Pennsylvania Health Law Lawyer & Attorney : Fox Rothschild LLP : serving Philadelphia, Pittsburgh, Allentown, Erie, Upper Darby Twp

As previously reported on this blog, the Centers for Medicare and Medicaid Services (CMS) had announced in 2007 that they intended to send requests for information to all Medicare participating hospitals for details regarding the investment/ownership and compensation arrangements between those hospitals and physicians to determine whether the arrangements were in compliance with the federal Stark statute. However, according to an April 10, 2008 notice published by the Office of Management and Budget, CMS has now withdrawn the Request for Information survey with no indication as to whether a new survey will be issued in the future. Of course, physicians who have financial relationships with hospitals should not assume that this issue is dead and gone but rather should take this opportunity to review their existing hospital relationships to ensure compliance with the Stark statute and regulations.

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According to a recent alert on the Centers for Medicare and Medicaid Services (CMS) website, physicians and other providers are required to begin using a new ABN form when services are expected to not be covered by medicare.  According to the alert, beginning Monday, March 3, 2008, physicians may use the revised ABN for all situations where Medicare payment is expected to be denied. The revised ABN replaces the existing ABN-G (Form CMS-R-131G), ABN-L (Form CMS-R-131L), and NEMB (Form CMS-20007). CMS will allow a 6-month transition period from the date of implementation for use of the revised form and instructions. Accordingly providers and suppliers must begin using the revised ABN no later than September 1, 2008.

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If you have a question about Medicare coverage or how a particular service is to be billed, who do you call? Many physician practices don’t hesitate to pick up the phone and call their Medicare carrier provider representative for guidance. While this can be an effective way of getting certain kinds of questions answered, practices should be aware that their calls to the carrier are being tracked and can be used by the carrier for a variety of things, including initiating audits. A recent Medicare carrier transmittal, Instructions Related to the CMS Standardized Provider Inquiry Chart for FY 2008, updates instructions to carriers on tracking provider inquiries and increases the level of specificity with which those inquiries are to be tracked. To avoid landing on the carrier’s radar screen with potential compliance or billing concerns, therefore, it is generally advisable, with the assistance of legal counsel, to make Medicare inquiries only in writing and on an anonymous basis.

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Citing the need for additional clarification of what constitutes the "office of the billing physician" under the final anti-markup regulations issued as part of the 2008 Physician Fee Schedule, the Centers for Medicare and Medicaid Services (CMS) issued another regulation today postponing the effective date of the anti-markup regulations until January 1, 2009.  Apparently CMS received much feedback from physician groups questioning applicability of the rule to arrangements which otherwise comply with the federal Stark statute. 

Pod Lab Owners Beware: The provisions of the anti-markup regulations applicable to anatomic pathology services (think "pod labs") and those relating to purchased technical component services (which are nothing new) will still take effect as of January 1, 2008. 

Today's rule postponing the effective date can be found here:  http://a257.g.akamaitech.net/7/257/2422/01jan20081800/edocket.access.gpo.gov/2008/07-6280.htm

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The Centers for Medicare and Medicaid Services (CMS) issued a final rule on November 26, 2006 enacting Section 911 of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003. Section 911 of the MMA required the (CMS) to replace the current fiscal intermediary and carrier contracts for the administration of Medicare benefits with new contracts with Medicare Administrative Contractors (MACs) who will administer both Part A and Part B. The duties of the selected MACs will include not only claims processing but also customer service, provider education, financial management, payment safeguards, and information systems security.

Per the final rule, the country will be divided into fifteen “A/B Jurisdictions” and each A/B Jurisdiction will be assigned to one MAC, who will administer both Part A and Part B claims. Pennsylvania, New Jersey, Delaware, Maryland, and the District of Columbia have been assigned to A/B Jurisdiction 12. CMS recently awarded the MAC contract for A/B Jurisdiction 12 to Highmark Medicare Services. Implementation plans for Highmark began in November of 2007 and are expected to be completed by September 2008.  For more infomration on these major changes, contact Anne Jorgensen.

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The much awaited 2008 Medicare Physician Fee Schedule has finally been formally published in the Federal Register (click here to read it).  The proposed Fee Schedule published in June of 2007, included a number of proposed changes to the Stark regulations as well as certain regulatory changes to the diagnostic testing rules and IDTF conditions of participation.  As is usually the case with CMS regulations, the final Fee Schedule includes some good news and some bad news.

With respect to the proposed revisions to the Stark regulations, the good news is that CMS elected not to finalize the proposed regulations in the Fee Schedule. The bad news is that CMS intends to issue additional Stark regulations pursuant to a separate rulemaking. So, be on the lookout more Stark regs (perhaps we should call them Phase IV).  Among other things, however, the final Fee Schedule:

• Imposes an anti-markup restriction on the technical components (TCs) and professional components (PCs) of diagnostic tests (other than clinical lab tests) that are ordered by the billing supplier, if the TC or PC is purchased by the billing supplier, or the TC or PC is performed outside of the office of the billing supplier;
• Imposes additional requirements on independent diagnostic testing facilities; and
• Requires that persons furnishing physical and occupational therapy services to people with Medicare meet licensing, registration, or certification requirements in the state in which they practice, and that they complete an approved educational program for the discipline in which they practice.

The implications of these changes, particularly the anti-markup provisions, are expected to be far reaching.  Check back in the coming days for more discussion of how these changes are likely affect your practice.

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In a recent Stark law Advisory Opinion (CMS-AO-2007-01), the Centers for Medicare and Medicaid Services (CMS) found that a hospital could not change the terms of an existing physician recruitment assistance agreement where that change would effectively result in additional compensation to the recruited physician.  Specifically, the original recruitment assistance agreement between the hospital and the physician included an excess receipts provision which obligated the physician to remit to the hospital any collections in excess of the physicians' expenses and guaranteed compensation.   

The hospital sought CMS' opinion on whether (1) an excess receipts provision was required in recruitment assistance agreements by the Stark regulations, and (2) whether the hospital could delete the provision from the existing agreement.  CMS declined to opine on the first issue (although they did note that the recruitment assistance exception does not require such a provision) but found with respect to the second issue that deleting the excess receipts provision would have the effect of providing more compensation to the recruited physician than he would originally have been entitled to.  On this, CMS stated the following:  "Because the Physician has already relocated his medical practice, the additional compensation is not for the purpose of inducing relocation and may directly or indirectly reflect the volume or value of the recruited physician’s actual or potential referrals."

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Much has been in the news lately about the Children's Health and Medicare Protection (CHAMP) Act of 2007 recently introduced by the House democrats.   The Bill's proponents claim that if enacted it will provide insurance coverage for millions of children and improve and strengthen Medicare for America's seniors and people with disabilities.  What Physicians -- particularly surgeons who may be thinking of developing a specialty hospital -- may not know is that  the Bill also contains language that would essentially eliminate the ability of physicians to invest in hospitals (specialty or otherwise) and would impose new requirements on existing physician-owned hospitals.  This language, found at Section 651 of the Bill, eliminates the whole hospital exception to the Stark law so that physicians could not refer to hospitals in which they have an ownership interest.  Although existing arrangements would be grandfathered, the grandfathered hospitals will have only 18 months to meet a number of new requirements related to growth, disclosure of ownership, limiting physician ownership to an aggregate of no more than 40% of the facility and no more than 2% individually, and other patient disclosure requirements.

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According to a recent article in the Florida Sentinal, the Centers for Medicare and Medicaid Services has taken the unprecedented step of terminating the Medicare HMO plans run by America's Health Choice in Florida due to quality of care issues.  According to the article, termination of the plan was the result of patient complaints about delays in and denials of authorizations of care.  One would expect other Medicare contractors (HMOs and even carriers) to pay close attention to the Florida developments, and physicians and patients who have historically felt powerless when it comes to dealing with payor incompetency, may get some new leverage out of all of this.

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In accordance with the Deficit Reduction Act, the Department of Health and Human Services (“HHS”) is undertaking an initiative to require all hospitals participating in a Medicare program to provide information to HHS on a periodic basis concerning their investment and compensation relationships with physicians. As the initial step in this process, HHS will send a mandatory disclosure report form to 500 hospitals in September of this year, on which those hospitals will be required to disclose their investment and compensation arrangements with physicians. HHS will use the information gathered to analyze the relationships for compliance with applicable federal law, including the federal Stark statute. 

The HHS notice can be found by clicking here. The mandatory information request is authorized by federal regulations found at 42 CFR 411.361.

In addition to the obligation to return any amounts improperly collected from the Medicare program, penalties for violating the Stark statute include a $15,000 fine for each impermissible referral and for each claim submitted pursuant to an impermissible referral, as well as potential liability under the False Claims Act.

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The Centers for Medicare and Medicaid Services (CMS) announced on May 30, 2007 that it would make available online certain health care provider data contained in the National Plan and Provider Enumeration System (NPPES). This data will be available through an internet-based NPI registry in two formats – in an initial downloadable file, with monthly update files that will also be downloadable from the internet, and in a query-only database that will allow users to query by NPI number or by provider name. CMS has delayed the launch of the NPI registry until August 1, 2007 in order to allow providers to review their disclosable NPPES data and make any changes or deletions they feel are appropriate in order to protect any sensitive information provided by the providers when they initially applied for their NPI numbers. Such data includes information provided by providers in the optional data fields in the NPI application, such as other first name, other last name, address, phone and fax numbers, among others.

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The Medicare incident-to rules permit a physician to bill for the services of auxiliary personnel as if the physician performed those services himself.  You may already know that the incident-to rules require a physician to be present in the office suite and immediately available to assist while auxiliary personnel are performing incident-to services in the office.  But, did you know that you could be supervising incident-to services without even knowing it? 

In a recent federal District Court whistleblower case out of Hawaii, a court rejected a whistleblower physician's claim that he could not have been the supervising physician for incident-to services since he was not made aware by his group practice that the services would be billed to Medicare under his provider number.   Under the incident -to rules, any physician in a "physician directed clinic" may supervise incident-to services and the court agreed with the defense that a physician in a "physician directed clinic" need not have specific knowledge that he will be the supervising physician for billing purposes.  The court's opinion can be found here.

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The Centers for Medicare and Medicaid Services (CMS) announced today in the federal register that it will delay publication of the much anticipated Phase III final Stark self-referral regulations (which were due out by today) until March 23, 2008. According to CMS, the delay is necessary in order to allow time to review and consider the extensive public comments on the Interim Final regulations (Phase II) of the regulations which were published in 2004.  Until publication of Phase II, the Phase II rules will remain in place.  

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On February 19, 2007 (but effective retroactively to January 26, 2007), the Centers for Medicare and Medicaid Services (CMS) rescinded the controversial IDTF transmittal referrenced in the February 18, 2007 entry on this Blog.  A copy of the notice can be found here: Transmittal 187.  Those guidelines would have imposed major new conditions on independent diagnostic testing facilities (IDTFs), and would have invalidated many leasing arrangements. No word yet as to whether CMS is planning to re-publish the guidelines any time soon.  Stay tuned!

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Think hanging on to insurance overpayments is no big deal?  Think again.  According to a press release by the U.S. Attorney for the Eastern District of Tennessee, one cardiology practice that neglected to refund overpayments to federal and private insurers and patients has learned a valuable ... and expensive lesson: if you have money you're not entitled to, give it back!  East Tennessee Heart Consultants has reportedly entered into a settlement with the US Attorney for $2.9 Million in connection with the alleged failure to refund overpayments.  For tips on investigating and refunding overpayments, click here.

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According to an audit report published by the Office of Inspector, doctors are not reporting the correct "Place of Service" codes when submitting claims.  Medicare payments for the same services may vary depending on the location where the services were rendered.  This is because Medicare has determined, among other things, that the cost to produce a service may be more or less in certain settings.  In addition, payment for a professional service which is rendered in a facility (where a facility fee applies) will typically be lower than if the same services is rendered in the office setting, since the facility expense in the office setting (known as the practice expense) is rolled into the professional fee and not paid separately.  Failing to correctly code the POS can result in a physician receiving an overpayment and could even result in false claims liability.

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Both the House and the Senate have now passed the Tax Relief and Health Care Act of 2006 which, among other things, would eliminate the 5% cut in Medicare physician reimbursement that was to take effect in January 2006.  The Bill is on its way to the President for signature. The text of the Bill can be viewed by clicking here.

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In November 2006 the Centers for Medicare & Medicaid Services (CMS) issued Advisory Opinion 2006-01 dealing with the Stark exception for physician recruitment arrangements.  Specifically, the Opinion addressed a proposed arrangement whereby a hospital and a medical practice would share the expense of recruiting a new physician into the hospital's service area and the hospital would provide certain forgivable loans to the physician. 

Although the recruited physician would either would move his or her practice at least 25 miles or would derive at least 75% of revenues from professional services furnished to patients not seen or treated by the Physician previously, as required by the recruitment exception, 10 to 20% of the recruited physician's time would be spent providing medical services at a practice location outside of the hospital’s geographic service area.  The parties seeking the advisory opinion sought clarification of whether a physician would be deemed to have relocated his practice to the a hospital's service area if the physician spends a percentage of his time practicing medicine outside of the hospital's service area.

Based on the fact that the recruitment exception includes no explicit requirement that the recruited physician spend 100% of his medical practice time in the geographic area served by the recruiting hospital, CMS concluded that the proposed arrangement would meet the recruitment exception.  However, CMS notes that it might reach a different conclusion if the time spent by the recruited
physician outside of the geographic service area was more substantial than under the proposed arrangement.

AO-206-01 is noteworthy in that it signals a willingness on the part of CMS to provide more meaningful guidance through the Advisory Opinion process than it has in the past.  It also serves as a reminder to physicians and counsel that CMS will apply a technical reading when applying the Stark exceptions.

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Each fall, the Office of Inspector General (OIG) announces its enforcement priorities for the coming year in the form of a Work Plan. The 2007 Work Plan was released on September 26, 2006 and can be found here: http://oig.hhs.gov/publications/docs/workplan/2007/Work%20Plan%202007.pdf. As in past years, the Work Plan should be required reading for all compliance officers and others interested in getting an advance look at the feds' playbook.

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If the Proposed 2007 Medicare Physician Fee Schedule is adopted in final, Physicians can expect a 5.1% decrease in Medicare reimbursement which CMS claims is in response to the fact that spending on physicians’ services and other Part B services has been growing at a much faster rate than target spending.  The 2007 Fee Schedule as proposed would also continue to impose the 25% reduction in payment for the technical component of multiple imaging procedures on contiguous body parts which was first imposed in 2006.

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