Compliance

Published on: May 29, 2013

Hospital Lobbying Groups Push Congress to Pass RAC Bill

Hospital lobbying groups are pushing for Congress to pass the Medicare Audit Improvement Act of 2013, which would put a cap on the amount of document requests that Recovery Audit Contractors (RAC) may demand from providers. Specifically, the bill would limit RAC document requests to 2% of hospital claims and a maximum of 500 additional document requests over 45 days.

The legislation was introduced in the House on March 19, 2013 by Representatives Sam Graves (R-MO) and Adam Schiff (D-CA); and was introduced two months later in the Senate by Senators Roy Blunt (R-MO) and Mark Pryor (D-AK). On March 19, 2013, Graves stated in a press release that “[d]octors and nurses should be focused on caring for patients, not trying to comply with the ever-increasing requests for documents.” Graves also stated that small, rural hospitals will benefit from this new legislation the most, since they are often ill-equipped to handle extensive document requests.

The American Hospital Association (AHA) endorsed both bills, and since the new year, has spent $4.3 million thus far in lobbying efforts. In addition, the Federation of American Hospitals and six state hospital associations also joined the AHA in its lobbying efforts. Despite this significant lobbying, neither bill has gained momentum. The same bill was also introduced last year by Graves, but failed to move out of committee. A spokeswoman for the AHA stated that the House bill was not expected to move soon. As a result, lobbying efforts have been placed on increasing the number of co-sponsors of the bill. Last year, only 26 members of Congress co-sponsored the bill, whereas the current legislation has 70 co-sponsors.

Published on: May 20, 2013

Bard Agrees to $48.26 Million Settlement for FCA Violations

by Wachler & Associates, P.C.

On May 13, 2013, the Department of Justice (DOJ) announced that C.R. Bard Inc. agreed to pay the United States $48.26 million to resolve allegations that Bard knowingly caused false claims to be submitted to Medicare in violation of the False Claims Act (FCA). Bard is a corporation based out of New Jersey which develops, manufactures, and markets medical products. The claims that purportedly violated the FCA were for brachytherapy seeds used to treat prostate cancer.

The government alleged that from 1998 to 2006, Bard delivered illegal remuneration in the form of grants, rebates, fees, marketing assistance, and/or free medical equipment to customers and physicians to induce them to purchase Bard’s brachytherapy seeds, in violation of the Anti-Kickback Statute. The government argued that the hospital bills submitted to Medicare for these seeds were rendered false due to Bard’s illegal kickback activity. The government alleged that Bard was liable for causing the submission of those false claims.

This settlement also resolves a lawsuit filed by Julie Darity, a former manager at Bard. Darity brought her claim under the whistleblower provisions of the False Claims Act, which allows private citizens to bring suits for false claims on behalf of the United States and share in the recovery obtained by the government. The former manager will receive $10,134,600 as her share of the civil settlement.

Published on: May 17, 2013

Jury Rules Tuomey Violated Stark Law and the FCA through Physician Employment Agreements

by Wachler & Associates, P.C.

On May 8, 2013, in a retrial of a 2010 case, a federal jury found that Tuomey Healthcare System (Tuomey) in Sumter, SC violated both the Stark Law and the False Claims Act (FCA). The jury found that Tuomey violated the FCA by submitting 21,730 claims to the Medicare program that were tainted by illegal compensation arrangements which induced physicians to refer patients to the hospital in violation of the Stark Law.

The underlying employment arrangements were made for 19 surgeons who each received base pay, significant benefits, and potentially two bonuses. The jury agreed with the government’s contentions that the pay was not consistent with fair market value and was not commercially reasonable. The government argued that the excess compensation was evidence that the employment agreements took into account the volume or value of the physicians’ referrals to Tuomey.

The jury assessed damages against Tuomey in the amount of $39,313,065, which is the full amount of the Medicare claims at issue. In addition, under the FCA, the government may seek up to three times the amount of damages plus $11,000 per claim, meaning Tuomey could potentially face up to $357 million in liabilities under the FCA. However, since Tuomey is a community hospital, they are likely to receive a penalty less than that amount. Each side will now submit motions interpreting what they think are the appropriate amount of damages, with a final damage amount coming sometime in the future.

Published on: May 15, 2013

Recovery Auditors (RACs) target Hospice Face-to-Face Recertifications

by Wachler & Associates, P.C.

Hospice providers must always obtain written certification that a patient meets Medicare’s hospice coverage criteria. Written certification of terminal illness needs to be obtained no later than 2 days after hospice care is initiated, and must be on file in the hospice patient’s record prior to the submission of a claim to the Medicare contractor. Certification must be made by the medical director of the hospice and, if applicable, the patient’s attending physician. Payment for hospice care will begin the date certification is obtained.

This initial certification satisfies the hospice certification requirement for the first 90-day period of coverage. Additional periods require recertification, which can be obtained 15 days prior to the next benefit period, but no later than 2 days after that period begins.

Per the Medicare Benefit Policy Manual, the written certification must include:

Published on: May 9, 2013

OIG Issues Special Advisory on Exclusion Issues

by Wachler & Associates, P.C.

On May 8, 2013 the Office of Inspector General (“OIG”) for the Department of Health and Human Services issued an Updated Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs (“the Updated Bulletin”) to replace and supersede a bulletin issued in 1999.

The Updated Bulletin reiterates, clarifies and/or provides guidance on many points, including the following with regard to the effect of exclusion on participation in Federal health care programs:

Payment cannot be made from a Federal health care program for items or services furnished by an excluded person or at the medical direction or on the prescription of an excluded person.

Published on: May 8, 2013

OIG Release Report Focusing on Hospice’s Use of General Inpatient Care

by Wachler & Associates, P.C.

On May 3, 2013, the Office of Inspector General (OIG) released a memorandum describing hospice general inpatient care (GIP) provided to Medicare patients in 2011, for which Medicare paid $1.1 billion. According to the memorandum, the OIG will be conducting an in-depth medical record review to evaluate the appropriateness of GIP provided by hospices. The study will be focused on the accuracy of reimbursement for GIP and the proportion of GIP provided in different settings, specifically Medicare-certified hospice inpatient units, hospitals, and skilled nursing facilities.

This ongoing study is a continuation of prior studies released by the OIG, which show that the amount of GIP services provided differs significantly depending on the setting. For example, hospices that have their own inpatient units provided GIP to 35% of their Medicare patients. In contrast, hospices that have to outsource GIP care sent only 12% of their Medicare beneficiaries to receive that care. Furthermore, hospices that provided GIP in their own inpatient units recorded 50% longer patient stays and three times the proportion of Medicare payments for GIP services than did hospices that have to outsource GIP care.

The memorandum states that the OIG will begin a new study which will use actual beneficiary medical records to determine the accuracy of reimbursement. In addition to its own investigations, the OIG advised CMS to ensure that the hospices not currently providing GIP are still providing beneficiaries with appropriate access to the types and amount of care needed at the end of their lives. These studies are part of OIG’s continuing investigations related to Medicare hospice care. In 2011, Medicare paid $13.7 billion for hospice services on behalf of 1.2 million beneficiaries, and both of those numbers are expected to increase with the aging of the baby boomer generation.

Published on: May 6, 2013

Therapy Providers Face Manual Review of Outpatient Therapy Claims, CMS Releases FAQ

by Wachler & Associates, P.C.

As mandated by the American Taxpayer Relief Act of 2012, Medicare Part B outpatient therapy providers now face manual medical review of claims at or above a $3700 statutory cap. Due to some confusion in the provider community, the Centers for Medicare and Medicaid Services (CMS) published a Frequently Asked Questions to clarify the new therapy manual medical review process.

In the FAQ, CMS explains that the manual medical review process is triggered when a beneficiary’s services for that year exceed one of two threshold caps dictated in Section 603 of the Act. The cap for Occupational Therapy (OT) services is $3700 per year, per beneficiary. Separately, the combined cap for Physical Therapy (PT) and Speech Language Pathology (SLP) is $3700 per year, per beneficiary. CMS also points out that although physical therapy and speech language pathology services are combined to trigger the cap, the medical review of those claims will be conducted separately.

The FAQ states that the cap and manual medical review process applies to all Part B Outpatient Therapy settings and providers, including private practices, Part B skilled nursing facilities (SNFs), home health agencies (HHAs), outpatient rehabilitation facilities, rehabilitation agencies and hospital outpatient departments.

Published on: April 5, 2013

Intermountain Health System Agrees to $25.5 Million Settlement in Stark Violation Case

by Wachler & Associates, P.C.

Intermountain Healthcare, the largest health system in Utah, has agreed to pay $25.5 million to resolve claims that it violated the federal Stark law and False Claims Act by engaging in inappropriate financial relationships with referring physicians.

In 2009, Intermountain disclosed to federal officials that the system may have illegally paid bonuses to 37 doctors based on their patient referrals. If true, Intermountain would have been in violation of the Stark law. In addition, Intermountain disclosed that it compensated more than 170 doctors in the absence of written agreements, including via rentals of office space in several cities without written lease agreements. In total 209 physicians were involved in the violations, which spanned over a 10 year period.

Intermountain discovered the violations through its regular review process, and reported them to the government in 2009. Intermountain cites the complexities of the Stark law’s regulations as one cause of its noncompliance. According to Intermountain’s Chief Medical Officer Dr. Wallace, Intermountain should have more closely monitored the situation and although Intermountain’s management realized that penalties could be significant, they chose to self-disclose the issues.

Published on: March 14, 2013

The United States Senate Committee on Finance Released a Comprehensive Report to Combat Waste, Fraud, and Abuse in Medicare and Medicaid

by Wachler & Associates, P.C.

On January 31, 2013, the Senate Finance Committee released a report aimed at combating waste, fraud and abuse in Medicare and Medicaid. In May of 2012, the Senate Finance Committee invited interested stakeholders to submit white papers offering recommendations and innovative solutions to improve program integrity efforts, strengthen payment reforms, and enhance fraud and abuse enforcement efforts. In response, a variety of healthcare industry experts, including Wachler & Associates, submitted nearly 2,000 pages of input and recommendations. Wachler & Associates submitted instances of egregious contractor errors, including improper recoupment of alleged overpayments, contractors sending appeals correspondence to the wrong addresses and improper referral of alleged overpayments to the Department of Treasury. Based on the Finance Committee’s review, the white papers discussed five broad themes: improper payments, beneficiary protection, audit burden, data management, and enforcement.

Improper payment issues were discussed by 44 percent of health insurers and providers who submitted white papers. Solutions regarding improper payment issues included allowing reimbursement at the outpatient service level if inpatient status is denied or for certain types of complex cases; and clarifying the guidance on or abolishing outpatient observation status. Beneficiary protection was discussed by 57 percent of insurers and providers, many of whom discussed the use of outpatient observation status by hospitals to avoid recovery audit contractor’s (RAC) scrutiny of claims, as well as provider and patient frustration with payer documentation requirements, which may lead them to forfeit certain courses of treatment or care. Furthermore, 60 percent of providers and insurers discussed audit burden issues, and were specifically concerned with the number of audit entities involved, the volume and complexity of payment rules and regulations, whether payment rules are applied consistently and whether audit entities are inappropriately overturning medical necessity decisions, audit entities interactions with providers during the audit process, difficulty communicating with audit entities during the audit process, and financial burden of payment suspensions and the impact on business.

Ninety-four percent of white papers included recommendations to combat waste, fraud, and abuse. Some of the recommendations included were:

Published on: November 26, 2012

CMS Releases Final Rule for New Survey and Sanction Options for Home Health Agencies

by Wachler & Associates, P.C.

On November 8, 2012, the Centers for Medicare and Medicaid Services (CMS) released its final rule updating the home health prospective payment system for calendar year 2013. In particular, the final rule provides CMS with new options for surveying and sanctioning home health agencies (HHAs). According to the final rule, HHAs will be subject to a standard survey at least once every 36 months, which will be unannounced and performed by the state agency or an accrediting organization. The standard survey’s objective is to review the HHA’s compliance with a select number of conditions of participation (CoP). In addition to the standard survey, HHAs will be subject to a variety of other surveys, which include:

Abbreviated standard survey: similar to the standard survey, but concentrates on a smaller number of CoPs determined to be an area of concern; conducted within two months of a specific concern, receipt of complaints, or change in ownership.
Extended survey: used to ensure compliance with additional CoPs that were not surveyed in the standard survey, or to review certain policies and procedures in which the surveyors determined the HHA provided substandard care.