Previously on the Fox Rothschild Physician Law Blog, we reported on the July 2015 amendments to the PA Child Protective Services Law. See our August 31, 2015 post here: What You Need to Know about PA’s Child Protective Services Law. In particular, we noted that the PA Medical Society interpreted the amendments to the Law as requiring all health care practitioners and practice staff having direct contact with children to obtain child abuse clearances.
After further review of the Law and consultation with the PA Department of Human Services (DHS), the PA Medical Society issued a retraction of its prior statement. On December 1, 2015, the PA Medical Society reported that it had confirmed with the DHS that physicians and other employees of a medical practice or hospital (including administrative employees) are not required to obtain child abuse clearances under the Law. See the PA Medical Society’s Clarification here: PA Medical Society Child Abuse Clearances Clarification.
Although the Law used to require physicians (and other health care practitioners) to obtain child abuse clearances, the July amendments to the Law limited the clearance requirement to certain programs, activities and services. As a result, a long-standing rule that physicians must obtain child abuse clearances appears to have been eliminated.
In our post, we also reported that the PA Department of Health (DOH), which licenses hospitals and other health care facilities, had continued to require such facilities to ensure that their health care practitioners obtained child abuse clearances, even after the amendments were passed. The DOH has not yet confirmed its position on the Law after the recent clarification by the DHS.
While the Law appears not to require health care practitioners to obtain child abuse clearances in Pennsylvania, be sure to consult your legal counsel before making an administrative decision for your practice or health care facility.
Under the federal Affordable Care Act, physicians and other providers have only 60 days to refund overpayments to the Medicare program before they face potential liability under the False Claims Act. In addition, if CMS or the Medicare Area Contractor (MAC) identifies an overpayment, physicians have a limited period of time to respond or reply to the overpayment demand before CMS begins to recoup the overpayment. A useful tool for understanding this process is this recently revised Medicare Learning on Medicare Overpayments.
This week the Office of Inspector General (OIG) published Advisory Opinion 15-16 addressing a 501(c)(3) charitable foundation (the “Requestor”) that would seek donations from third parties (including drug manufacturers) and provide financial assistance with out-of-pocket patient expenses for outpatient prescription drugs.
Under the proposed arrangement, the Requestor would maintain two disease funds, one of which would provide assistance to patients with various types of cancer, and the other of which would provide assistance to patients with chronic kidney disease or iron deficiency anemia. donors could earmark their donations for either fund but would have no control over the specific types of diseases each fund would apply to.
The OIG concluded that the proposed arrangement would not violate the federal prohibition against inducements to patients in the Civil Money Penalties law and that it would not impose sanctions under the federal anti-kickback statute. In coming to these conclusions, the OIG cited the following characteristics of the arrangement:
- No donor, affiliate of any donor, physician, or health care provider would exert direct or indirect control over Requestor or its program.
- Before applying for assistance, each patient already would have selected his or her health care providers, practitioners, or suppliers, and already would have a treatment regimen in place so that the existence of the program would influence the selection of a provider.
- donors would not receive any data that would facilitate a donor in correlating the amount or frequency of its donations with the amount or frequency of the use of its drugs or services.
- No donor or affiliate of any donor would influence directly or indirectly the identification or delineation of the diseases covered by its two disease funds.
- The determination of a patient’s qualification for assistance would be based solely on his or her financial need, without considering the identity of any of his or her health care providers, practitioners, suppliers, drugs, or insurance plans; the identity of any referring party; or the identity of any donor.
- The Requestor would assist all eligible, financially needy patients on a first-come, first-served basis to the extent funding is available.
Earlier this month, the Centers for Medicare and Medicaid Services released a new tool designed to give providers and consumers insight into Medicare drug spending. The Medicare Drug Spending Dashboard, which at present only includes 2014 data, summarizes information on 80 drugs, 40 of which are covered under Medicare Part B and 40 of which are covered under Medicare Part D. Data on the dashboard (which is sortable) includes total drug spending, number of beneficiaries utilizing each drug, drug spending per user, beneficiary costs, and the annual change in average drug unit cost.
This week, the Office of Inspector General (OIG) issued OIG Advisory Opinion No. 15-15 regarding a proposed arrangement in which a hospital would bill a radiology group for transcription of the radiology group’s reports for patients who are not hospital patients, but rather patients of a third-party clinic that provides radiology studies and refers to the radiology group. Under the proposed arrangement, the clinic would perform the technical component of radiology studies and transmit the results of the studies to the radiology group for interpretation. The hospital would transcribe the professional component interpretive reports and bill the radiology practice a fixed transcription fee on a per line basis.
The OIG noted that because the clinic is a referral source to the radiology group, if transcription costs were reimbursed as part of the Medicare payment for the technical component, these costs would be the responsibility of the clinic and the payment of the transcription fees by the radiology group could be viewed as an improper kickback to the clinic. However, according to the OIG, the Centers for Medicare and Medicaid Services takes the position that when the technical and professional components of a test are performed by different parties, the parties may determine who will pay the transcription costs. Accordingly, the OIG concluded that payment of the transcription fees by the radiology group would not be an improper inducement and, therefore, that the arrangement would not violate the anti-kickback statute.
The federal Affordable Care Act requires certain employers to provide employees with forms reporting offers of health coverage and coverage provided by the employer in 2015 by no later than February 1, 2016. Employers then had to report that information to the IRS by February 29 (by paper) and March 31 (electronically). According to a joint press release, the Treasury Department and the IRS have now extended these 2016 reporting deadlines. Specifically, the February 1 is extended by two months and the February 29 and March 31 reporting deadlines are extended by three months.
The Centers for Medicare & Medicaid Services (CMS) has stated its intention to move at least 50% of Medicare payments from fee for service to alternative payment systems based on quality and/or value by 2018. In furtherance of this goal, the Medicare Access and Children’s Health Insurance Program (CHIP) Reauthorization Act of 2015 (MACRA) passed earlier this year included a requirement that the Department of Health and Human Services publish a draft plan for developing quality measures to support these alternative payment models. On December 18, 2015, CMS published its draft Quality Measure Development Plan: Supporting the Transition to the Merit-based Incentive Payment System (MIPS) and Alternative Payment Models (APMs) to create a framework for the development of these quality measures . Although the plan is only in draft, it sheds important light on what Medicare payment systems are likely to look like commencing in 2019 and beyond. Physicians and other providers who rely upon Medicare reimbursement for their livelihood should review the draft plan and keep a close eye on future developments in this area as changes will likely be sweeping.
Commercial payors are actively looking for ways to reduce payments to out-of-network providers. One area of focus is discounts and waivers of patient copayments and deductibles by out-of-network providers. In the eyes of these payors, coinsurance/copayments are essential to incentivizing patients to use in-network providers, and discounts on (or waivers of) coinsurance/copayments by out-of-network providers often result in higher costs to payors.
To challenge these discounts, some payors have denied reimbursement on claims where the patient’s copayment/coinsurance has been waived by an out-of-network provider. Others have taken legal action, bringing cases for fraud and other claims, and arguing that they are not required to pay for items or services for which the patient is not billed. There has been a special focus by some payors on instances where the provider “overstates” its charges in order to recoup the discounts or waivers of coinsurance/copayments it offers to patients.
The legal landscape is evolving on this issue; however, there are cases on the docket that may address certain aspects of this issue sooner rather than later. Stay tuned to Fox Rothschild’s Physician Law Blog for updates.
In the interim, here are a few tips to keep in mind when considering whether to offer discounts on (or waivers of) coinsurance/copayments with respect to out-of-network plans:
- Consider offering the discounts solely in return for prompt payment by the patient. Under the federal Anti-Kickback Statute and other state anti-kickback laws, discounts could be considered remuneration to patients in exchange for purchasing of health care services. However, the U.S. Office of Inspector General (OIG) has acknowledged that discounts for prompt payments of coinsurance/copayments may be permissible if they are not intended to induce purchases of services. Note that the amount of such discounts should correspond to the savings in collection and billing costs of the Practice.
- Consider disclosing to payors your intent to offer the discounts to patients. Based on recent case law, if a payor is aware of the out-of-network provider’s intent to offer discounts to patients, the payor is less likely to have a case for fraud against the provider. See North Cypress Medical Center Operating Co. v. Cigna Healthcare, 781 F.3d 182, 205 (5th 2015) (available online here: http://www.ca5.uscourts.gov/opinions/pub/12/12-20695-CV0.pdf). However, simply notifying payors of your intent to offer a discount would not address the risk of violating the federal anti-kickback statute and other state anti-kickback laws. In addition, payors could deny your future claims based on the theory that the payor has no obligation to pay where the patient incurred no liability. Therefore, payors should be notified only after discussing all options with your legal counsel.
- Avoid overstating charges for services provided. If you offer discounts or waivers of coinsurance/copayments for services provided to patients of payors with which you are out-of-network, avoid charging the payors for the full cost of the services. In addition, ensure that the charges reported to the payor reflect both the amount of coinsurance/copayment paid by the patient and any discount or waiver which you provide to the patient. Overcharging payors may be illegal under your state’s insurance laws, and, with respect to federal government payors, may lead to liability under the federal False Claims Act.
- Beware of “most-favored nation” clauses in your in-network provider contracts. A most-favored nation clause requires a provider to charge a payor the lowest price it charges to any payor for a service. If you charge payors with which you are out-of-network less to avoid overstating charges, you could also be required by your in-network payor contracts to charge the same rates for services billed in-network.
Finally, offering discounts or waivers of coinsurance/copayments is a complicated and unresolved legal issue. You should consult a knowledgeable attorney to discuss the latest developments before taking any actions.
After many years counseling physicians regarding Medicare fraud and abuse compliance, I’m still perplexed at the general lack of understanding in the physician community regarding the need to comply with complex healthcare fraud and abuse laws and the serious risks of noncompliance. Unfortunately, it seems that many physicians still mistakenly believe that they are “below the radar” when it comes to compliance.
As evidence that even individual physicians can be held to account for improper conduct, Modern Healthcare reports this week about an Ohio cardiologist who has been sentenced to 20 years in prison for overbilling. Of course, the vast majority of physicians do not engage in intentional fraudulent or abusive billing but even relatively simple billing mistakes can result in large overpayments or expensive and disruptive investigations. For this reason, having an effective compliance program in your medical practice is critical to avoiding costly compliance mistakes.
This past month, CMS published several new Frequently Asked Questions (FAQs) on its website addressing questions about the EHR incentive programs, and in particular how to attest to certain measures for health information exchange, patient electronic access, and other objectives that require patient action. Those FAQs can be found here on the CMS website.
CMS also published the final regulations with a comment period for participation in Stage 3 of the EHR incentive program. The public may submit comments on the regulations until December 15, 2015. The regulations can be viewed here in the Federal Register.