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

Unless you've been living under a rock for the last several weeks, you are likely well aware of the budget sequester that took effect on March 1.  The sequestration requires "across the board" cuts in federal spending.  That, in and of itself, may not be such a bad news.  However, what you may not be aware of is that the sequestration will directly impact physician reimbursement.  Specifically, according to a recent article in OrthopedicsToday, the sequestration includes a 2% cut in Medicare reimbursement for physicians.  At a time when physicians are struggling to make ends meet, this is just more bad news from the feds.

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Earlier this month, the Centers for Medicare and Medicaid Services (CMS) released final regulations implementing the federal Physician Payment Sunshine Act contained in the Federal Accountable Care Act.  Among other things, the Sunshine Act requires manufacturers of drugs, biologics, devices and medical supplies to track and report payments (including anything of value) made to physicians.  As many physicians receive compensation from these types of manufacturers for consulting, teaching and the like, physicians should understand that the payments they receive are likely to become matters of public record.  Regardless of the legalities of such payments (which are, of course, subject to various kickback and fee splitting laws), when entering into these types of arrangements, physicians should consider whether disclosure of such payments could have a negative implications from a public relations standpoint.  The regulations can be seen here:  https://www.federalregister.gov/articles/2013/02/08/2013-02572/medicare-medicaid-childrens-health-insurance-programs-transparency-reports-and-reporting-of

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Yesterday the U.S. Department of Justice announced that it has entered into a $26M False Claims settlement with a dermatologist in Florida.  According to the DOJ, this is one of the largest False Claims settlements against an individual in history.  The physician was accused of allegedly accepting kickbacks from a pathology lab and billing for medically unnecessary services. 

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Today I am focusing on the self-referral ban under the federal Stark laws. In particular, a recent case – Fresenius Medical Care Holdings, Inc. v. Tucker (Dkt. No. 4:03-cv-00411-SPM-GRJ (Jan. 10, 2013, 11^th Cir.)) – discussed the interplay between those laws and a State’s attempt to impose more stringent requirements. 

The court first focused on two exceptions to the Stark laws’ ban on physician self-referrals. These exemptions concern clinical lab services for end-stage renal disease (ESRD), as well as certain lab services performed by a company with stockholder equity in excess of $75 million. 

A Florida statute subsequently narrowed these exemptions, and that statutory change impacted a Florida business’ ability to make referrals. 

The plaintiff argued that Congress had crafted the Stark laws’ exemptions in order to benefit Medicare and Medicaid recipients and, as such, intended to provided explicit benefits. That argument was rejected. 

The circuit court found that federal law permitted State laws to be more stringent, and that this was such a situation. Moreover, the court was not convinced that the plaintiff’s business was stifled by the State rules and, instead, found that the impact to the business was marginal. 

It remains to be seen whether or not this ruling will encourage States to enact more stringent restrictions and make it even more difficult for businesses to comply with a non-uniform set of rules.

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Last week the U.S. Department of Health and Human Services (HHS) released final regulations modifying existing HIPAA enforcement, privacy and security regulations. Although a number of the changes merely serve as clarification of existing regulations, the modifications impose a number of new requirements on covered entities and business associates.

Some of the important issues addressed in the new rules include the following:

• Clarification of the definition of a privacy breach;
• Adoption of risk assessment factors to be taken into consideration in conducting a breach analysis;
• Modifications to the limitations on the use and disclosure of protected health information for marketing and fundraising purposes;
• Modifications regarding business associates including changes to the definition of a business associates and when business associates may held directly liable for violations;
• Modifications to the required terms in business associate agreements; and
• Modifications that covered entities are required to make to their Notices of Privacy Practices.

The new regulations take effect on March 26, 2013 and covered entities and business associates have until September 23, 2013 to comply. The regs were published in the Federal Register on January , 2013 and can be viewed here Federal Register.

Check back for more detail on the required business associates and NPP changes.
 

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Now that the new year is upon us, today’s post will look at the Department of Health and Human Services’ Office of Inspector General (OIG), in particular, OIG’s priorities for 2013.   According to OIG’s Fiscal Year 2013 Work Plan, it will be focusing upon a number of topics of interest – including some items not addressed last year.

OIG’s planned reviews of Medicare Part A and Part B will include:

● Billing patterns for nursing home stays.

● Accreditation of medical equipment suppliers, with a particular focus on quality standards.

● Claims submitted by medical equipment suppliers for lower limb prosthetics, power mobility devices and vacuum erection systems.

● Replacement of medical equipment, especially the frequency and necessity of that replacement.

● Independent physical therapists’ claims and whether the claims are reasonable, medically necessary and properly documented.

● Billing for electrodiagnostic testing.

● Ensuring that payments are not made for alien beneficiaries who were unlawfully present in the United States.

● Reviewing payments for Part A and Part B services to avoid claims starting after a beneficiary has died. 

 

Special attention should be paid to these areas in the coming year given OIG's additional scrutiny.

 

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It appears to be business as usual on Capitol Hill this New Year's Eve.  Once again, Congress has failed to fix the sustainable growth rate formula in the Medicare physician fee schedule. Unless at least a temporary "patch" is put in place to keep Medicare physician payment rates steady, physicians will experience a 27% cut starting January 1, 2013. 

Year after year, Congress has elected to put a one-year patch in place to forestall these drastics cuts and very often negotiations over even a temporary fix go to the eleventh hour.  While another temporary patch has been part of the ongoing "fiscal cliff" negotiations in Congress, no agreement has been reached yet on the cliff, so it appears that a "doc fix" may have fallen it by the wayside.  However, according to rollcall.com, both Senate Majority Whip Richard Durbin and Senate Finance Chairman Max Baucus still believe a doc fix will be in any agreement ultimately reached on the fiscal cliff. Keep your fingers crossed for a Happy New Year.

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According to a recent study published in the Journal of the Association of American Medical Colleges, a primary care physician who graduates with education debt of $160,000 should be able to raise a family, live in an expensive urban area, and repay their debt in 10 years without incurring additional debt, as long as their household income and spending are consistent with median statistics. However, the ability to meet education debt repayment obligations as a primary care physician becomes significantly more difficult when the education debt is $200,000 or more. According to the study, of 2011 medical school graduates, 59% had education debt of $150,000 or more at graduation, 33% had more than $200,000, 15% had more than $250,000, and 5% had more than $300,000.

By national standards, physicians – even primary care physicians -- have a pretty good earning capability. However, the financial, emotional and physician investment required to earn a medical degree and complete training is daunting – particularly when coupled with the fact that most physicians cannot begin saving for retirement in a meaningful way until their early to mid-thirties. With the emphasis placed on primary care under the federal Affordable Care Act, what will the federal government need to do to entice the best and the brightest to go into primary care? 
 

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It's no secret that Medicare pays significantly more for certain services when they are performed in a hospital outpatient department than when they are performed in a physician office.  In fact, this is one of the reasons privately practicing physicians have been folding up shop in favor of hospital employment.  Hospitals can make more from these services than physicians and, therefore, can generally pay physicians more than they could earn in private practice. 

The Medicare Payment Advisory Commission (MedPAC) has taken notice of the discrepancy and recopmmended last month that the Centers for Medicare and Medicaid (CMS) consider adopting a policy of site neutrality when setting payment for outpatient services.  This means the payment would be the same regardless of where it is performed.  Presumably, however, the payment rates would gravtitate to the lower of the levels rather than the higher ones.

Not surprisingly, the American Hospital Association is none too happy about the proposal (see
MedPAC considers equal outpatient pay to hospitals, doc offices on Fiercehealthcare.com).  Although there is no telling whether CMS will adopt the proposal, physicians considering selling or joint venturing with a hospital to take advantage of the outpatient payment differential should consider the potential implications such a change would have on the future viability of these arrangements. 

 

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The 7^th Circuit Court of Appeals recently issued a decision of interest to physicians and teaching hospitals. It concerns the method of rotating teaching physicians between multiple surgeries and billing Medicare for those services.  

The case involves so-called "qui tam" claims (essentially, a whistleblower case) against a teaching hospital, by which a successful claimant gets to keep a portion of the penalties recovered.  Basically, the Medicare program pays teaching hospitals for work by residents that is supervised by teaching physicians.  Here, however, a hospital was alleged to have made its teaching physicians simultaneously supervise multiple surgeries -- and then submit fee-for-service bills to the Medicare program for certain unsupervised work.  

 

After addressing legal issues concerning claimants' right to sue when the facts were generally in the public domain by way of government reports (those reports were not specific to this hospital), the suit was allowed to continue for now.  

Note to physicians: The Court emphasized that a teaching hospital does nothing wrong if the teaching physicians are "immediately available" during all parts of the surgeries even if making a circuit between multiple operating theaters.  The breadth of that holding, and whether it would apply to other circumstances, is not clear.  Nevertheless, hospitals who bill Medicare for activities supervised by teaching physicians, and the physicians themselves, must pay special attention to these activities to stay within the law.

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Health care fraud and abuse enforcement activity is at an all-time high yet many physicians and other providers lack a basic understanding of the key healthcare fraud and abuse statutes that apply to them.  Although each state may have its own fraud and abuse laws, any healthcare provider that receives federal funds should be familiar with three significant federal fraud and abuse statutes: the anti-antikickback statute, the federal false claims act and the physician self-referral law (also known as the Stark law). 

Each of the statutes imposes a different set of prohibitions on healthcare providers and each carries separate but significant penalties for violation. For an introductory overview to each of these statutes, consider listening to the brief podcasts produced by physicianspractice.com at the following links:

http://www.physicianspractice.com/podcasts/content/article/1462168/2048688

http://www.physicianspractice.com/podcasts/content/article/1462168/2048678

http://www.physicianspractice.com/podcasts/content/article/1462168/2048188

 

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Physicians who reassign their right to bill the Medicare program can still be liable for false claims submitted by the entities who obtained that reassignment, as discussed in a recent "Alert" issued by the Office of Inspector General (OIG). [PDF].

OIG also referenced settlements it reached with eight physicians who had reassigned their payments to physical medicine companies in exchange for Medical Directorship positions -- when those companies subsequently billed Medicare for services that the physicians had not actually performed.

This OIG Alert highlights the ability of physicians to monitor all services billed using their reassigned provider numbers, and strongly urges physicians to do so. If not, physicians face liability for false claims asserted under their provider numbers.

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I have been speaking with physicians for years about the importance of developing effective fraud and abuse compliance programs in their practices and I often still get the same response:  The government is only interested in the big fish like pharmaceutical manufacturers and hospitals -physicians are under the radar. 

Well, contrary to popular belief, it appears that there are some pretty big fish in the physician community when it comes to fraud enforcement.  The Department of Justice announced this week the largest Medicare fraud bust by dollar amount of a single physician ever. Dr. Jacques Roy of Texas was accused on Tuesday of a fraud scheme which resulted in improper payments from the Medicare and Medicaid programs totaling in excess of $375 million and spanning more than half a decade.

According to the DOJ, Dr. Roy allegedly certified or directed the certification of more than 11,000 individual patients from more than 500 home health agencies over the past five years. Between 2006 and 2011, Dr. Roy's medical-practice allegedly certified more Medicare beneficiary for home health services and any other practice in the country. 

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In June of 2011, I reported on this blog about a software program being launched by the federal Department of Health and Human Services to use a technology called predictive modeling to identify fraudulent and abusive billing practices on a prepayment basis.  The program, known as the Fraud Prevention System, was funded through the The Patient Protection and Affordable Care Act of 2010 and carried an initial price tag of $77 million.  According to the Associated Press, initial results are back on use of the Fraud Prevention System and they are pretty disappointing.  Specifically, according to a recent article published by the AP, the program identified only a single case of fraud which resulted in him him him him him him him Medicare savings totaling $7,591. 

Medicare officials say it's too early to judge the system's effectiveness and, on its blog, the White House stated on Friday that "predictive modeling has identified 2,500 leads for further investigation, 600 preliminary law enforcement cases under review and resulted in 400 direct interviews with providers who would not have otherwise been contacted."   Clearly there are some bugs in the system to be worked out but it appears that HHS is not yet ready to pull the plug on the program.

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In a last ditch effort to salvage their Holiday vacation plans, the U.  S.  House of Representatives has approved legislation which will delay the 27% Sustainable Growth Rate (SGR) cut to the Medicare Physician Fee Schedule.  The good news of course is that CMS will not need to put a hold on physician payments starting January 1 as they did last year.  The bad news is that a two-month fix can hardly be considered a fix at all and any kind of permanent fix for the SGR does not even appear on Congress' radar screen.  Hopefully Santa delivers some bipartisanship this weekend because it will be sorely needed in February.

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By David Restaino, Esquire

Federal prosecutors continue to focus their efforts on preventing health care fraud, as evidenced by a recent case arising in Texas. Earlier this year, a Houston doctor (Dr. Christina Clardy) was convicted of three counts of mail fraud, 14 counts of health care fraud and one count of conspiracy to commit health care fraud – all relating to over $45 million in false billings to Medicare and Texas’ Medicaid programs. In particular, the scheme involved a nursing service having billed over $25 million in physical therapy services under Dr. Clardy’s physician provider numbers.

The documents produced at trial included a letter from the doctor showing her knowledge of the fraudulent activities, specifically, requiring her employer’s owner to immediately cease all billing under her number or she would notify the authorities – which she never did even though the billings continued. The evidence against Dr. Clardy was compounded by her receipt of large cash payments from the owner soon after her letter was sent.

The Court recently announced its sentence against Dr. Clardy. The sentence serves as a clear warning to physicians who are tempted by the illegal profits to be made from defrauding Medicare and Medicaid: Dr. Clardy will be spending 135 months in federal prison and must personally pay over $15 million in restitution. This sentence is in addition to the separate sentences handed out against two other convicted defendants involved in the scheme; a fourth person will be sentenced this month.
 

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Physicians are feeling the economic burn of the down economy perhaps more than the average American. Not surprisingly, creative physician joint ventures are proliferating in the healthcare industry as a means of stabilizing revenue streams and referral patterns. Unfortunately, many of these arrangements may raise questions under applicable fraud and abuse laws. One such proposed arrangement was the subject of the most recent (and negative) Advisory Opinion issued by the Office of Inspector General (OIG) of the Department of Health and Human Services.

The arrangement involved a proposed management services agreement for pathology services pursuant to which a physician-owned management company would provide pathology laboratory management services to a pathology lab. Under the management services agreement, the management company would provide all pathology services, utilities, furniture, fixtures, space and laboratory equipment. In addition, the management company would provide both marketing and billing services. For all of these services, the pathology lab would pay the management company a "usage" fee based on a percentage of the lab's revenue. Moreover, the management company would offer ownership interests to physicians in a position to refer to the pathology lab.

Noting that the arrangement could not meet any of the available safe harbors under the federal anti-kickback statute and citing the fact that the management fee would fluctuate with the volume or value of services performed by the pathology lab, the OIG found that the arrangement would pose a substantial risk of fraud and abuse and, therefore, refused to bless it.

When revenue is flat and costs are increasing, it is hard to blame physicians for at least considering potentially lucrative joint venture proposals. Of course, many such arrangements may be perfectly legal and may even be eligible for safe harbor protection under the various healthcare laws. That being said, physicians must always be mindful that penalties for violating federal and state laws can be catastrophic. For example, violation of the federal anti-kickback statute is a felony a felony, punishable by a fine of up to $25,000, up to five years in jail, or both as well as potential false claims liability. Therefore, when it comes to joint venture arrangements, the best course is to proceed with caution.
 

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This month, the Centers for Medicare and Medicaid Services (CMS) published a final rule for 2011 Electronic Prescribing Incentive Program.  Importantly, for physicians who are in the process of becoming compliant but not quite there, the new rule pushed the deadline for seeking a hardship waiver from the applicable penalty to November 1, 2011.

Unless a hardship waiver is applied for and granted by CMS, Physicians who fail to meet the minimum e-prescribing thresholds under the program are subject to a one-percent (1%) Medicare payment penalty on payments in 2012 based on their e-prescribing activity in the first six months of 2011.  Penalties then increase by .5% in 2013 and again in 2014. 

There are a number of types of hardship exemptions that can be requested including limited prescribing activity and insufficient opportunities to report the electronic prescribing measure -- but to qualify for an exemption, requests must be submitted by November 1, 2011.  More information on the program can be found at the following link:  http://www.cms.gov/ERxIncentive/20_Payment_Adjustment_Information.asp

 

 

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One of the major trends in health care today is to allow greater patient access to health information.  In keeping with that, the Department of Health and Human Services has proposed amendments to the CLIA regulations which would require labs covered by the health Insurance Portability and Accountability Act (HIPAA) to provide test results directly to patients. According to HHS Secretary Kathleen Sebelius, the amendments are designed to cut down on the administrative delays currently experienced by many patients in getting their results from their doctors.  I wonder however whether patients will be able to effectively interpret their own lab results or, perhaps more importantly, whether they might be inclined skip a critical follow up visit because they think everything looks fine.  For more information, take a look at the following article from Reuters.

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For the last couple of years I have been telling my physician and provider clients that they should expect to see a dramatic rise in healthcare health fraud investigations and prosecutions. According to a recent article published by USA Today citing statistics released by the Transactional Records Access Clearing House, my prediction (albeit a fairly easy one) is proving to be true. According to the USA Today article, federal healthcare prosecutions for 2011 are on track to increase 85% over 2010, and fraud prosecutions have gone up 71% from five years ago. In addition, according to Justice Department statistics, there have already been more Medicare fraud trial convictions in the first eight months of 2011 than there were in 2010.

The spike in fraud investigations and prosecutions should come as no surprise given that the Obama administration has placed heavy emphasis on fraud, waste and abuse recoupment as a means of funding new healthcare reform legislation. On top of this, healthcare enforcement authorities are using new and more advanced means (e.g., enhanced technology and cooperative task force operations) to identify fraud and abuse. And, frankly, there is still plenty of fraud, waste and abuse in the system. It is often said that desperate times lead to desperate measures and as the economics of healthcare delivery get tighter, I expect we will see healthcare providers more willing to enter into riskier arrangements than they might in better economic times. All of these factors of course spell a potential “perfect storm” from a healthcare compliance perspective, so physicians and providers should take careful stock of there compliance efforts, including regular documentation and billing audits and a regular review of contractual arrangements to ensure compliance with applicable federal and state fraud and abuse legislation.
 

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These are uncertain times for physicians. Under the looming threat of major Medicare reimbursement cuts, rising administrative costs and an increasingly complex regulatory environment, many of the physicians I speak to feel paralyzed in their professional lives. They are afraid to make capital investments in equipment or technology or recruit new physicians to expand their practices for fear that the government or third party payors may pull the rug out from under them. Physicians are desperate to change their situation but unable to see a clear path forward.
If you share the above sentiments, consider that one of the best ways to overcome the anxiety associated with the present uncertainties in medicine is to develop a strategic plan for your practice. Developing a strategic plan requires that you take a hard look at where your medical practice is today and that you give real thought to where you want your practice to be in the future.

At a very basic level, a strategic plan should answer the following three questions:
1. Where are you now?
2. Where do you want to be?
3. How will you get there?

The more specific you can be in answering these questions, the more successful you are likely to be in developing and implementing your strategic plan. Moreover, a strategic plan need not necessarily be set in stone. Rather, you may find it necessary to modify your plan from time to time and, in fact, you should revisit the plan on a regular basis to see how you’re doing. A medical practice strategic plan should address at least the following key issues:

1. Geographic service area;
2. Scope of clinical services;
3. Physician staffing;
4. A managed care strategy; and
5. Strategic relationships and referral sources.

There are certainly many unknowns in the practice of medicine today. One thing we know for sure however is that successful businesses evolve and you cannot get anywhere standing still. If you have never done strategic planning in your practice, consider picking a weekend in the next six months to meet with your partners for this purpose. Meet somewhere away from your practice where you can devote a significant block of uninterrupted time solely to developing a strategic plan. There are plenty of resources available online to help guide you in your efforts and, if you are still not sure how best to proceed, consider engaging a professional who regularly deals with medical practice development to help lead your strategic planning session.
 

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According to an announcement this week, the Centers for Medicare and Medicaid Services (CMS) has extended its 5-year Physician Group Practice (PGP) Payment Demonstration program by another two years.  The extension period commenced on January 1, 2011.

Under the Demonstration program, ten (10) physician group practices had the ability to earn incentive payments based on the quality of care they provided over an established minimum benchmark for each of the quality measures.  All ten groups will participate in the extension. 

The Demonstration participants were successful in the initial 5-year period at meeting most of the quality benchmarks and, according to the announcement, CMS paid $110 million in incentives to seven of the Demonstration participants and four of the groups are to receive incentive $29.4 million of total savings to Medicare of $36.2 million.

CMS has used and intends to continue to use data from the Demonstration project to further shape policy regarding shared savings and Accountable Care Organization (ACO) payment models currently under development.
 

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If you intend to take advantage of the Medicare EHR Incentive Program in the first year of participation, you will need to attest that you have met the “meaningful use” requirements for 90 consecutive days.  If your initial attestation fails, you can select a different 90-day reporting period that may partially overlap with a previously reported 90-day period. To attest for the Medicare EHR Incentive Program in subsequent years, you will need to meet meaningful use for a full year.

Importantly, meaningful use attestation must be done through CMS' web-based attestation and registration system found at the following link: https://ehrincentives.cms.gov/hitech/login.action. Physicians will qualify for a Medicare EHR incentive payment upon completing a successful online submission through the system.  More information the registration process can be found at CMS' registration page here: http://www.cms.gov/EHRIncentivePrograms/20_RegistrationandAttestation.asp

Physicians must register for Medicaid HER incentives through a similar state system. More information on the Medicaid registration process can be found here: http://www.cms.gov/apps/files/medicaid-HIT-sites/

 

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We spend a great deal of time on this blog recounting stories of physicians and other providers who have run afoul of the various federal and state abuse laws applicable to the practice of medicine.  However, in my travels in working with physicians and group practices, it is apparent that many physicians still lack a basic understanding of the complex legal and regulatory framework within which they practice every day.  Many physicians operate under the mistaken belief that their greatest area of legal exposure is professional (malpractice) liability.  But, unlike fraud and abuse exposure, most physicians carry significant insurance against catastrophic malpractice claims.  Too few physicians appreciate the fact that running afoul of Medicare billing and coding requirements or entering into an arrangement which is a violation of the federal stark or anti-kickback statutes could result in significant overpayments which must be refunded to the Medicare program or even worse, massive civil money penalties or false claims liability.
 

Continue Reading...

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Although many Medicare billing rules can present challenges for physicians, the incident-to billing rules consistently confound many physicians. The incident-to rules permit a physician to bill for the services of non-physician mid-level providers and auxiliary personnel as if the physician performed those services himself. To be covered on an incident-to basis, the services and supplies must be:

• An integral, although incidental, part of the physician’s professional service. The Centers for Medicare and Medicaid Services (CMS) has interpreted this to mean that there must have been a physician’s service rendered to which the auxiliary personnel services are incidental. However, according to CMS, this does not mean that a physician’s service must precede every single incident-to service. Rather, there must have been a physician’s service which initiates the course of treatment during which incident-to services will be rendered.

• Commonly rendered without charge or included in the physician’s bill.

• Of a type that are commonly furnished in physician offices or clinics. If auxiliary personnel perform services outside of the office setting, such as in a patient’s home or an institution (other than a hospital or skilled nursing facility), their services may be covered under the incident-to rules only if there is direct supervision by the physician. In a non-office setting, direct supervision would require that the physician be in the immediate presence of the auxiliary personnel while the services are being rendered.

• Furnished by the physician or by auxiliary personnel under the physician’s direct supervision. This means the physician must be present in the office suite where the services are being rendered, at all times while the services are being rendered, and must be able to immediately respond if needed. CMS has not provided any clear guidance on what constitutes an “office suite,” and presently this is within the discretion of each Medicare Area Contractor.

All of the incident-to rule technical requirements must be met as a condition of Medicare reimbursement. This means that if even one of the requirements is not met, the services may not be billable to Medicare and you may be receiving overpayments (which must be repaid within 60 days of discovery). Accordingly, it is advisable to adopt policies and procedures to ensure ongoing incident-to compliance.
 

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Several federal agencies have just issued much awaited proposed guidance regarding Accountable Care Organizations (ACOs) under the Medicare Shared Savings Program. The guidance includes the following:

1. The Centers for Medicare & Medicaid Services (CMS) has issued proposed regulations that would establish accountable care organizations (ACOs) under the Medicare Shared Savings Program. The CMS proposed rule is available online at http://www.cms.gov/sharedsavingsprogram

2. CMS and HHS Office of Inspector General (OIG) jointly issued a notice with comment period outlining proposals for waivers under the Stark law, the anti-kickback statute, and certain provisions of the civil monetary penalty law in connection with the Shared Savings Program. The joint notice with comment period is available online at http://www.ofr.gov/inspection.aspx?AspxAutoDetectCookieSupport=1

3. The Federal Trade Commission and the Department of Justice jointly issued a "Proposed Statement of Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program" (Antitrust Policy Statement). The Antitrust Policy Statement is available online at: http://www.ftc.gov/opp/aco/

4. The Internal Revenue Service (IRS) has issued a notice requesting comments regarding the need for guidance on participation by tax-exempt organizations in the Shared Savings Program through ACOs. The IRS notice is available online at http://www.irs.gov/newsroom/article/0,,id=222814,00.html
 

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Too many physicians still believe that federal and state fraud authorities are only interested in large health systems and pharmaceutical companies. As clear evidence to the contrary, however, the U.S. Department of Justice announced this week that Dr. Fred Dweck, a retired Miami physician, has been sentenced to 24 months in prison and 3 years of supervised release for his role in a scheme to receive kickbacks from home health agencies in exchange for referrals for unnecessary Medicare services. According to the release, during a three year period, Dr. Dweck referred more than 800 patients for unnecessary homecare and physical therapy services. In addition to his prison sentence, Dr. Dweck has been ordered to pay $22 million in restitution jointly and severally with his co-defendants and co-conspirators to the Medicare program.

While Dr. Dweck's punishment reflects the egregious nature of the scheme with which he was charged, physicians who treat Medicare patients and order/certify services covered by Medicare should take care to ensure that those services meet applicable medical necessity guidelines and further, that medical necessity is clearly documented in the record.  Billing for medically unnecessary services can result in overpayments and worse, allegations of fraudulent or abusive billing.  It's also a good idea to have your documentation, coding and billing reviewed on a periodic basis by an independent billing/coding expert (engaged by legal counsel) to ensure compliance with Medicare and commercial payor rules and standards. 

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We’ve known for a while now that the Medicare Recovery Audit Contractors ("RAC") program would eventually start impacting physicians and other Part B providers. That time has now come as medical practices and physicians are beginning to receive both audit and repayment letters from RACs. So, if you’re still not familiar with this aggressive audit and recovery program, you are well-advised to begin preparing for the possibility that some of your claims may be reviewed by a RAC.

Continue Reading...

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The United States Attorney’s Office for the District of Maryland has announced that St. Joseph Medical Center in Towson Maryland will pay $22 million to settle allegations that it violated the federal False Claims Act, the federal anti-kickback statute and Stark by entering into several improper professional services contracts with a cardiology group, MidAtlantic Cardiovascular Associates that involved the payment of illegal remuneration.

The DOJ alleged that St. Joseph paid kickbacks to the cardiology group through sham professional services agreements between 1996 and 2006. Specifically, the parties had entered into 11 professional services agreements which involved payments above fair market value, and/or payments for services that were either not rendered or not commercially reasonable.

Importantly, the settlement was the result of a qui tam whistleblower lawsuit brought by a group of cardiac surgeons who alleged that the service agreements were in violation of federal law. 

This settlement underscores the importance of ensuring that all financial relationships between physicians and hospitals to which they refer, including medical directorships, call coverage arrangements, rental arrangements and the like are for legitimate and necessary items/services and that payments are consistent with fair market value. 

 

 

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The final Medicare Physician Fee Schedule for 2011 was placed on display at the Federal Register on November 2 , 2010.  Unwelcome to many physicians is the news that under the sustainable growth rate (SGR) formula, CMS is projecting a -24.9% decrease in physician fees unless Congress overrides the projected cuts as it has done each year since 2003.  With a host of hot issues (think Bush era tax cuts) already on the table for the lame duck Congress, it's anyone's guess as to whether or when Congress will revisit the SGR cuts for 2011.

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Two recent Advisory Opinions by the Office of Inspector General (OIG) shed some much needed light of the OIG's view of marketing by health care providers.  Last week the OIG published Advisory Opinions 10-23 and 10-24, both concerning a proposed arrangement between a sleep testing provider and a hospital.  The facts in both Opinions were very similar: the hospital contracted with a sleep testing company to provide certain sleep testing equipment and services.  Among other things, the sleep testing company would provide marketing services for the hospital's sleep center.  

In Opinion 10-23 the OIG concluded that the arrangement could potentially generate prohibited remuneration under the anti-kickback statute and that the OIG could potentially impose administrative sanctions if the parties proceeded with the arrangement.  In opinion 10-24, however, the OIG concluded that while the proposed arrangement could potentially generate prohibited remuneration under the anti-kickback statute if the requisite intent to induce or reward referrals of Federal health care program business were present, the OIG would not impose sanctions on the parties because the arrangement included sufficient safeguards against the risks if improper inducement.

In both proposed arrangements, the parties stipulated that the compensation to be paid to the sleep testing company was consistent with fair market value.  However, in Opinion 10-23, the compensation was on a per test basis (sleep company was paid each time a patient was tested) and in Opinion 10-24, the sleep company was paid a fixed amount regardless of the number of patients seen or tested.  Although Advisory Opinions may generally only be relied upon by the parties requesting them, these two contrasting opinions suggest that marketing as an element of an independent service agreement is not fatal to the arrangement under the kickback statute as long as the compensation is fixed in advance, does not fluctuate with the volume or value of services and is consistent with fair market value.

 

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Hot on the heels of the online article in the Wall Street Journal focusing on questionable physician billing practices and Medicare's Carrier Standard Analytic File database, another recent online Wall Street Journal article is now questioning the propriety of physician involvement in setting the relative values used to establish Medicare physician fees.  Citing the potential conflict of interest in having physicians decide how much their own services are worth, the article takes aim at the American Medical Association's Relative Value Scale Update Committee or the RUC as it is commonly known -- which the article refers to as a "secretive committee".  The article suggests that the RUC's disproportionate specialty representation and reliance on survey data which may in some cases be insufficient results in "out of whack" physician fees.   

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The recently enacted health reform law has ignited a great deal of public interest in rising health care costs and the underlying reasons for them.  Not surprisingly, fraud, waste and abuse in the system is a recurring theme.   Although of late the third party insurance companies and "corporate fatcats" have drawn most of the criticism in these cost discussions, at least one recent Wall Street Journal article suggests that abusive billing practices and fraud on the part of the Nation's physicians may be largely to blame.  The article states that this information can be gleaned from a Medicare database (The Carrier Standard Analytic File) which shows how much physicians are paid each year by Medicare.  The only problem according to the article is that the identies of the physicians in the database are protected from disclosure.  This right to privacy has been challenged and upheld in federal court, so there is little reason to believe that the physician information will be made public.  Nevertheless, physicians will no doubt be very disturbed by the unflattering light in which this article casts them and should be wary of the direction in which the health care cost discussion appears, at least according to the WSJ article, to be going.

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Hospital-owned practices may take an unexpected hit in revenue under a new Medicare rule that bundles certain physician service fees into hospital payments. The so-called “payment window” rule (sometimes referred to as 3-day/1-day window rule) requires a hospital (or an entity that is wholly owned or wholly operated by the hospital) to include on the claim for a beneficiary's inpatient stay, the diagnoses, procedures, and charges for all outpatient diagnostic services and admission-related outpatient nondiagnostic services that are furnished to the beneficiary during the three days before admission to a hospital, or one day preceding admission to a “non-subsection (d) hospital,” (a hospital not paid under the IPPS: psychiatric hospitals and units, inpatient rehabilitation hospitals and units, long-term care hospitals, children's hospitals, and cancer hospitals). Historically, this has only involved technical fees, not professional services.   

In a notice to Medicare providers, CMS has clarified that the payment window, as modified by the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 enacted in June, includes outpatient services that are otherwise billable under Part B, such as physician services, if they are related to the admission.  An outpatient service is related to the admission if it is clinically associated with the reason for a patient’s inpatient admission, and is no longer limited to diagnostic services. The rule took effect on June 25, 2010.

 

A hospital is considered the sole (whole) operator of an entity if the hospital has exclusive responsibility for conducting or overseeing the entity’s routine operations, regardless of whether the hospital also has policymaking authority over the entity.   This means practices managed by a hospital may be affected even if they are not technically “owned” by the hospital.

If you believe your services are unrelated to the admission, the hospital can submit an attestation. The general rule is that services rendered during the window period preceding the date of a beneficiary’s inpatient admission are presumed to be related to the admission, and thus, must be billed with the inpatient stay, unless the hospital attests to specific nondiagnostic services as being unrelated to the hospital claim. Such services are covered by Part B, and may be separately billed to Part B.

 

IMPORTANT: If your practice is hospital-owned or managed and your compensation formula is based on collections, you could lose credit for services that would previously have been separately billable under Part B, such as professional interpretation of diagnostic testing preceding hospitalization.  Keep this in mind when renegotiating your contract, and check to see if your contract includes a reopener triggered by changes in reimbursement methods. 

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Physicians and other Part B providers should be aware that the Office of Inspector General of the Department of Health and Human Services has released its Work Plan for Fiscal year 2011. The Work Plan describes those area the OIG intends to review in the coming fiscal year and is a key tool for determining what “risk areas” to focus on from a compliance standpoint. A partial list of the Part B review areas in the 2011 Work Plan is as follows:

Place‐of‐Service Errors. Will review physician coding of place of service on Medicare Part B claims for services performed in ambulatory surgical centers (ASC) and hospital outpatient departments.

Coding of Evaluation and Management Services. Will review evaluation and management (E&M) claims to identify trends in the coding of E&M services, the extent of potentially inappropriate payments for E&M services and the consistency of E&M medical review determinations, and industry practices related to the number of E&M services provided by physicians and reimbursed as part of the global surgery fee.

Medicare Payments for Part B Imaging Services. Will review Medicare payments for Part B imaging services focusing on the practice expense components to determine whether Medicare payments reflect the expenses incurred and whether the utilization rates reflect industry practices.

Billing of Portable X‐Ray Suppliers. Will review providers of portable x‐ray services with unusual claims patterns and identify Medicare claims that are questionable.

Questionable Billing for Medicare Outpatient Therapy Services. Will review paid claims data for Medicare outpatient therapy services from 2009 and identify questionable billing patterns.

Appropriateness of Medicare Payments for Polysomnography. Will review the appropriateness of Medicare payments for sleep studies.

Excessive Payments for Diagnostic Tests. Will review Medicare payments for high‐cost diagnostic tests to determine whether they were medically necessary.

Independent Diagnostic Testing Facilities’ Compliance With Medicare Standards. Will review selected IDTFs enrolled in Medicare to determine the extent to which they comply with selected Medicare standards.

More information on the Work Plan can be found here.
 

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One of the few true payment reform models built into the health care reform law passed earlier this year is the Accountable Care Organization (ACO). Unfortunately, absent final regulations implementing the ACO model, very little guidance exists for physicians who are interested in pursuing this model. To that end, tomorrow, October 5, 2010, the Federal Trade Commission, the Office of Inspector General, and the Centers for Medicare and Medicaid Services are sponsoring a workshop to discuss a number of the legal implications of ACOs. A copy of the meeting agenda can be found here: ACO Workshop Agenda. The agenda includes contact information for the workshop via webcast or teleconference.

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Many physicians are unaware that they are required to update their Medicare enrollment applications whenever key aspects of their practice change.  Changes in practice ownership, the addition or deletion of practitioners and the addition or deletion of office sites all require the filing of a completely new enrollment application.  CMS is in the process of sending notices to physicians requiring them to revalidate their enrollment information.  Failure to failure to update enrollment information on a timely basis (whether in response to a revalidation request or because of a practice change) can result in revocation of Medicare enrollment, during which time physicians are prohibited from billing Medicare at all.

 

When completing Medicare enrollment applications, physicians must be very careful to ensure that information is accurate and complete.  Incomplete applications can result in having the application returned for correction, which can substantially delay the process. 

 

Of much more significant concern, inaccurate information on enrollment applications can be deemed to be a misrepresentation with significant legal consequences.  In fact, in a recent case upheld by the 11^th Circuit Federal Court of Appeals, a medical clinic in Florida was required to refund in excess of $300,000.00 for services billed while the clinic was partly owned by a physician who had been excluded from the Medicare program.  Although the excluded physician never rendered any services on behalf of the entity or ordered or referred any Medicare services while an owner of it, the Court held that the clinic’s failure to disclose the excluded physician’s ownership was a misrepresentation on the enrollment application and upheld the overpayment. (see Florida Med. Ctr. of Clearwater, Inc. v. Sebelius, No. 09-13922 (11th Cir. Aug. 19, 2010).

More information regarding the Medicare enrollment and revalidation requirements can be found In the CMS Program Integrity Manual.

 

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In years past, Congress was able with little fanfare to pass legislation forestalling the physician payments cuts under the Medicare Physician Fee Schedule Sustainable Growth rate (SGR) formula.  2009 was a far different story.  In fact, the SGR and the "doc fix" was a regular news headline for much of the first half of the year as the public was fixated on health care costs.  Now, according a recently prepared letter from the Congressional Budget Office, it would appear that any long-term fix for the SGR is likely to continue to be elusive.  According to the CBO, the temporary doc fix passed by Congress for the second half of 2009, together with inflationary adjustments to the Fee schedule, will over, the next 10 years, cost an estimated $330 Billion.   In an era of fiscal-belt tightening, this is not comforting news to the physician community and likely means more fee schedule uncertainty next year. 

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In July, the Centers for Medicare and Medicaid Services (CMS) released the much-anticipated final regulations that providers are required to meet in order to receive the Medicare incentives for adoption of a certified electronic health record system. In those regulations, In the final rule, CMS set forth 15 core elements which must be met in order to qualify for “meaningful use” of the EHR system.

Notwithstanding the regulations, the requirements are complex and many physicians and other providers have a host of questions regarding both the regulations and the incentive program. To address some of these questions, CMS has issued a number of Frequently Asked Questions (FAQs) on its website. To review the new EHR FAQs, physicians can click here and type the term “EHR” into the search window.

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Unfortunately, many physicians believe their activities are “under the radar” when it comes to fraud and abuse enforcement. A recent settlement announcement by the Office of Inspector General (OIG) of the Department of Health and Human Services illustrates that this is not the case. According to the press release, the OIG has entered into a $7.3 million settlement with three physician-owned entities, United Shockwave Services, United Prostate Centers, and United Urology Centers, for allegedly soliciting and receiving payments in violation of the federal anti-kickback statute.

Among other things, the OIG alleged that certain of the physician investors in the entities had suggested to hospital administrators that if the hospitals did not enter into contractual arrangements to utilize the entities’ services, the physicians would take their cases to other hospitals. In addition to the $7.3 million settlement, the entities also agreed to a five-year corporate integrity agreement under which an independent reviewer will monitor all of the contractual arrangements between the entities and any hospital in Illinois, Iowa and Indiana.

This recent settlement underscores the need for physicians and physician organizations to get serious about their compliance efforts.  All indications are that we will be seeing more and more enforcement actions against physicians in the months to come.

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As further indication that health care fraud enforcement efforts are heating up in a big way, on Friday July 16, 2010, the Department of Justice announced the largest health care fraud crackdown in history.  According to Attorney General Eric Holder, raids were simultaneously conducted in multiple states including New York, Florida, Louisiana and Detroit.  The crackdown resulted in the indictment and/or arrest of 94 people in connection with alleged schemes to submit false claims to Medicare in excess of $250 Million.  The crackdown was lead by by the Medicare Fraud Strike Force -- the joint initiative between the Departments of Justice and Health and Human Services -- involved more than 360 law enforcement agents.  According to the DOJ comments, among those arrested were physicians, medical assistants, and health care company owners and executives.  

 

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The Centers For Medicare and Medicaid Services (CMS) has published the CY2011 Proposed Medicare Physician Fee Schedule for public inspection.  The Proposed Fee Schedule includes a number of provisions which, if adopted, would implement the recently enacted Affordable Care Act (ACA).  One of the proposed regulations would serve to clarify the requirement in ACA that physicians notify patients referred for imaging services within the physician's practice of alternate imaging providers. 

or someone in the physician’s group practice and provide the patient with a list of suppliers who furnish the service in the area in which the patient resides.

CMS has interpreted the ACA disclosure requirement to be effective only when the final rule is adopted.  If adopted in final, CMS would propose making the rule effective as of January 1, 2011.

Continue Reading...

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On June 24, by a vote of 417-1, the House of Representatives passed a bill (H.R. 3962) impelmenting a six-month deferral of the automatic 21% cuts in the Medicare physician fee schedule retroactive to June 1.  This measure has already been approved by the Senate and is expected to be signed by the President.  The bill also included clarifications of the 3-day payment window for hospital services, a CMS-RIS data match program to identify fraudulent providers, and certain pension funding relief provisions.

 

In a statement released yesterday,  the AMA called the patch "a very temporary reprieve, ... not a solution."  AMA president Cecil Wilson, M.D. noted:

 "In December, the Medicare physician payment cut will be a whopping 23 percent, increasing to nearly 30 percent in January. Congress is playing a dangerous game of Russian roulette with seniors’ health care. Sick patients can’t wait. Congress must replace the broken payment system before the damage is done and cannot be reversed."

 

It appears likely that claims for services rendered after June 1 that were processed by Medicare carriers at the lower rate will need to be resubmitted. Further clarification from CMS is anticipated.

 

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As of this past Friday, things were looking good for at least a temporary fix to the impending 21% Medicare physician rate cuts.  In an effort to forestall the cuts, the Senate passed a short term fix and sent it back to the House of Representatives for a vote.  According to a recent AP article, House Speaker Nancy Pelosi has put the breaks on once again, however, by indicating that she does not intend to call a vote on the "doc fix" bill until the Senate addresses an extension of various unemployment benefits.  

Since CMS has now begun processing physician claims at the reduced 2010 rates, physicians can expect to see a meaningful drop in Medicare reimbursement over the next few months.  Moreover, if the doc fix is passed retroactively, physicians will need to resubmit claims in order to get full reimbursement.   

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On Friday, June 18, the Senate approved a bill which, if passed by the House next week, would prevent the scheduled 21% cut in Medicare reimbursement under the Medicare Physician Fee Schedule.  The bill would provide for a 2.2% increase over 2009 rates but only until November 30, 2010. 

Unfortunately, the Senate action comes too late to stop the scheduled cuts from taking effect pending action by the House of Representatives.  The Centers for Medicare and Medicaid Services, which has held off on processing physician claims since June 1, 2010 (when the cuts technically took effect), has now instructed its contractors to start processing claims from June 1 or later at the reduced 2010 rates pending passage of the bill. 

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The Senate voted down a bill this week that would have temporarily avoided the impending 21% cuts in Medicare physician fees.  Although those cuts technically took effect on June 1, 2010, the Centers for Medicare and Medicaid put a hold on physician payments until tomorrow to give Congress time to pass the legislation.  The bill in question has been kicking around Congress since April.  In light of the current bill's defeat in the Senate, if and when the Senate approves a revised bill, it will then need to go back to the House for approval.  This added delay likely means the fee cuts will kick in, even if only temporarily, until a fix is ultimately passed.

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According to a recent article on Politico, federal lawmakers are close to passing legislation that would suspend until 2014 the 21% Medicare Physician Fee Schedule cuts that have been hanging over physicians' heads since January.  According to the article, under the bill physician payments would increase by 1.3% this year and another 1% in 2011.  In years 2012 and 2013, primary care physicians would get an additional raise equal to the gross domestic product plus 2%.  The House and Senate are expected to vote on the legislation as early as next week.
 

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The dreaded 21% Medicare Physician Fee Schedule payment cuts were, after several extensions, scheduled to take effect yesterday, April 15, 2010.  The Senate passed last minute legislation, however, delaying the effective date of those cuts until June 1, 2010, and the President quickly signed the legislation into law last night.  Unfortunately this temporary fix leaves physicians on pins and needles for another two months while they wait to see if a permanent fix is in the cards.   

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For physicians in the process of developing physician-owned hospitals, the race is on to get those facilities up and running by December, 2010. The recently enacted “Health Care and Education Affordability Reconciliation Act of 2010” amends the Stark law to once and for all prohibit physician-owned specialty hospitals unless: (1) the hospital has a Medicare provider agreement by December 31, 2010; and (2) was not converted from an ambulatory surgical center to a hospital after March 23, 2010. Hospitals grandfathered under the above provisions are prohibited from, among other things, expanding their physician ownership or the number of ORs or beds from what they were on December 31, 2010.
 

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Among its many provisions, the newly signed Patient Protection and Affordable Care Act has imposed a new requirement on physicians who rely on the Stark "In-Office Ancillary Services" exception.  Physicians who refer patients for CT, MRI or PET (or other Stark services as designated by the Secretary of HHS) that will be provided by the referring physician's practice under the Stark In-Office Ancillary Services exception must now inform the patient in writing at the time of the referral that the individual may obtain the services for which the individual is being referred from a person other than the referring physician's practice, and provide the patient with a written list of suppliers (who furnish such services in the area in which such individual resides.

The provision in the new law has an effective date of January 1, 2010, so absent clarification from Congress or HHS, the above requirement is effective immediately. 

 

 

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Under the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), all Medicare suppliers of the technical component of advanced imaging services have until by January 1, 2012 to become accredited by an accreditation organization designated by the Secretary of Health and Human Services . This includes physicians, non-physician practitioners, and physician and non-physician organizations paid for the technical component of advanced imaging services under the Medicare Physician Fee Schedule. 

Advanced diagnostic imaging procedures include diagnostic magnetic resonance imaging (MRI), computed tomography (CT), and nuclear medicine imaging such as positron emission tomography (PET).

CMS has named the American College of Radiology (ACR), the Intersocietal Accreditation Commission (IAC), and The Joint Commission (TJC) as the accrediting organizations.

 

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On Tuesday night, President Obama signed into law the “Temporary Extension Act of 2010” - a bill extending various benefits to unemployed Americans.  Physicians across the country can collectively breathe a sigh of relief as the new law includes a provision delaying implementation of the 2010 Medicare physician fee schedule which includes a 21% across the board cut in Medicare reimbursement to physicians.  

Now for the bad news:  the extension is for only 30 days (until April 1, 2010).  So, unless Congress is able to pull off a minor miracle in the next three weeks or so, physicians will once again be hyperventilating over their Medicare reimbursement.

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In an effort to give Congress a few more days to pass legislation postponing the 2010 Medicare Physician Fee Schedule payment cuts, CMS has once again instructed its contractors to hold physician claims for the first 10 days of March for claims with dates of service March 1, 2010 and later.  The payment cuts were to take effect on March 1, 2010 but if Congress can pass at least a temporary fix in the next few days, the 10 day processing delay will allow physician payments to resume at 2009 rates.  Of course, the delay also means physicians will feel a cash flow pinch sometime in the next few months as Medicare payments come in later than expected.

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Physicians, Wondering why cash is a little tighter in 2010?  In case you hadn't heard, the Centers for Medicare and Medicaid Services (CMS) instructed its contractors to put a 10 day hold on physician payments at the beginning of January. 

Here's what's going on:  On October 30, 2009, CMS released the 2010 Medicare Physician Fee Schedule which included a 21.2% across the board cut in payment rates.   As part of its Defense Appropriations bill, Congress extended the 2009 Fee Schedule rates for 60-days to allow time to consider ways in which to fix the sustainable growth rate formula in the Fee Schedule. 

In order to give Medicare contractors time to implement the 2010 payment rates by March 1, 2010, CMS put a hold on physician payments for the first 10 business days of 2010.  As a result, many practices are just now feeling the cash flow pinch.  See the CMS notice here.
 

 

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In case you missed it, the Centers for Medicare and Medicaid Services (CMS) eliminated use of the evaluation and management Consultation Codes.  Consultations are now to be billed using the standard E/M visit codes.  According to CMS Transmittal 1875:

"Effective January 1, 2010, the consultation codes are no longer recognized for Medicare Part B payment. Physicians shall code patient evaluation and management visit with E/M codes that represent where the visit occurs and that identify the complexity of the visit performed. In the inpatient hospital setting and the nursing facility setting all physicians (and qualified nonphysicians where permitted) who perform an initial evaluation and management may bill the initial hospital care codes (99221 – 99223) or nursing facility care codes (99304-99306). As a result of this change, multiple billings of initial hospital and nursing home visit codes could occur even in a single day."

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On November 24, 2009, the U.S. House of Representatives passed the Medicare Physician Payment Reform Act" (H.R. 3961) which would repeal the scheduled 21% fee reduction scheduled for January 2010.  The legislation would also permanently replace the existing Sustainable Growth Rate (SGR) formula with a new formula that, according to the House summary:

• Removes items such as drugs and laboratory services not paid directly to practitioners from spending targets;
• Allows spending on most services to grow at the rate of GDP plus 1 percentage point per year (compared to GDP without any adjustment today);
• Allows spending on primary and preventive care services to grow at GDP plus 2 percent per year; and
• Encourages coordinated, innovative care by allowing Accountable Care Organizations to be responsible for their own growth paths, irrespective of reductions or increases that apply elsewhere in the system.
   

The bill is now on the Senate calendar for consideration.

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Despite efforts by Senator Harry Reid to pass legislation which would have effectively frozen Medicare payment rates for physicians, it looks like Congress will once again look to freeze physician payment rates with a one-year patch. According to an article published by the Wall Street Journal, Senator Reid’s proposed bill would have permanently prevented Medicare payment cuts to doctors. However, the bill was estimated to cost $247 billion over ten years and Senator Reid was unable to secure the votes necessary to get the bill out of the Senate. The bad news for physicians is that there’s no permanent fix for the sustainable growth rate formula in the Medicare Physician Fee Schedule. The good news however is that Senator Reid has indicated an intention to pass a measure which would forestall the projected 21% decease in physician payments expected for 2010.

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According to the Congressional Budget Office (CBO), the Chairman’s mark for the Healthy Futures Act of 2009 proposed by Senator Max Baucus will be paid for, in part, through a reduction in Medicare payment rates.  Specifically, according to a blog post by the CBO,  the legislation would "substantially reduce the growth of Medicare’s payment rates for most services". 

The CBO also acknowledges that it's estimated cost projections is based on the proposed legislation and legislation currently in effect such as the current Sustainable Growth Rate system pursuant to which physicians are already scheduled to see a major reduction in Medicare reimbursement.  Lower reimbursement means physicians will likely need to see more patients (the bill would result in an estimated 29 million more insured patients) than they are currently seeing to generate the same revenue.  

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In case you somehow missed the news, effective October 1, 2009 (that's right, tomorrow), 'under arrangements' ventures involving Stark services are no longer permissible.  An under arrangements venture usually involves provision of a diagnostic or therapeutic service on a turn-key basis by an outside supplier (often a physician office) on behalf of a hospital.  The hospital then bills for the service to Medicare as if the service was performed by the hospital pays the under arrangements provider a fee for performing the service.  In the 2009 Inpatient Prospective Payment System Regulations, CMS revised the definition of a designate health service "entity" for purpose of the Stark law to include not only the entity that submits the claim and receives payment from the Medicare program for the service (i.e., the hospital) but also the entity that performs the service (i.e., the under arrangements physician office).   As a result of this change, physician practice will, as of tomorrow, no longer be able to provide services under arrangements to hospitals to which they refer Medicare patients.   If for some reason you have not terminated or corrected any of your under arrangements contracts, you need to act quickly to avoid on-going Stark liability.  

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It is apparent that preventive care will take on greater importance in the "reformed " health care system and while Medicare historically did not cover routine or preventive screening services, the list of preventive services now covered by Medicare has grown in recent years.  Physicians should familiarize themselves with the applicable coverage and billing rules so as not to miss an opportunity to capture revenue for these services where appropriate.  To help physicians in this regard, CMS has published a guide to preventive and screening services for physicians and other providers.  Also, for a good overview on the OIG's current thinking on offering free screening services, physicians and other providers should have a look at the recent OIG Advisory Opinion 09-11 addressing free blood pressure screenings to walk-in visitors at a hospital.

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As reported previously on this Blog, the Centers for Medicare and Medicaid Services published the proposed Medicare Physician Fee Schedule CY 2010 on July 13, 2009 in the Federal Register.  Unless Congress takes action before the end of the year, physician payment rates with be reduced by an average of 21.5%.  Some specialties will face deeper cuts.

If you haven't already done so, you may wish to submit comments to CMS on the proposed rule, but you'll need to do so soon.  The deadline for submitting comments is 5PM on August 31, 2009 - this Monday.  Comments can be submitted electronically at http://www.regulations.gov, by regular mail, by express or overnight mail or by hand or courier.  Instructions for submitting comments can be found at the beginning of the Federal register document.

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With the rollout of the Recovery Audit Contractor (RAC) audit program in full swing, physicians should be paying close attention to their medical record documentation efforts.  One of the Medicare documentation requirement that many physicians don't fully appreciate is the requirement that all medical records be signed by the performing physician.  Specifically, Medicare requires that medical records include a "legible identifier" for all services provided/ordered. According to the Medicare medical review documentation standards, the legible identifier must be in the form of a hand written or electronic signature (stamp signatures are not acceptable).  The medical review documentation standards can be found at Section 3.4.1.1 of the Medicare Program Integrity Manual.

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On July 1, 2009 CMS released a display copy of the Proposed FY 2010 Medicare Physician Fee Schedule. It is evident from a variety of the proposed policy changes that CMS intends to force primary care into a more prominent role – in some cases at the expense of specialists. In addition, imaging services in the office setting have been targeted for greater regulation and lower reimbursement

Among other things CMS is proposing to stop paying for consultation codes at a higher rate than equivalent evaluation and management (E/M) services. Practitioners would be required to use existing E/M service codes when providing these services instead. Resulting savings would be redistributed to increase payments for the existing E/M services.

CMS is proposing to increase the payment rates for the Initial Preventive Physical Exam (the “Welcome to Medicare” visit) to be more in line with payment rates for higher complexity services.

Overall, CMS believes these and other policy changes will result in an increase in payments to general practitioners, family physicians, internists, and geriatric specialists by between 6% and 8%.

 

Continue Reading...

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On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 (Recovery Act), which, among other things, created financial incentives for physicians and other providers to adopt and utilize electronic health records (EHR) and penalties for those physicians who do not.  The provisions addressing the incentives are known as the Health Information Technology for Economic and Clinical Health Act or the "HITECH Act".  Many physicians remain uncertain about the details of the incentives so CMS has now published a Fact Sheet which is intended to shed some light on the HITECH payment incentives. 

Here are some of the key points from the Fact Sheet:

• Financial incentives will begin in January 2011 for eligible professionals (EPs) who are meaningful EHR users.
• Beginning in 2015, payment adjustments will be imposed on EPs who are not meaningful EHR users by that date.
• Hospital-based physicians who substantially furnish their services in a hospital setting are not eligible for incentive payments.
• Incentive payments will equal to 75 percent of Medicare allowable charges for covered services furnished by the EP in a year, subject to a maximum payment in the first, second, third, fourth, and fifth years of $15,000; $12,000; $8,000; $4000; and $2,000, respectively.
• For early adopters whose first payment year is 2011 or 2012, the maximum payment is $18,000 in the first year.
• There will be no payments for meaningful EHR use after 2016.
• The Medicare fee schedule amount for professional services provided by an EP who was not a meaningful EHR user for the year would be reduced by 1 percent in 2015, by 2 percent in 2016, by 3 percent for 2017 and by between 3 to 5 percent in subsequent years.
• For 2018 and thereafter, if the Secretary finds that the proportion of EPs who are meaningful EHR users is less than 75 percent, then the reductions will be increased by 1 percentage point each year, but by not more than 5 percent overall.

 

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In its recent Advisory Opinion No. 09-05, the OIG reviewed a proposed arrangement whereby a hospital would compensate physicians for on-call services performed on behalf of the hospital’s uninsured patients. The OIG concluded that while the Proposed Arrangement could potentially generate prohibited remuneration under the anti-kickback statute, if the requisite intent to induce or reward referrals of Federal health care program business were present, the Office of Inspector General (“OIG”) would not impose administrative sanctions on the arrangement.

Under the proposed arrangement, the hospital would pay physicians for services provided during on-call periods to indigent patients. The proposal included four discount payment amounts/categories: (1) Emergency consultations: $100 flat fee; (2) Care of patients admitted as inpatients from the Emergency Department: $300 per admission. (3) Surgical procedure or procedures performed on a patient admitted from the Emergency Department: $350 flat fee; and (4) Endoscopy procedure or procedures performed on a patient admitted from the Emergency Department: $150 flat fee.

The OIG noted that while there is “substantial risk that improperly structured payments for on-call coverage could be used to disguise unlawful remuneration” under the anti-kickback statute, the proposed arrangement included adequate safeguards against such abuse including:

(1) The payment amounts were represented to be within the range of fair market value for services rendered;

(2) The hospital had a legitimate rationale for revising its on-call coverage policy (physicians were refusing to provide on-call services);

(3) The proposed arrangement would be offered uniformly to all physicians on staff, the method of scheduling on-call coverage would be governed by the hospital’s medical staff by-laws, would be uniform within each department or specialty, and would not be used to selectively reward the highest referrers; and

(4) The proposed arrangement would appear to create an equitable mechanism for the hospital to compensate physicians who actually provide care that the Hospital must furnish.

While the Advisory Opinion does not contain any surprises, it provides a very useful analysis at a time when on-call compensation arrangements are proliferating. Physician who have on-call compensation arrangements or who are considering entering into one are well-advised to review their arrangements in light of the OIG’s analysis.
 

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Major Medicare fraud and false claims settlements against large providers and pharmaceutical and device companies are reported in the news on a regular basis these days.  Unfortunately this trend may lead many physicians to believe that their billing and collection activities are under the radar of federal and state enforcement authorities.  According to an article in the Scranton Times-Tribune, when it comes to Medicare fraud, size doesn't matter. 

According to the article, a Scranton podiatrist was sentenced this week to two years of probation and ordered to pay $23,266 in restitution for submitting false claims to Medicare.  What is significant about this case is that the podiatrist reportedly only received between $10,000 and $30,000 in improper payments from the Medicare program.  So, if you still think your practice is too small to get noticed, think again. 

The prospect of developing a full-blown fraud and abuse compliance plan may seem overwhelming for many physicians but a compliance plan is really the only "insurance" you can put in place to help minimize legal exposure from improper billing.  Consider starting small.  An annual coding and documentation audit with the help of a health care attorney and billing consultant is hands-down one of the best things you can do from a compliance standpoint and it need not be expensive.  Most importantly, however, when if comes to compliance, doing something is far better than doing nothing.  For more information on developing a cost effective compliance plan, see the article "Compliance Planning on a Shoestring Budget"www.physiciansnews.com/law/1107rodriguez.html.

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A recent whistleblower case out of the federal 3rd Circuit in Pennsylvania highlights some of the dangers in not properly documenting financial relationships between physicians and hospitals. Specifically, in US ex. rel. Kosenske v. Carlisle HMA, Inc., a Qui Tam lawsuit brought by the former member of an anesthesia group, the 3rd Circuit Court of Appeals reversed a US District Court’s summary judgment in favor of the defendant hospital and anesthesia group.

The anesthesia group in question had a written exclusive contract with the hospital for anesthesia services but, subsequent to entering into the exclusive agreement, began providing pain management services at the hospital’s freestanding pain center. The hospital did not charge the anesthesia group rent for use of the space in the pain center and the qui tam relator claimed that the arrangements failed to meet the Stark exception for personal service arrangements (and therefore that claims for services referred by the anesthesia group’s physicians to the hospital were in violation of the federal False Claim Act).

 

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As yet another warning to physicians and the medical device industry, the Department of Justice has entered into a Deferred Prosecution Agreement with medical device maker Neuromtrix in connection with an alleged kickback arrangement with referring physicians.  

According to a press release by the US Attorney's Office for the District of Massachusetts, the settlement has to do with a medical device used in physicians’ offices to assist in the diagnosis of neuropathies in peripheral nerves.  Physicians using the device are required to purchase disposable biosensors.  Accordingly to the press release, Neurometrix allegedly paid physicians in the form of free boxes of disposable biosensors to induce them to recommend purchase of the device to their colleagues. 

Under the Deferred Prosecution Agreement, Neurometrix has agreed to pay a criminal penalty of $1.2 million.  Neurometrix also agreed to pay $2,498,337 in civil damages and penalties for allegedly causing physicians to bill nerve conduction studies to Medicare using a higher code than was actually performed by the physicians.  The press release does not mention whether any action is being taken against the physicians in question.

It is apparent from this latest case that physician and device manufacturers are still willing to enter into questionable financial arrangements despite the numerous high-profile cases over the last few years.  Physicians considering entering into these relationships must be aware that where the devices in question are reimbursed by the Medicare or any other federal program or involve the submission of claims for services to those programs, any payment, in cash or anything else of value, may implicate the federal anti-kickback statute.  Violations of the anti-kickback statute are punishable by a fines of up to $25,000 per violation, up to five years in jail, or both, as well as civil money penalties of $50,000 for each violation.

Even where the arrangements do not involve federal payor programs, comparable state kickback laws may apply.  It is critical therefore that physicians carefully evaluate these arrangements and consult with experienced health care counsel before entering into them.

 

 

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The Office of Inspector General of the Department of Health and Human Services (OIG) published a notice today seeking proposals and recommendations for developing new and modifying existing safe harbor provisions under the Federal anti-kickback statute and for developing new OIG Special Fraud Alerts.  To be considered, public comments must be delivered to the OIG by 5 p.m. on February 17, 2009 and can be sent by mail, electronically or by hand delivery.  For more information on how to submit comments, see the Federal Register notice here. 

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In response to an unusually straightforward fact pattern, the OIG today released an advisory opinion blessing certain part-time physician employment arrangements. The advisory opinion comes in response to a nonprofit, tax-exempt corporation’s proposal to employ two physicians on a part-time basis to perform endoscopies on the requestor’s own premises. Each of the physician employees would maintain separate medical practices, at separate premises, at outside of the part-time employment relationship with the requestor. The requestor certified that the physician employees would be bona fide employees in accordance with the employment safe harbor under the anti-kickback statute and that each physician employee would be a salary based on the fair market value of the professional services that he or she personally provides. Based on the facts presented, the OIG concluded that the proposed arrangement would not generate prohibited remuneration under the anti-kickback statute and would fall within the applicable employment safe harbor. The OIG did not opine on the issue of whether the employees would in fact be bona fide employees or on the issue of fair market value of the compensation in question. See Advisory Opinion 08-22

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Physicians enrolling in the Medicare program should be aware that Medicare recently changed the rules applicable to when a physician's enrollment is deemed to take effect. Specifically, the FY 2009 Medicare Physician Fee Schedule establishes that the effective date of billing for physicians and non-physician practitioners is the later of: (1) the date of filing of a Medicare enrollment application that was subsequently approved by a Medicare contractor; or (2) the date an enrolled physician or non-physician practitioner first started furnishing services at a new practice location.

The rule also provides that physicians and non-physician practitioners who meet all program requirements may bill retrospectively for services furnished up to 30 days prior to the billing effective date (as opposed to the 23 months allowed under current regulations).  Note also that physicians and non-physician practitioners have 30 days to notify their Medicare carrier of a change of ownership, final adverse action (e.g., exclusion, debarment, felony conviction, license suspension or revocation), or a change of location.  Failure to notify the carrier within 30 days can result in an overpayment from the date of the reportable event. 

The 2009 Medicare Fee Schedule can be viewed here.
 

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Does your practice bill Medicare for diagnostic tests?

If so, you have until January 1, 2009 to make sure your arrangements comply with the now very complicated anti-markup rule. The Centers for Medicare and Medicaid Services (CMS) published the Final Medicare Physician Fee Schedule for 2009 in the Federal register on November 19, 2009. Among other things addressed in the Fee Schedule regulations are clarifications of the diagnostic testing anti-markup rule.

Prior to the 2009 Fee Schedule changes, the anti-markup rule provided that if a physician or other supplier bills for the technical component (TC) or professional component (PC) of a diagnostic test that was ordered by the physician or other supplier and the diagnostic test was either purchased from an outside supplier or performed at a site other than the office of the billing physician or other supplier, the payment to the billing physician or other supplier (less the applicable deductibles and coinsurance paid by the beneficiary or on behalf of the beneficiary) for the TC or PC of the diagnostic test may not exceed the lowest of the following amounts:

• The performing supplier's net charge to the billing physician or other supplier;

• The billing physician or other supplier's actual charge; or

• The fee schedule amount for the test that would be allowed if the performing supplier billed directly.

In the 2009 Fee Schedule, CMS has now clarified that the anti-markup provisions will not apply to the TC or PC of a diagnostic test where the performing physician shares a practice with the billing physician or other supplier. With respect to a TC or PC of a diagnostic testing service, the performing physician is considered to share a practice with the billing physician or other supplier if either of the following is met:

(Alternative 1) He or she furnishes substantially all (at least 75 percent) of his or her professional services through the billing physician or other supplier; or

(Alternative 2) The TC is conducted and supervised, or the PC is performed, in the office of the billing physician or other supplier. For purposes of Alternative 2, the “office of the billing physician or other supplier” is defined as the same building where the ordering physician performs substantially the full range of patient care services that the ordering physician generally provides.
 

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Under Medicare regulations,  the interest rate that may be charged on Medicare overpayments and underpayments is the higher of the current value of funds rate (five percent for calendar year 2008) or the private consumer rate as fixed by the Department of the Treasury.  According to a recent CMS Transmittal, the Department of the Treasury has notified the Department of Health and Human Services that the private consumer rate has been changed to 11.375%.  Accordingly, effective as of October 22, 2008, the interest rate that may now be charged on Medicare overpayments and underpayments is 11.375%. 

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Physicians, Do you have financial relationships (think joint venture, medical director stipends, lease arrangements, AS&T agreements) with a hospital? If so, your referrals to that hospital for inpatient and outpatient services may violate the federal Stark self referral law unless they fall within one of the exceptions to Stark.  You need to make sure your arrangements meet an exception!  Even if you originally structured those arrangements to fit within a Stark exception, if you have not reviewed those arrangements for Stark compliance for awhile, I strongly recommend that you review your arrangements for compliance now. 

Why the urgency? Because in the coming months, CMS will be auditing hospital/physician financial relationships for compliance with Stark. Specifically, CMS will be sending out “Disclosure of Financial Relationship” information requests to 500 hospitals across the Country soliciting specific information about the relationships the hospitals have with their physicians.  If yours is one of those hospitals, CMS will be looking at your arrangements.    

What should you be looking for? You need to identify your hospital financial relationships and then figure out which exception applies. If you have a contract, you need to be sure the contract meets the specific requirements of the applicable exception and that it is signed and currently in effect.  Remember, Stark is a strict liability statute so if you don’t meet all of the requirements of an exception, you likely have a violation of the statute and the penalties are draconian.

What if you’re not compliant? The Stark regulations do offer some ability to correct non-compliant arrangements but they are very limited. Generally a refund is required and penalties for violating Stark include a $15,000 civil money penalty for each tainted referral and for each claim submitted pursuant to a tainted referral, as well as potential false claims liability.

If you’d like assistance evaluating your hospital relationships for compliance with Stark (or handling non-compliant arrangements), please contact Todd Rodriguez.

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The Office of Inspector General (OIG) of the Dept of Health and Human Services released its FY2009 Workplan yesterday. The Workplan outlines the initiatives and audits that the OIG expects to undertake in the coming fiscal year.  Below are some of the key initiatives that the OIG expects to undertake with regard to physicians.  If you or your practice is engaged in any of these activities, now would be a great time to review whether you are complying with applicable Medicare rules.  If you need assistance reviewing any of your services for compliance with Medicare rules, please contact Todd Rodriguez.

Place of Service Errors
The OIG will review physician coding of place of service on Medicare Part B claims for services performed in ambulatory surgical centers (ASC) and hospital outpatient departments. The OIG will be looking to determine whether physicians properly coded the places of service on claims for services provided in ASCs and hospital outpatient departments.

Evaluation and Management Services During Global Surgery Periods
The OIG will review industry practices related to the number of evaluation and management (E&M) services provided by physicians and reimbursed as part of the global surgery fee. It will be looking determine whether industry practices related to the number of E&M services provided during the global surgery period have changed since the global surgery fee concept was developed in 1992.
 

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For those of you who have not been watching your Stark radar screen closely, be aware that CMS recently made a number of substantial changes to the Stark self-referral regulations that may affect your practice arrangements. Some of these changes will not take effect until October 1, 2009, but others changes will take effect on October 1, 2008. Key changes include (but are not limited to the following:

1.  “Stand-in-the shoes” Relationships – Under current regulations, physicians who refer to a Stark entity with which they have a financial relationship will be deemed to “stand in the shoes” (i.e., be treated as if they had the same compensation arrangements) of their physician organizations (e.g., their medical practice entity). CMS has clarified that, Effective October 1, 2008, this rule only applies to physicians who have an ownership interest in the physician organization – not physicians who are only employees, independent contractors or whose ownership interest is only titular.

2.  Services Furnished “Under Arrangements” -- CMS has in the past expressed concern over “under arrangements” ventures where a physician supplies items and services to a hospital for which the hospital bills the Medicare program and pays the physician fee. To address this concern, CMS has revised the definition of the term “entity” for purposes of the Stark prohibitions to the person or entity that actually performs a Stark services as well as the entity that causes a claim for the Stark service to be submitted to the Medicare program. This change will take effect on October 1, 2009.

 

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Document, document, document! is the cry of health care attorneys and consultants across the Country when asked what physicians can do to protect their practices from fraud and abuse liability.  But what happens if you receive a Medicare audit request and you find out that your documentation isn't so good or even non-existent?  Many physicians when faced with this prospect are tempted to recreate or alter medical record documentation.  Beware, this is probably the worst thing you can do in this situation. 

Poor or even non-existent medical record documentation is not necessarily an indicator of fraud or abuse.  In many cases it is simply an indication of the need for documentation and coding education or better record keeping protocols.  In these circumstances, a physician may have to return some money to Medicare or other payors but will generally not be looking at civil or criminal penalties.  Recreating, altering or falsifying records, however can quickly turn a simple overpayment situation into a criminal case.  That's what has apparently happened to a podiatrist in New Jersey according to a recent article in the New Brunswick Home News Journal.  According to the article, in response to a request by a Medicare contractor for 25 medical records, the podiatrist re-wrote the records to enhance the Medicare claims under review and was charged with obstructing a federal audit.  The potential penalty for this: a maximum of five years in prison and as much as a $250,000 fine.

 So what can you do if your documentation falls short in the face  of an audit submission?  If the documentation exists but is simply illegible, you might include a typed transcription along with the original records.  If pieces of information are missing from a note, you can include an annotation explaining why the information is missing, but any such annotation should be signed and dated when made.  Back-dating is major a no-no.  Finally, when records are missing altogether, a letter to the auditor explaining the situation and offering to refund the amounts received may make sense.  In any of these circumstances, however, it is highly advisable to immediately consult with a knowledgeable health care attorney before doing anything.

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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. Continue Reading...

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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. Continue Reading...

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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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