Health Law

Published on: October 20, 2010

CMS Releases Letter to State Medicaid Directors Regarding Medicaid RACs

On October 4, 2010 the Centers for Medicare and Medicaid Services (CMS) published a letter that was sent to state Medicaid directors as part of a series of letters that will provide guidance for the implementation of provisions of the Patient Protection and Affordable Care Act (PPACA), including the expansion of the Recovery Audit Contractor (RAC) program to Medicaid. States are required to contract with Medicaid RACs consistent with state law and the RACs will be paid through contingency fees. States will submit a State Plan Amendment (SPA) to CMS through which the State will either attest that it will establish a Medicaid RAC program by December 31, 2010 or indicate that it is seeking an exemption from the requirements. CMS will permit states to maintain flexibility in the design of the state’s Medicaid RAC program and the number of entities the state will enter into contracts with, so long as the states act within the parameters of the statutory requirements.

States that seeks to request variances or exceptions from the Medicaid RAC program must submit to CMS a written request from the state’s Medicaid Director to the CMS/Medicaid Integrity Group. CMS has expressed that it will grant complete Medicaid RAC program exceptions rarely and only under the most compelling of circumstances.

Another important component of the Medicaid RAC program is the contingency fee payment to the contractors. PPACA requires that Medicaid RACs be paid only from amounts “recovered” on a contingent basis for collecting overpayments and in amounts specified by the State for identifying underpayments. Although CMS will not dictate the contingency fee rates, the maximum rate will be established. CMS will publish a notice in the Federal Register, no later than December 31, 2010, to announce the highest Medicare RAC contingency fee rate and this rate will apply to Medicaid RAC contracts with a performance period beginning on or after July 1, 2014. The contingency fee rates should be reasonable and take into account several factors, including: the level of the effort performed by the RAC, the size of the state’s Medicaid population, the nature of the state’s Medicaid health care delivery system and the number of Medicaid RACs engaged. The fees paid to Medicaid RACs must include amounts associated with (1) identifying and recovering overpayments and (2) identifying underpayments. States must maintain an accounting of amounts recovered and paid, and ensure that the total Medicaid RAC fees paid are not more than the total amount of overpayments collected.

Published on: October 18, 2010

OIG Advisory Opinion 10-20 and 10-21

by Wachler & Associates, P.C.

The Office of the Inspector General recently released Advisory Opinions 10-20 and 10-21. Advisory Opinion 10-20 deals with a radiology group seeking to pre-authorize insurers free of charge for referring physician groups. These requests for pre-authorization would be handled before the requestor would be providing the services. Additionally the radiology group would bear the financial risk if they were not able to obtain preauthorization from the insurers.

Although the situation where services are provided free of charge to a referring source does have a potential for risk, the OIG mentioned several mitigating factors present in the proposed arrangement to limit the risk of influencing referrals. One factor that limits the risk of influencing a referral is that the proposed arrangement would not target any specific physicians and since there are a large number of insurers the requestor would be unlikely to know the specific obligations of a physician with respect to any particular patient. To help reduce the risk of fraud and abuse, no payment would be made to physicians, no assurance of preauthorization approval would be made and all private laws would be followed. The arrangement would be operated transparently, where the insurers would know that the call center was operated by the requestor. Finally, the OIG noted that the requestor’s insurance reimbursement is at stake, which is a legitimate business purpose.

For all the aforementioned reasons, the OIG determined that the risk of inducing referrals under the proposed arrangement was minimal given the safeguards and legitimate business purpose.

Published on: October 13, 2010

U.S. District Judge Refuses to Grant Injunction Against Health Care Reforms Implemented through the Affordable Care Act

by Wachler & Associates, P.C.

On October 8, U.S. District Judge George Steeh refused to grant an injunction that would prevent the implementation of the federal health reforms enacted through the Affordable Care Act. Judge Steeh also dismissed several substantive portions of the suit, determining that Congress did not exceed its constitutional authority by requiring most people to buy health insurance. The lawsuit was brought by the Thomas More Law Center, an Ann Arbor-based Christian legal center and four plaintiffs. The Detroit Free Press reported that an attorney for the law center, Robert Muise, stated that the plaintiffs will appeal the decision.

The Michigan lawsuit is one of several lawsuits filed challenging provisions of the Affordable Care Act. Another lawsuit filed by several attorney generals, including Michigan Attorney General Mike Cox, is in the appeals process with oral arguments scheduled for December 16.

For more information on federal healthcare reform, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.

Published on: October 7, 2010

OIG Advisory Opinion 10-17

by Wachler & Associates, P.C.

The Office of the Inspector General (OIG) recently released Advisory Opinion 10-17 which deals with donations made as part of a private settlement agreement stemming from a Certificate of Need (CON) dispute. These donations, made to programs, which provide services to children and families, were deemed not to violate the Anti-Kickback statute.

The proposed donations would be made by the children’s health system to the health system in exchange for the health system dropping its challenge to the CON applied for by the children’s system. These donations would be made to the health system’s wholly owned, federally tax exempt, entity that raises funds for the health system but does not provide any healthcare services. The settlement agreement does not stipulate that either entity needs to refer patients to the other entity.

Several factors mentioned by the OIG which make this arrangement copacetic are that both requestors are non-profit, tax exempt with no incentive to grant referrals to one another, the children’s health system is obligated to pay the funds regardless of whether they are paid to the health system or some other third party, other safeguards exist to make sure that there are no incentives to grant referrals between the entities and the donations will go towards helping children and families, many of which are uninsured.

Published on: October 6, 2010

The OIG Publishes Two Favorable Advisory Opinions

by Wachler & Associates, P.C.

Last week the Office of Inspector General (OIG) issued two Advisory Opinions addressing proposed programs that could potentially implicate the anti-kickback statute and the imposition of civil monetary penalties (CMPs).

The first OIG Advisory Opinion, 10-18, analyzed a proposed program by a health system which involved post-surgical free hotel accommodations to pediatric tonsillectomy patients insured by federal healthcare programs. The health system provides services in a rural area and consists of four facilities that provide tonsillectomies. The proposed program would offer the free overnight stay to pediatric tonsillectomy patients who are treated at the health system’s Surgery Center. All of the procedures performed at the Surgery Center will be by ear, nose and throat specialists (Clinic ENTs) who only perform tonsillectomies at hospitals in the Health System. Even though the patients that stay at the adjacent hotel will be Federal healthcare program beneficiaries, neither Federal healthcare programs nor private insurers will be billed directly or indirectly for the costs. The OIG’s Advisory Opinion listed several components of the proposed program which contributed to its determination that the program would not constitute grounds for violation of the anti-kickback statute. These included:

– The Clinic ENTs that perform the services do not have privileges at hospitals outside the Health System and do not perform tonsillectomies at hospitals outside the Health System.

Published on: September 30, 2010

CMS Begins Preparing for RAC Expansion to Medicaid

by Wachler & Associates, P.C.

On September 10, 2010, CMS released draft form CMS-10343, which will be used by state Medicaid plans to show that they have contracted with a RAC auditor. The forms are used in connection with preparation for Medicaid RAC expansion and include criteria related to payments to the Medicaid RAC and the appeal of Medicaid RAC denials. Under the Social Security Act section 1902(a)(42)(B)(i), States are required to have an operational program and contract with a Medicaid RAC by December 31, 2010. Pursuant to CMS’s Supporting Statement, States will be able to tailor the Medicaid RAC’s activities to the uniqueness of the Medicaid program in their state, as well as identify and proposetargeted areas for improper payments.

As CMS begins to move towards expansion of the RACs to Medicaid, providers should start preparing for audits of their Medicaid claims.

For more information on RACs or if you need assistance defending a Medicaid audit, please visit www.racattorneys.com– or contract a Wachler & Associates attorney at 248-544-0888.

Published on: September 29, 2010

Centers for Medicare and Medicaid Services (CMS) publish the Medicare self-referral protocol (SRDP)

by Wachler & Associates, P.C.

On September 23, 2010 the Centers for Medicare and Medicaid Services (CMS) published the Medicare self-referral protocol (SRDP). The SRDP was established by sec. 6409 of the Affordable Care Act (ACA) which required the Secretary of Health and Human Services to establish a Medicare self-referral program that affords providers of services and suppliers the opportunity to self-disclose actual or potential violations of the physician self-referral statute. The SRDP is open to all health care providers of services and suppliers, whether individuals or entities, and is not limited to a particular industry, medical specialty or type of service. The purpose of the SRDP is to facilitate the resolution of matters that the disclosing party reasonably assesses are actual or potential violations of the Stark Law. Thus, disclosing parties should make a submission to the SRDP only with the intention of resolving its overpayment liability exposure for conduct it identified. CMS will evaluate the facts and circumstances surrounding the disclosed conduct to determine an appropriate solution. It is important to note that CMS is not obligated to follow conclusions made by a disclosing party regarding the matter and has no obligation to resolve the matter in a particular way.

The disclosing party must submit the disclosure electronically and submit an original and 1 copy by mail to the Division of Technical Payment Policy. Information required to be in the disclosure includes: (1) description of actual or potential violation(s); (2) financial analysis; (3) a signed certification stating that best to the individual’s knowledge, the information provided contains truthful information and is based on a good faith effort to bring the matter to CMS’s attention.

For more information on the SRDP or for assistance with Stark compliance measures please call a Wachler & Associates attorney at 248-544-0888.

Published on: September 23, 2010

RAC for Region A Adds New Issues for Medical Necessity Review

by Wachler & Associates, P.C.

Recently the RAC for Region A, DCS Healthcare (DCS), added new issues for medical necessity reviews to its list of approved issues. DCS approved nine medical necessity issues, including Respiratory (limited to MS-DRG 190, 191, and 192), Gastro Intestinal Disorders (limited to MS-DRGs 391 and 393) and Diseases and Disorders of Blood, Blood Forming Organs and Immunological Disorders (limited to MS-DRG 811). RACs for Region B, C and D have also approved medical necessity reviews for certain MS-DRGs.

For more information on RAC approved issues or if you need assistance with a Medicare audit, please visit www.racattorney.com or contract a Wachler & Associates attorney at 248-544-0888.

Published on: September 23, 2010

CMS Publishes Proposed Rule Implementing Affordable Care Act Provisions

by Wachler & Associates, P.C.

The Centers for Medicare and Medicaid Services (CMS) published a proposed rule implementing provisions of the Patient Protection and Affordable Care Act (PPACA) that help tackle Medicare and Medicaid fraud. According to Peter Budetti, the Director of the new anti-fraud office at CMS, the proposed rules will provide federal authorities the power to identify fraud and reduce improper payments by an estimated $55 billion.

According to CMS, the proposed rule is essential to the implementation of healthcare reform since the expansion of healthcare coverage relies upon saving money on fraud and abuse in the healthcare systems. Specifically, the rules will provide increased scrutiny to $900 billion in annual spending in federal Medicare, and the state-federal Medicaid and Children’s Health Insurance Program (CHIP), but it is unknown how much money the proposed rules will actually save.

Increased scrutiny over Medicare and Medicaid Programs will include the following measures:

Published on: September 20, 2010

U.S. District Judge Likely to Allow Lawsuit Challenging Healthcare Reform to Proceed

by Wachler & Associates, P.C.

U.S. District Judge Roger Vinson indicated last Tuesday that he will likely allow a lawsuit to proceed that challenges the Constitutionality of the Healthcare Reform law. The lawsuit, filed by 20 states, the National Federation of Independent Business and two individuals, challenges whether the Constitution permits the federal government to mandate Americans to purchase health insurance. Earlier this summer the Obama Administration requested Judge Vinson to dismiss the lawsuit, arguing that the challenge requests the court to overturn precedent enforcing the federal government’s power to regulate interstate commerce.

After a two-hour hearing with the parties, Judge Vinson indicated that he would likely deny the federal government’s motion to dismiss on at least the count addressing whether Congress can require most citizens to purchase health insurance.

For more information on healthcare reform and its impact on providers, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.