Wachler & Associates Health Law Blog

Published on: September 29, 2014

Federation of State Medical Boards Releases Model Legislation to Expedite Physician Licensure in Lieu of Telemedicine Push

As the demand for telemedicine increases across the country, states continue to grapple with licensure issues arising from physicians working across state lines. In an effort to resolve the dilemma, the Federation of State Medical Boards (FSMB) published model legislation designed to assist in the implementation of a multistate compact, by which physicians from one state can be expeditiously licensed in another state to practice telemedicine.

FSMB’s model legislation requires a minimum of seven states to participate, with each state providing representatives for a governing commission. When at least seven states have joined, the commission would openly share disciplinary and credentialing information in a joint effort to quickly license physicians that are already licensed in one of the other participating states. This sharing of information would allow the participating states to license physicians without being saddled with the responsibility of independently collecting the large amount of paperwork required to license a physician. The governing commission of the compact would not have any licensing power itself, but rather would serve to facilitate the quick transfer of information between participating states. As an example, if Illinois, Michigan, and Indiana joined the multi-state compact, a physician licensed in Michigan, wishing to practice telemedicine in Illinois and Indiana, would have the compact commissioner obtain the necessary credentialing information and approval from the Michigan medical board, collect the licensing fees mandated in Illinois and Indiana, and then process an expedited license.

Members of the FSMB are hopeful for support of their model legislation because it ensures that licensure remains a state right and avoids federal intervention. A multi-state compact will hopefully solve the licensure dilemma, allowing physicians, for example, to use telemedicine technologies to offer specialized care to rural communities. One such state is Wyoming, which relies on telemedicine to care for its residents. The Executive Director of the Wyoming State Board of Medicine, Kevin Bohnenblust, stated that Wyoming has approximately 3,000 licensed physicians, but only 1,200 physicians that actually live in the state. As a prominent “importer” of telemedicine, Wyoming is hopeful that the FSMB policy takes effect. Bohnenblust also notes that states with renowned hospitals like Michigan, Minnesota, and Ohio, could benefit as “exporters” of telemedicine.

Published on: September 25, 2014

CMS Final Rule Provides Greater Flexibility for Meeting EHR Meaningful Use Requirements

by Wachler & Associates, P.C.

On August 29, 2014, the Department of Health and Human Services (HHS) published a Centers for Medicare & Medicaid Services (CMS) final rule allowing providers more flexibility in meeting the meaningful-use requirements for the electronic health records (EHR) incentive program. The final rule, which was an adoption of the May 2014 proposed rule, aims to assist providers in utilizing Certified EHR Technology (CEHRT) by giving eligible providers another year to continue using the 2011 Edition CEHRT, or a combination of the 2011 and 2014 Edition CEHRT. However, providers should be aware that in 2015 they are required to use the 2014 Edition CEHRT software.

Additionally, the final rule extends Stage 2 of meaningful use through 2016, thus delaying implementation of Stage 3. For those providers who first became meaningful users of EHR in 2011 or 2012, Stage 3 of meaningful use is now scheduled to begin in 2017. According to CMS, the updates in the final rule will better enable providers to participate and meet meaningful use objectives, including:

Electronic prescribing;

Published on: September 15, 2014

CMS Holds Conference Call on 68% Settlement Offer

by Wachler & Associates, P.C.

On Tuesday, September 9, the Medicare Learning Network (MLN) hosted a Conference Call regarding the newly revealed 68% settlement offer from the Centers for Medicare & Medicaid Services (CMS) for short-stay inpatient status claims. In an effort to ‘more quickly reduce the volume of inpatient status claims’ pending in the appeals process, CMS offered an administrative agreement to any hospital willing to withdraw all of their pending short-stay inpatient status claim denial appeals in exchange for partial payment of 68% of the net allowable amount as long as the date of admission was prior to October 1, 2013 and the claim is either pending appeal or the appeal has been filed and is pending review. In its release, CMS further noted that only acute care hospitals and critical access hospitals are eligible to submit a settlement request; psychiatric hospitals, inpatient rehabilitation facilities, long-term care hospitals, cancer hospitals, and children’s hospitals are not permitted to submit a settlement request.

The purpose of the Conference Call was to provide interested stakeholders an opportunity to speak with CMS representatives in order to ask questions and obtain a better understanding of how this settlement process will work. Wachler & Associates healthcare attorneys participated in the Conference Call and came away with a deeper understanding of how this process works, but there are still unanswered questions. First and foremost, submissions for settlement are due by October 31, 2014. If your entity cannot meet this deadline, you may ask CMS for an extension. Additionally, short-stay inpatient status claims pending at any level of the appeals process are eligible to be submitted for settlement.

In sum, eligible claims must also meet four requirements: (1) they must be pending in the appeals process or within the timeframe to appeal; (2) the date of admission for the claim must have been prior to October 1, 2013; (3) the denial must be based on a patient status review; and (4) the claim must not have been previously withdrawn or re-billed for payment under Part B. During the Conference Call participants requested clarification of whether the rebill for Part B must not have been submitted or whether it must not have been paid. CMS indicated that it would provider further clarification on this issue through the Frequently Asked Question (FAQ) page on CMS’ website for hospitals. In agreeing to settle all claims for the 68%, the entity agrees to the dismissal of all associated claims (the entity may not pick and choose which ones to settle) and agrees that the settlement will serve as the final administrative and legal resolution of all eligible claims. However, this resolution does not resolve any potential False Claims Act reviews by the Department of Justice. Additionally, eligible claims include claims from any Medicare contractor so long as the denial was based on a patient status review.

Published on: September 8, 2014

CMS Announces Settlement Offer to Hospitals

by Wachler & Associates, P.C.

In an effort to reduce the amount of cases currently pending appeal, specifically the backlog at the Administrative Law Judge (ALJ) level of appeal, the Centers for Medicare & Medicaid Services (CMS) announced an offer to hospital appellants to settle their patient status claim denials currently pending appeal. In exchange for hospitals’ withdrawal of their pending appeals, CMS has offered to pay hospitals 68% of the net payable amount of the claims.

In its announcement, CMS lists a number of conditions that must be met for a hospital to be eligible for settlement, including:

The provider must be either (1) an Acute Care Hospital, including those paid via Prospective Payment System, Periodic Interim Payments, and Maryland waiver, or (2) Critical Access Hospitals (CAH). Those entities which are not eligible for the settlement include: psychiatric hospitals paid under the Inpatient Psychiatric Facilities Prospective Payment System, Inpatient Rehabilitation Facilities (IRFs), long-term care hospitals (LTCHs), cancer hospitals and children’s hospitals.
The claim was not provided to a Medicare Part C (i.e., Medicare Advantage) enrollee.
The claim was denied upon review by a CMS audit contractor (e.g., Recovery Audit Contractor (RAC), Medicare Administrative Contractor (MAC), Zone Program Integrity Contractor (ZPIC) or Comprehensive Error Rate Testing Contractor (CERT)).
The claim was denied was based on the CMS contractor’s finding that the patient was inappropriately treated as an inpatient as opposed to outpatient.
The first day of the inpatient admission was before October 1, 2013.
The claim denial was timely appealed, or the provider has not yet exhausted their appeal rights.
The provider did not subsequently rebill and receive payment for the claim under Medicare Part B.

For those hospitals with eligible claims, CMS has provided instructions on its website detailing the process for hospitals to participate in the settlement offer. In order to take advantage of the settlement offer, hospitals must submit their settlement requests by October 31, 2014.

Published on: August 29, 2014

Reports Show Increase in Individuals Participating in Employer-Based Health Plans

by Wachler & Associates, P.C.

Since the passage of the Patient Protection and Affordable Care Act (ACA) in 2010, much of the media focus has been on individuals who were previously denied coverage because of preexisting conditions or financial barriers. Now, studies are focusing on the large group of individuals who, prior to the ACA, simply chose not to purchase health insurance. The reports demonstrate that due to the Individual Mandate portion of the ACA, which requires individuals to purchase health insurance, many more individuals are choosing to participate in their employers’ health plans.

The increased participation in employer health plans will inevitably cost employers. Most recently, Wal-Mart announced that a dramatic increase in employees signing up for insurance through the company will cost its stockholders $500 million — up from the company’s previous estimate of $330 million. Although Wal-Mart is experiencing the employer-based insurance shift on a large scale, many employers nationwide are expected to see a jump in participation in their health plans. Recently, the National Business Group on Health announced that large employers should expect to see a 6.5% rise in healthcare costs in 2015.

Although The New England Journal of Medicine and members of the Urban Institute both note a rise in individuals signing up for insurance through their employers, other analysts predict that employers’ costs will be too high, and that the employers will simply “dump” these employees into their state’s health insurance marketplace. Many experts, however, expect that if such dumping were to occur, it would come from small employers who merely cannot afford to offer adequate health plans.

Published on: August 26, 2014

Community Health Systems to Pay $98.15 million to Settle False Claims Act Allegations

by Wachler & Associates, P.C.

On August 4, 2014, the United States Department of Justice (DOJ) announced that Community Health Systems (CHS) agreed to pay $98.15 million to settle False Claims Act (FCA) allegations that CHS knowingly billed Medicare, Medicaid and TRICARE for inpatient hospital services that should have been billed as outpatient or observation services. Seven actions were filed against CHS by whistleblowers under the qui tam provisions of the FCA, which allows individuals to file suit on behalf of the government and, in turn, obtain a portion of the recovery. These seven actions were filed in six different jurisdictions and alleged that, between 2005 and 2010, CHS engaged in a corporate scheme to increase admissions of Medicare, Medicaid, and TRICARE beneficiaries even though the admissions were not medically necessary at an inpatient level of care. Rather, the United States alleged that the patients could have been cared for in less costly outpatient or observation settings.

In addition to the $98.15 million settlement payment, CHS agreed to enter into a five-year Corporate Integrity Agreement with the Office of Inspector General (OIG) in which CHS is required to implement significant compliance protocols, including retention of an independent review organization (IRO) to review CHS’s inpatient admission claims. In exchange, CHS will be released from any civil or administrative monetary claims the United States has for the covered conduct under the FCA, Civil Monetary Penalties Law, or Program Fraud Civil Remedies Act.

According to the DOJ, this settlement agreement is the largest FCA recovery in the Middle District of Tennessee. The DOJ touted the Health Care Fraud Prevention and Enforcement Action Team’s (HEAT) coordinated nationwide effort for exposing the FCA noncompliance. Since the establishment of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) in 2009, the DOJ has recovered over $20.2 billion in FCA cases, of which $14 billion has come from cases involving fraud against government health care programs.

Published on: August 22, 2014

OCR Announces Start of HIPAA Audit Program Phase 2

by Wachler & Associates, P.C.

The U.S. Department of Health and Human Services’ Office for Civil Rights (“OCR”) recently announced that it will be initiating Phase 2 of the compliance audits mandated by the Health Information Technology for Economic and Clinical Health Act (HITECH). The first phase of audits was carried out in 2011 and 2012, and targeted covered entities. While Phase 2 will expand the targeted entities to include business associates, it will utilize information gathered during Phase 1 to narrow the scope of audits in order to review the areas of greatest risk to protected health information (PHI).

Following Phase 1, OCR’s findings noted that, generally, the smaller the covered entity, the more compliance issues it had with all 3 Health Insurance Portability and Accountability Act (HIPAA) Standards: privacy, security, and electronic transactions. Furthermore, OCR observed that over 60% of the violations related to security standards. Additionally, nearly 40% of the findings related to privacy standards occurred simply due to lack of knowledge regarding the privacy standards.

Applying this information, OCR will narrow the focus of their compliance audits in Phase 2. The audits will occur between October 2014 and June 2015, and will address:

Published on: August 7, 2014

FDA to Bolster its Regulation of Diagnostic Testing

by Wachler & Associates, P.C.

With the passage of the Food and Drug Administration Safety and Innovation Act (FDASIA) on July 9, 2012, Congress expanded the Food and Drug Administration’s (FDA) authority to safeguard and advance public health. Exercising such authority, on July 31, 2014, the FDA notified Congress of its plan to publish a proposal to expand its oversight of laboratory developed tests (LDTs). LDTs are diagnostic tests, which are designed, manufactured, and used within a single laboratory. Previously, LDTs certified under the Clinical Laboratory Improvement Amendments (CLIA) could exist without FDA oversight. This exception existed because LDTs were primarily used for rare diseases. However, advances in molecular biology allowed laboratories to produce a broader range of LDTs, applicable to more common illnesses. The former exception has been touted by some as fostering laboratory independence, allowing for exponential innovation and accuracy in diagnostics. However, others like Senator Edward Markey (D-Mass.) claim that the newly implemented FDA oversight has been “long-overdue.”

As a result of support from individuals like Senator Markey, more than 11,000 LDTs, housed in 2,000 different laboratories, may fall into the FDA’s expanded regulations. The FDA has cited LDTs for illnesses like Lyme disease and cancer, as justification for the new regulatory framework. By subjecting LDTs to such scrutiny, the FDA’s stated goal is to eliminate faulty tests that produce inaccurate diagnoses and cause patients to seek unnecessary treatment, or delay vital treatment. However, opponents of the new regulation contend that the prior independence allowed laboratories to diagnose and measure disease with far greater accuracy than ever before.

The FDA’s regulatory expansion will take place over nine years and will first be applied to what are deemed the riskiest LDTs. However, some tests will remain excluded from FDA regulations. Such LDTs include those which treat rare diseases and those for which there is no FDA-approved test.

Published on: August 1, 2014

Bipartisan House Bill Proposes Increased Medicare Coverage of Telemedicine

by Wachler & Associates, P.C.

A bill amending Title XVIII of the Social Security Act will be proposed soon, marking the culmination of bipartisan efforts in the House of Representatives. Representatives Glenn Thompson (R-Penn.) and Mike Thompson (D-Calif.) are prepared to announce a new telehealth bill, titled the Medicare Telehealth Parity Act of 2014, which would reduce the Social Security Act’s current limitations on reimbursable telemedicine technologies.

Currently, the Social Security Act only permits reimbursement for telemedicine uses in rural health professional shortage areas (HPSAs) and non-Metropolitan Statistical Areas (MSAs). Not only are these qualifications limiting, they are also difficult to discern. For example, in the 2000s, the Health Resource and Service Administration (HRSA) eliminated the “rural HPSA” category from its designations, resulting in confusion regarding the correct application of the term. The forthcoming bill seeks to slowly resolve these reimbursement complications through a cost-effective, four-year plan:

Within six months of the bill’s passage, it would mandate that Medicare provide coverage for telemedicine in urban areas with a population of 50,000 or less. Additionally, the six month period would be used to increase care sites to include retail clinics.
Two years following the bill’s passage, Medicare coverage would expand to urban areas with a population of 100,000 or less. Furthermore, the bill would include home telehealth to the list of care sites, while expanding reimbursable services to encompass physical and speech therapy.
Lastly, after four years have passed, the bill would make telemedicine reimbursable across the United States.

In addition to the four-year plan, the bill seeks to officially add remote patient monitoring (RPM) to the Social Security Act’s list of reimbursable services. The bill defines RPM as “the remote monitoring, evaluation, and management of an individual with a covered chronic health condition . . ., insofar as such monitoring, evaluation, and management is with respect to such condition, through the utilization of a system of technology that allows a remote interface to collect and transmit clinical data between the individual and the responsible physician . . . or supplier.” By offering government reimbursement for RPM services, thereby expanding RPM use, the bill hopes to increase Medicare savings over time.

Also, the Representatives’ bill would task the Secretary of Health and Human Services (HHS) with developing standards for remote patient monitoring. Finally, the United States comptroller would be directed to conduct a study within two years of the bill’s passage, to determine the efficacy and estimated Medicare savings from the expansion of telemedicine applications.

Published on: July 14, 2014

Senate Report Finds the RAC Program to be Ineffective in Reducing Improper Payment Rates and Burdensome on Providers

by Wachler & Associates, P.C.

In a report released on July 9, 2014, the Senate Special Committee on Aging criticized the Centers for Medicare and Medicaid Services (CMS) for the increase in improper payments in the Medicare program, despite the increasing amount of audit activity and the resulting burden on Medicare providers.

The report noted that despite an increase in the number of contractors conducting pre and post-payment audits and in audits themselves, there has not been a reduction in the total rate of improper payments made to providers. In 2013, the rate jumped to 10.1%, from 8.5% in 2012. This was the highest rate in the last five years, despite significant efforts to combat improper payments.

The report also found numerous inefficiencies in the Recovery Audit Contractor (RAC) program and with other contractors more generally. For instance, the report noted that often times different audit contractors audit the same provider for claims that have been previously reviewed. This results in duplicative document requests that burden providers. The report recognized that providers often times providers must respond to documentation requests from contractors with their own unique timelines and specifications for proper documentation submission. The inconsistencies among contractors lead to significant confusion and, in some cases, denial of properly billed claims. Also noted was a problem well-recognized by the provider community, the withholding of Medicare funds during the later stages of the appeals process, despite the often the two, three even four year delay before providers receive an administrative law judge (ALJ) hearing decision. According to the report, one large hospital system has over $200 million withheld until its matters are adjudicated. The report recognized that for many providers, the ALJ level of appeal is successful. As an example, the report noted that for another health system, there was a 97% success rate for appeals at the ALJ level. The withholding of funds, especially when they have been properly billed, presents an enormous burden on all healthcare providers, even potentially forcing smaller providers to close their doors because they are unable to absorb the loss in revenue.