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The sale of the Detroit Medical Center (DMC) to Vanguard Health System, a hospital chain based in Nashville, has been delayed ten days. The DMC Board of Trustees and Vanguard Health Systems extended the letter of intent to allow each organization’s legal teams to complete the necessary work for the parties to reach an agreement.

The proposed deal involves Vanguard’s investment of $850 million over five years in 20 projects, including a new tower at DMC’s Children’s Hospital of Michigan, and the expansion of the emergency department at Sinai-Grace Hospital. In addition, Vanguard would pay DMC $417 million to retire its debt and fund $278 million in pension obligations.

For more information on health law issues, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.

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Recovery Audit Contractors (RACs) recently posted new issues approved for review:

  • The RAC for Region A, DCS Healthcare, added three RAC issues for non-medical necessity claims for providers in the District of Columbia, Maine, Delaware, New Jersey, New York, New Hampshire, Pennsylvania, Rhode Island and Vermont.
  • CGI, the RAC for Region B, added a new issue for non-medical necessity DRG-validation inpatient claims and a new issue for durable medical equipment (DME) claims to its CMS-approved list for providers in all Region B states.
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    The Department of Health and Human Services Secretary Kathleen Sebelius filed a motion to dismiss in U.S. District Court to dismiss the Virginia Attorney General’s challenge of the healthcare reform law. The suit is separate from the legal action filed in Florida that includes 20 states. The Virginia Attorney General, Ken Cuccinelli, argued that Virginia was in a position to challenge the healthcare reform measure because of a law adopted in Virginia that states that individuals cannot be forced to buy health insurance in Virginia. The motion to dismiss filed by the Obama administration on Monday argues that Virginia had no standing to sue and that the Congressional power to regulate commerce renders the law constitutional.

    Although the Obama administration has remained clear on its federal arguments defending the healthcare reform law, this motion to dismiss is the first time that these arguments have been formally submitted to a court.

    For more information on healthcare reform and its impact on providers, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.

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    The U.S. Department (DOJ) and the Health Alliance of Greater Cincinnati entered into an agreement to settle a False Claims Act lawsuit with the DOJ alleging that from 1997 to 2004 Christ Hospital, a former member of the Health Alliance, scheduled cardiologists at a diagnostic unit based on the amount of business they brought to the hospital. The DOJ alleged that the arrangement was a kickback scheme because the cardiologists could bill for their diagnostic services and obtain new patients for follow-up procedures. The case was initiated by a whistle-blower lawsuit that the DOJ joined in 2008.

    In the settlement agreement, Health Alliance of Greater Cincinnati and Christ Hospital deny the allegations and do not admit liability. The organizations agreed to pay a total of $108 million in the agreement.

    This case – and similar cases that have been brought against health care providers by the DOJ over the past several years – highlight the importance of ensuring compliance with federal laws including the Stark law and the Anti-Kickback Statute to protect against the possibility of costly False Claims Acts lawsuits.

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    On May 14, 2010, the Centers for Medicare and Medicaid Services (CMS) released an MLN Matters article explaining Change Request (CR) 6954. CR 6954 adds Section 3.14 to the Medicare Program Integrity Manual. This section clarifies language regarding clinical review judgments. It requires Medicare claim review contractors to instruct their clinical review staffs to use the clinical review judgment process when making complex review determinations about a claim. The clinical review judgment involves two steps:

    (1) The synthesis of all medical record information to create a longitudinal clinical picture of the patient; and

    (2) The application of the clinical picture to the review criterial to determine whether the clinical requirements in the relevant policy are met.

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    Last month the Centers for Medicare and Medicaid Services (CMS) published an MLN Matters Article regarding changes to remittance advice coding. The article is directed towards Home Health Agencies that submit claims to a Regional Home Health Intermediary (RHHI) or to the Home Health Medicare Administrative Contractor (HH MAC – National Heritage Insurance Corporation (J14 only)) for services provided to Medicare beneficiaries.

    The article explains that CMS released Change Request (CR) 6897 to instruct Medicare RHHIs and the J14 HH MAC to use a new Remittance Advice Remark Code (RARC) and a changed Claims Adjustment Reason Code (CARC) for home health agencies (HHAs) that are subject to the Home Health Prospective Payment System (HH PPS) outlier limitation. Up to CR 6897, the code “CARC 45” had been used to alert HHAs that an outlier payment, which would be eligible for payment, was not eligible because the HHA’s outlier limitation had been met. CMS found that CARC 45 did not adequately explain the reasoning for the denial of the payment, and therefore created a new remittance advice remark code (RARC) to be used in situations where the outlier limitation has been met. Then new RARC is N523. In addition to N523, HHAs can expect to see the claim adjustment reason code B5 (CARC B5).

    The new RARC and updated CARC are effective for claims with dates of service on or after March 1, 2010. Therefore, if a calculated outlier amount is not paid because the HHA has reached the outlier limitation, HHAs can expect to see the following on their remittance advice: (1) Group Code CO: “Contractual Obligation,” (2) Claim adjustment reason code B5 (CARC B5); (3) RARC N523.

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    The Centers for Medicare & Medicaid Services (CMS) issued Change Request (CR) 6698 to clarify how Medicare claim review contractors review claims and medical documentation submitted by providers. This clarification included an outline of new rules for signatures and added language for e-prescribing.

    The previous language in the Program Integrity Manual (PIM) required a “legible identifier” in the form of a handwritten or electronic signature for every service provided or ordered. CR 6698 updates these requirements to require that every service provided or ordered be “authenticated by the author” by handwritten or electronic signature; stamp signatures are generally unacceptable.

    CR 6698 also provides some exceptions to the signature requirement. First, facsimiles of original written or electronic signatures are acceptable for certifications of terminal illness for hospice. Second, there are other circumstances for which an order does not need to be signed. For example, orders for clinical diagnostic tests are not required to be signed, but there must be medical documentation by the treating physician that s/he intended the clinical diagnostic test to be performed. The documentation showing intent must be authenticated by the author with a handwritten or electronic signature. Finally, other regulations and CMS instructions regarding signatures take precedence. For example, if the NCD, LCD, and CMS manuals have specific signature requirements, those signature requirements take precedence. However, if these are silent as to signature requirements, the reviewer should follow the guidelines set forth in CR 6698.

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    Earlier this month, the U.S. District Court for the Western District of Michigan granted a defendant’s motion to dismiss a qui tam action against it. The court held that the relator failed to state a claim with the required particularity.

    Robert Lauricia filed the qui tam action under the False Claims Act (FCA) against Stryker Corporation. Mr. Lauricia’s complaint alleged that Stryker was engaged in a kickback scheme with Dr. Hari K. Parvateneni. The scheme involved Dr. Parvateneni’s agreement to use Stryker’s medical devices for implantation into Medicare patients in exchange for Stryker’s agreements to fund the training of Parvateneni’s residents and research projects. Mr. Lauricia alleged that since Parvateneni and Stryker engaged in the illegal kickback scheme, any claims submitted for reimbursement from Medicare were violations of the FCA.

    The defendants’ motion to dismiss was granted by the district court. The court expressed that the allegations failed to state a claim for relief as the relationship between the defendants was neutral on its face, with Mr. Lauricia failing to produce any specific conduct that would render it illegal. The court also noted that the claim failed to allege the time or place of the alleged misrepresentations, any injury resulting from the alleged fraud, or even a single particular fraudulent claim.

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    Section 6401 of the Patient Protection and Affordable Care Act (PPACA) grants the Secretary of the Department of Health and Human Services (the “Secretary”) the authority to require health care providers to adopt compliance programs as a condition of participation in the Medicare, Medicaid and CHIP programs. Before the PPACA, a corporate compliance program was only mandatory for a healthcare provider or supplier that was operating under a Corporate Integrity Agreement or had a contract with the federal government that exceeded $5 million and lasted longer than 120 days.

    Although section 6401 lacks specific direction to the Secretary with regard to the health care providers that will be subject to the mandatory compliance programs and the core elements of the programs, the section gives the Secretary the authority to make these decisions. One exception to the lack of specific direction is found in section 6102 of PPACA. That section requires skilled nursing facilities (SNFs) and other nursing facilities to establish compliance programs. According to the language in section 6102, the SNF program must be “reasonably designed, implemented, and enforced so that it will be generally effective in preventing and detecting criminal, civil and administrative violations under this Act and in promoting quality of care.” The section lists eight required components of the compliance program, and requires that the programs be in place by March 2013. The eight required components include:

  • Compliance standards and procedures must be adopted and followed by employees and other agents in a position to reduce criminal, civil and administrative violations under the PPACA.
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    The Centers for Medicare and Medicaid Services (CMS) issued a new transmittal to address concerns regarding the reporting of recoupment for overpayment on the remittance advice (RA). During the RAC demonstration project providers would receive an RA, which is a notice of payments and adjustments sent by Medicare contractors to providers, billers and suppliers. The RA would either be delivered as a companion to a claim payment, or as an explanation when no payment was made. If a RAC denied a claim and was entitled recoup money, the amount would be taken from a future payment. However, there was not a mechanism to trace the recouped payment back to the original claim that had been denied. The result was that providers were unable to maintain correct records.

    Transmittal 659 addresses this concerning by instituting a system that will assign a control number at the point a recoupment demand is made. The control number will stay attached to the claim and will later be used on the RA when the payment is offset from the provider’s reimbursement. Therefore, the control number will identify a particular claim and providers will be able to maintain accurate records.

    If you need assistance with a RAC or third party payor audit or for more information, please visit www.racattorneys.com or contact a Wachler & Associates attorney at 248-544-0888.

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