Health Law

Published on: June 13, 2014

Physicians Nationwide Face Terminations as Insurance Plans Move to Narrow Networks

In the past year, thousands of health care providers across the country have been excluded without cause from their insurance plan’s provider networks. The proliferation of narrow networks – defined as health insurance plans that limit the doctors and hospitals available to their subscribers – has caused a backlash amongst providers, who claim the insurers’ terminations will squeeze beneficiaries on access to care, and disrupt longstanding patient-physician relationship, emergency department care, and referral networks.

Although the Affordable Care Act did not create narrow networks, the reform law accelerated the trend by limiting insurer’s ability to continually lower benefits and exclude unhealthy individuals. Without other ways to compete, controlling providers and limiting choice is the insurers’ best way to lower premiums and thus compete on the exchanges. Insurers claim that narrow networks control costs and allow for higher quality, better coordinated care.

In most cases, however, patients choose insurance plans based on the plan’s access to a specific provider network. Patients subscribe and re-subscribe to one-year commitments with the primary intent to access their long-term primary care physicians or other regularly seen providers. Patients often build relationships with these providers over several years, even decades. Now, without notice or the ability to switch their plan, the patients’ physician is suddenly out-of-network and cost-prohibitive.

Published on: May 30, 2014

Insurance Rule in the Affordable Care Act Worries Doctors

by Wachler & Associates, P.C.

A Centers for Medicare and Medicaid Services (CMS) rule implemented in October of 2012, as the result of the Affordable Care Act, has some doctors very nervous. The rule, commonly dubbed the “grace period rule”, provides that individuals who purchased a government subsidized health insurance plan from the marketplace will have their medical bills covered for 30 days by their insurer if the patient falls behind on their payments for premiums. However, the rule provides that for the following 60 days, insurers may place a “stay” or even ultimately deny payments to the treating physician if the patient does not pay his or her premium. Under the rule, even if insurers cover claims during the last 60 days of the grace period, they may seek to recoup those funds if the insurance coverage is ultimately canceled. Prior to the rule’s implementation, insurers generally cancel a policy if a member falls behind more than 30 days and the insurer is usually on the hook for bills incurred before that cancellation.

The rule makes it so that physicians would have to seek payment for services rendered directly from the patient, which can be a long and uncertain process. The rule could impact solo physicians and small physicians groups, in addition to specialists, on a much greater scale due to their inability to absorb the costs of lost payments. For specialists, the high costs of their services could have an extremely negative impact on their bottom lines if they end up having to absorb the costs of lost payments for services rendered.

The American Medical Association (AMA) has publicly expressed concerns about the rule, fearing that it “could pose a significant financial risk for medical practices” and would leave doctors on the hook for unpaid patient bills after the insurer cancels the patient’s policy. The AMA has also urged the Obama administration to provide further guidance on how and when insurers must notify physicians on when their patients fall behind on premiums. The state of Washington, for example, passed a “prompt notification” law earlier in May. The Washington law would require insurance companies to provide information about whether a member is in the 90 day grace period, if a doctor or hospital requests such information. Other states are debating whether to pass legislation substantially similar to Washington’s “prompt notification” law.

Published on: May 19, 2014

OIG Proposes Significant Changes to Provider Exclusion Authority

by Wachler & Associates, P.C.

Last week, the Office of the Inspector General (OIG) released a Proposed Rule that changes its provider exclusion authority and significantly alters certain provider exclusion procedures and the substantive bases for exclusion from a Federal healthcare program. The Proposed Rule was released in conjunction with another Proposed Rule on the same date regarding Civil Monetary Penalties (CMPs). Comments regarding the rules are due on July 8.

§ 1128 of the Social Security Act grants the OIG authority to exclude certain individuals and entities from participation in Federal healthcare programs. If the OIG determines that an individual or entity has engaged in certain prohibited conduct, it must ban such a person or entity from participation in Federal healthcare programs for a statutorily mandated five year minimum period. However, many bases for exclusion are merely “permissive”, where the OIG retains discretion in deciding whether to exclude an individual or entity.

The Proposed Rule provides the OIG with three new bases upon which they may permissively exclude a provider or entity: the failure of ordering, referring, or prescribing providers to furnish payment information under Section 1128(b)(11); knowingly making, or causing to be made, false statements, omissions, or misstatements of material fact on a federal health care program application under Section 1128(b)(16); or convictions in connection with obstruction of a healthcare audit under Section 1128(b)(2).

Published on: March 21, 2014

Fox 2 Detroit Interviews Wachler & Associates’ Andrew Wachler regarding Beaumont, Botsford, Oakwood Merger

by Wachler & Associates, P.C.

Wachler & Associates partner Andrew Wachler appeared on Fox 2 Detroit this morning to discuss the recent announcement that Beaumont Health System, Botsford Health Care, and Oakwood Healthcare have signed a letter of intent to form a new $3.8 billion nonprofit health system.

In his interview, Mr. Wachler described the advantages this affiliation will provide in improving patient care and accessibility. He indicated that it could allow patients access to each hospitals’ various specializations and also allow the hospitals to share technology and capital resources, which in time has the potential to improve quality of care and reduce costs.

Mr. Wachler also explained that the Affordable Care Act, which includes the concepts of bundled payments and Accountable Care Organizations (ACOs), incentivizes large health systems to manage care efficiently, and may consequently result in a greater focus on wellness and preventive care.

Published on: January 23, 2014

CMS to Make Physician Payment Information Available on Case-by-Case Basis

by Wachler & Associates, P.C.

On January 14, 2014, the Centers for Medicare & Medicaid Services (CMS) modified their policy regarding the disclosure of physician payment information under the Freedom of Information Act (FOIA). Effective March 18, 2014, CMS will now evaluate requests for individual physician payment information on a case-by-case basis.

CMS Principal Deputy Administrator, Jonathon Blum, cites the agency’s commitment to greater transparency and the benefits numerous stakeholders have identified that would result from an increase in the availability of information as reasons for the change in policy. Some benefits CMS hopes the policy will lead to include:

• Provider collaboration on improved care management and lower costs in the delivery of health care;

Published on: January 17, 2014

OIG Approves Industry Stakeholders’ Contributions to a Patient Assistance Program under the Anti-Kickback Statute

by Wachler & Associates, P.C.

The Department of Health and Human Services (HHS), Office of Inspector General (OIG) recently released an advisory opinion that highlights long-standing OIG guidance as to how industry stakeholders can contribute to independent, bona fide charitable assistance programs. In this case, the patient assistance program (“Requestor”) provides grants to patients suffering from a specific disease for insurance premiums and other expenses not covered by insurance. The Requestor is a supporting organization of a nonprofit charitable foundation (“Foundation”) that exists solely to support the disease.

The Requestor’s main source of funding is the Foundation. However, all funds received from the Foundation are ultimately donations by pharmaceutical manufactures of the drugs used to treat the disease. The Requestor thus sought an advisory opinion to determine if such an arrangement would be grounds for civil monetary penalties under section 1128A(a)(5) of the Social Security Act (“Act”), covering improper beneficiary inducements, or other provisions of the Act as those sections relate to the Federal anti-kickback statute.

In the advisory opinion, AO No. 13-19, the OIG reiterates long-standing OIG guidance that industry stakeholders may contribute to the health care safety net for financially needy patients, including beneficiaries of Federal health care programs, by contributing to independent, bona fide charitable assistance programs. The OIG also states that such programs should not exert influence over donors, and donors should not have links to the charity that could directly or indirectly influence the charity’s operations or subsidy programs. Further, such programs cannot function as a conduit for payments from donors to patients, impermissibly influence beneficiary choices, or engage in practices that effectively subsidize a donor’s particular product.

Published on: December 13, 2013

CMS Advisory Opinion Approves Proposed Hospital Expansion under Stark Law’s Whole Hospital Exception

by Wachler & Associates, P.C.

The Centers for Medicare & Medicaid Services (“CMS”) recently released a favorable advisory opinion, CMS AO-2013-03, that interprets the “whole hospital” exception to the physician self-referral prohibition commonly known as the Stark Law. CMS determined that the proposed arrangement, which adds a new observation unit and 14 observation beds to a physician-owned hospital, complies with the “whole hospital” exception’s restriction on facility expansions.

In general, the Stark Law prohibits the referral of Medicare patients for designated health services (“DHS”) to an entity in which the referring physician has a financial relationship. The law also prohibits the entity that furnishes DHS as a result of a prohibited referral from billing Medicare, the beneficiary, or any other entity.

The Stark Law contains several exceptions to which the self-referral prohibition does not apply, including the “whole hospital” exception under Section 1877(d)(3). The “whole hospital” exception allows referring physicians to have physician ownership or investment interests in a hospital provided that the referring physician is authorized to perform services at the hospital and the ownership or investment interest is in the hospital itself.

Published on: November 25, 2013

CMS Releases Update on Medicare Claim Denials for Incarcerated Beneficiaries

by Wachler & Associates, P.C.

On November 20, 2013, CMS released an update regarding the Medicare denials for claims submitted by providers and suppliers for beneficiaries who were allegedly incarcerated during the dates of service. The large volume of denials, which occurred during this past summer, were incorrect as CMS acknowledged that the systems that track whether a beneficiary is ineligible for Medicare services due to incarceration were incorrectly updated. Medicare providers and suppliers nationwide were impacted by this error as Medicare Administrative Contractors (MACs) automatically denied and in many cases recouped alleged improper claims for services provided to incarcerated beneficiaries. Although CMS acknowledged the errors in late July 2013, it is not until now that Medicare providers and suppliers have received concrete information that addresses how the errors will be fixed and how correct claims will be paid appropriately. CMS is now making strides to refund improper collections and to implement fundamental changes to its claims processing systems. Medicare Administrative Contractors (MACs) will be responsible for reprocessing claims denied in error. Please see our earlier blog posts regarding CMS’s efforts to recoup reimbursement for services provided to incarcerated beneficiaries here.

According to a FAQ Sheet available on CMS’s website, CMS anticipates that incorrectly denied or cancelled claims associated with allegedly incarcerated beneficiaries from June through August of 2013 will be refunded to suppliers via an automated process by the beginning of December. Medicare provider claims denied due to the incorrect information regarding incarcerated beneficiaries between June through August of 2013 will also be reprocessed by the MACs. According to the FAQ bulletin, CMS expects the reprocessing to be completed by the end of December.

Suppliers and providers should be aware that repayments “may not exactly match the original payment that was made for the claims.” Factors such as CMS business processes, outstanding payments, or changes in a beneficiary’s paid deductible amounts may be reflected in the final claim repayment amounts remunerated to the affected providers.

Published on: November 18, 2013

“Probe and Educate” Hospital Inpatient Audits Extended an Additional 3 Months

by Wachler & Associates, P.C.

On November 12, 2013, CMS held a third open door forum (ODF) discussing the Fiscal Year (FY) 2014 Inpatient Prospective Payment System (IPPS)/Long-Term Care Hospital (LTCH) Final Rule (CMS-1599-F). As of November 4, 2013, the patient status probe review period that was previously applicable through December 31, 2013 has been extended through March 31, 2014. CMS has issued helpful guidance on questions and answers relating to patient status reviews, selecting hospital claims for patient status reviews, and reviewing hospital claims for patient status.

These “probe and educate” reviews will be conducted on a prepayment basis to assess whether hospitals are in compliance with the admission order requirements and 2-midnight benchmark. Because these reviews will be conducted on a prepayment basis, the MACs will deny any claims not meeting these three requirements. The initial sample probe reviews will consist of 10-25 claims per hospital with dates of admission from October 1 through December 31, 2013.

MAC review of the inpatient hospital claims will provide outreach and education about the inpatient rule and will help ensure that hospitals understand and comply with the Medicare requirements. Upon completion of the 10-25 claim reviews, if the MACs do not find any issues with the particular hospital’s claim documentation then further probes will not be conducted for that hospital (unless there are significant changes in billing patterns for admissions).

Published on: November 11, 2013

Open Door Forum on Final IPPS Rule Tomorrow at 1:00

by Wachler & Associates, P.C.

Tomorrow from 1:00-2:00 pm Eastern Time, the Centers for Medicare & Medicaid Services (CMS) will hold a third open door forum (ODF) to discuss the Fiscal Year (FY) 2014 Inpatient Prospective Payment System (IPPS)/Long-Term Care Hospital (LTCH) Final Rule (CMS-1599-F).

On August 2, 2013, CMS issued the FY 2014 IPPS/LTCH Final Rule (final rule) which finalized proposals related to patient status during short-stay hospital cases, including the new standards for inpatient admission and the medical review criteria for payment of hospital short-stay inpatient services under Medicare Part A. On September 5, 2013, CMS issued sub-regulatory guidance regarding the final rule’s requirements for hospital inpatient admission order and certification, which are conditions of payment under Medicare Part A. This sub-regulatory guidance was issued in part as a result of the significant confusion surrounding CMS’s requirements for inpatient admission orders and physician certifications of inpatient services. CMS also posted subregulatory instructions and frequently asked questions, relating to the claim selection process and preliminary review guidelines, for conducting patient status reviews of claims with dates of admission beginning in October 2013.

Questions on the two midnight provision for admission and medical review may be sent to CMS before the ODF begins via email to IPPSAdmissions@cms.hhs.gov. Questions on Part B inpatient billing and clarifications regarding physician order and certification can be sent to Section3133DSH@cms.hhs.gov.