for providers in Pennsylvania, the District of Columbia, New Jersey, Delaware, New York, Connecticut, Vermont, Maine, Massachusetts, New Hampshire, and Rhode Island, excluding Maryland. The new issues include:

• MS-DRG 885 psychoses

• MS-DRG 188 pleural effusion without CC-MCC

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The Center for Medicare and Medicaid Services (CMS) has extended the deadline for the submission of the Pioneer ACO Model program letters of intent to June 30, 2011. Additionally, the Application deadline has been extended to August 19, 2011. Applications received from organizations that have not submitted a letter of intent will not be considered.

Click the following links to complete the Pioneer ACO letter of intent and application. If you wish to participate in CMS’ Pioneer ACO Model program and need assistance in doing so, please contact a Wachler & Associates attorney at 248-544-0888.

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