According to usatoday.com, The U.S. Senate will not act on legislation to fix the 21% pay cut under the Medicare Physician Fee Schedule before it goes into effect on April 1. Although the House passed legislation earlier this week which would permanently fix the Sustainable Growth Rate formula which causes this pay cut panic every year, Senator Mitch McConnell has indicated that the Senate intends to take the matter up when it returns from break after April 13, 2015.
As of today’s date, Congress has not yet fixed or even patched the expected 21% cut to the Medicare Physician Fee Schedule. A eNews alert sent out today by the Centers for Medicare and Medicaid Services notifies physicians of the following:
“The negative update of 21% under current law for the Medicare Physician Fee Schedule is scheduled to take effect on April 1, 2015. Medicare Physician Fee Schedule claims for services rendered on or before March 31, 2015, are unaffected by the payment cut and will be processed and paid under normal procedures and time frames. The Administration urges Congress to take action to ensure these cuts do not take effect. However, until that happens, CMS must take steps to implement the negative update. Under current law, electronic claims are not paid sooner than 14 calendar days (29 days for paper claims) after the date of receipt. CMS will notify you on or before April 11, 2015, with more information about the status of Congressional action to avert the negative update and next steps.” (CMS Medicare Learning Network)
Physicians should keep a close on how this issue develops as it could impact practice cash flow even it a fix is put in place.
These days, more often than not, physicians and up on the short end of the stick when it comes to new health care legislation. However, last month a bill was introduced by Senator David Argall which, if passed, would give physicians and other healthcare providers important protection against retroactive insurance denials. Specifically, Senate Bill No. 554 would limit the period during which insurance companies could retroactively deny payment to 12 months after the date of the original payment. This would mean that if a payor makes payment on a claim, it would have only 12 months to later seek to recoup that payment if coverage is retroactively denied. The only time this rule would not apply as if the claim is fraudulent or improperly coded. The bill, which has been referred to the Banking and Insurance Committee can be viewed on the Pennsylvania Senate website.
Many physicians mistakenly believe that federal healthcare fraud and abuse statutes only apply to the Medicare fee-for-service program. However, physicians need to be aware that many federal healthcare statutes apply to any program or plan funded, in whole or in part, with federal dollars. One such example is the Medicare Advantage program. Although these plans are implemented by private insurance companies, they are funded with Medicare dollars. As such, they are generally subject to federal healthcare fraud and abuse laws including, without limitation, the federal Health Care Fraud statute and the False Claims Act.
In February 2015, a Florida physician and his medical practice were indicted by a federal grand jury for allegedly engaging in a scheme to defraud the Medicare program through a Humana Medicare Advantage plan. Specifically, the physician and clinic in question are alleged to have submitted fraudulent diagnoses to Humana which resulted in the Medicare program making larger Medicare Advantage capitated payments to Humana. The physician and clinic, in turn, received a larger monthly payment from Humana under the Medicare Advantage Program. Although healthcare fraud cases arising under the Medicare Advantage program are not yet commonplace, this case demonstrates the potential pitfalls associated with federally funded health care programs that all physicians need to be aware of. For more on the indictment, see “Delray Beach Doctor Charged with Health Care Fraud”.
The United States Court of Appeals for the Seventh Circuit recently issued an interesting decision concerning the definition of “referral” in the context of federal anti-kickback laws. See U.S. v. Patel, No. 14–2607, 2015 WL 527549 (7th Cir. 2015). In the Patel matter, the United States charged a Chicago-area physician with violating and conspiring to violate the Anti–Kickback Statute, 42 U.S.C. § 1320a–7b (the “Statute”), alleging that the physician received undisclosed payments from a home health services provider for referring patients.
The referral process at issue is summarized below:
“First, [physicians] made the initial determination that the patient required home health care services. This initial decision is not at issue in this case – it is undisputed that all of Patel’s patients who were treated by [home health provider] needed home health care. After this initial determination was made, a provider needed to be chosen. [Physician] did not personally discuss the selection of providers with patients or their family members, either as an initial matter or as part of recertification. Rather, his patients discussed home health care options with [physician’s] medical assistant . . . [Physician] did not tell [medical assistant] which provider to recommend. [Medical assistant] gave patients an array of 10-20 brochures from various providers. The brochures were given to [physician’s] office by the providers, but it is unclear whether [medical assistant] and [physician] included every brochure that they were offered. One of the brochures provided by [medical assistant] was [home health provider], but the government does not contend that it was included in the array because [home health provider] had offered [physician] kick-backs. Each patient independently chose a provider from those in the array. After a provider was selected, [medical assistant] called or faxed the provider with the name of the patient, his diagnosis, and his Medicare number. The fax cover pages from [physician’s] office bore the subject line ‘new referral’ and the body of the faxes contained prescriptions for home health care signed by [physician] or by [medical assistant], with [physician’s] authorization.”
The physician received $400 from the home health provider for each new patient, and $300 for each recertification. The government did not allege that any patient received treatment when it was not needed. Further, the government did not allege that the physician actively steered any patients to the home health provider. In fact, many of the physician’s patients chose other providers when given the option. The government nevertheless argued that the exchange of money itself constituted a “referral” under the Statute and the District Court agreed. The physician appealed his conviction and eight-month sentence to the Seventh Circuit Court of Appeals.
In affirming the conviction, the Seventh Circuit focused on the definition of “referral” in the context of the Statute and other laws governing Medicare and Medicaid fraud, such as the Stark Act, 42 U.S.C. § 1395nn. The physician argued that the traditional definition of “referral” in the medical context is a doctor’s recommendation that a patient see a particular provider, and that this is the behavior that Congress targeted when it enacted the Statute. The physician argued, among other things, that because (a) he did not steer patients to the home health provider, and (b) the government could not demonstrate any harm, the physician did not violate the Statute.
The Court rejected the physician’s proposed definition of “referral,” opting for a more expansive interpretation, stating: “[o]ften, people use the word ‘referral’ to describe a doctor’s authorization to receive medical care, even when the doctor is not the one choosing the provider of that care.” The Court determined that the Statute was designed to prevent Medicare and Medicaid fraud, and that a narrow definition of the term would defeat the central purpose of the Statute. Further, the Court determined that it was irrelevant that the government could not demonstrate any harm arising from the alleged pay arrangement.
Under the Court’s interpretation, criminal liability may exist even if a physician takes no action to encourage his patients to select one provider over another and the Centers for Medicare & Medicaid Services (“CMS”) suffers no harm. Doctors should review their compensation arrangements to determine if these types of payments exist and, if so, seek competent counsel to navigate potential risk.
Many physicians are aware of the push by the Medicare program to move away from a fee for service physician payment model to one which recognizes higher quality and lower cost care. However, few physicians have a good understanding of how such payment models would work and how their practices would fair under them. This week, the Centers for Medicare and Medicaid Services (CMS) released some important data regarding one of these value-based payment programs: the Value Modifier program.
The Value Modifier program seeks to reward physicians who provide high quality and low cost care by increasing their reimbursement by a “value modifier”. Physicians who do not score favorably under the program will, in turn, be subject to a downward payment adjustment. This week, CMS published a summary of the results of the first year of the program which initially applied only to physician groups of 100 or more.
In the initial year of the program, groups subject to the Value Modifier had the option to participate in a tiering program (which will be mandatory starting in 2016). Under this program, depending on their cost and quality scores, groups would either be subject to an upward payment adjustment, a neutral payment adjustment or a downward adjustment. Of 691 group practices subject to the Value Modifier, only 127 initially elected to participate in the tiering program. Of these 127 groups, only 106 submitted sufficient data to receive both cost and quality scores for tiering purposes. According to the published results, 14 groups will receive an upward adjustment; 11 groups will receive a downward adjustment and 81 groups will have a neutral adjustment (i.e., no adjustment ). None of the groups earned the highest modifier adjustment available for quality and low cost.
The Value Modifier program will apply to all physician groups and solo practitioners beginning in 2016. Physicians need to be paying careful attention to this and other value-based payment programs as it is clear that CMS is serious about shifting payment arrangements in this direction.
A physician who was excluded from the Medicare program is not precluded from receiving payment for services rendered prior to the exclusion according to Advisory Opinion 15-02 published by the HHS Office of Inspector General (OIG) earlier this month. The Advisory Opinion was requested by a physician who was excluded for 20 years from Medicare participation as part of a a criminal plea and settlement of a civil False Claims Act settlement. The excluded physician was required as part of the settlement to sell his medical practice and as part of the proposed sale, the buyer would collect the pre-exclusion receivables and pay them to the excluded physician.
Under the federal Social Security Act, no payment may be made by Medicare, Medicaid, or any other Federal health care program for any item or service furnished by an excluded individual on or after the effective date of the exclusion. Because the receivables in questions related only to services performed prior to the exclusion, the OIG concluded that the proposed arrangement would not be prohibited.
While this Advisory Opinion required only a straightforward reading of the statutory language, physicians and other providers should nevertheless be exceedingly careful when dealing with individuals and entities who are or have in the past been excluded from Medicare or other payor programs as even straightforward financial arrangements with such parties can result in severe sanctions under the federal civil money penalties law of the Social Security Act. Practices and providers should, as part of their compliance activities, regularly check the Exclusions Database for existing employees and contractors as well as part of a pre-hire screening process.
Beginning May 13, 2015, employers must provide paid sick leave to employees who work in Philadelphia, per the City of Brotherly Love’s newly enacted Promoting Healthy Families and Workplaces Ordinance. The ordinance will undoubtedly elicit feelings of frustration rather than love because it requires employers to provide employees who work in Philadelphia with one hour of paid sick leave for every 40 hours worked. Paid sick leave is capped at a maximum of 40 hours per year. – See more details regarding the ordinance HERE.
According to various news outlets, physicians at the University of California student health centers (as many as 150 physicians in all) went on strike this week in protest of what they believe are unfair labor practices by the University. These physicians are members of the Union of American Physicians and Dentists. The protest stems from contract negotiations between the Union and the University which have been ongoing for many months. While this is only the first time in more than 25 years that physicians in the United States have gone on strike, with more and more physicians becoming employees of large health systems and insurance companies, this strike could be a sign of things to come in the not too distant future.
The Centers for Medicare and Medicaid Services (CMS) announced today that it intends to adopt regulations modifying the Medicare Electronic Health Record (EH R) Meaningful Use Program requirements as early as the Spring of 2015. According to the announcement, CMS is considering:
- Realigning hospital EHR reporting periods to the calendar year to allow eligible hospitals more time to incorporate 2014 Edition software into their workflows and to better align with other CMS quality programs.
- Modifying other aspects of the program to match long-term goals, reduce complexity, and lessen providers’ reporting burdens.
- Shortening the EHR reporting period in 2015 to 90 days to accommodate these changes.
The announcement also clarifies that the proposed new rules are in addition to and would not replace the “Stage 3″ proposed rule expected to be adopted in final in March 2015.
Given the complexities of the Program and the difficulties providers have experienced in implementing and complying with the requirements to date, physicians and providers should carefully monitor these regulatory developments and ensure that their systems are capable of meeting the modified requirements.