Wachler & Associates Health Law Blog

Published on: June 16, 2014

OIG Recommends Increased Audits of E/M Services by CMS

In May of 2014, the Office of the Inspector General (OIG) released a report detailing its findings regarding Medicare payments for evaluation and management (E/M) services. E/M services are performed by physicians in order to assess and manage a beneficiary’s health. The OIG found that coding errors in documents for routine patient E/M services have resulted in the Medicare program paying out billions of dollars in improper payments each year. Earlier in 2014, the OIG reported that the overall Medicare program lost about $50 billion during 2013. In conducting this study, 63 percent of the claims sampled by the OIG were for established patient office/outpatient visits. Only 4 percent of the visits the OIG analyzed were for initial or subsequent skilled nursing care.

The OIG reports that for the 2010 fiscal year, Medicare payments for E/M services totaled $32.3 billion, which accounted for almost 30 percent of all Part B payments. The OIG also noted that in 2012, physicians began to increase their billing of higher level codes, which resulted in higher payment amounts. In its report, the OIG found that 55 percent of E/M services were incorrectly coded and/or lacked sufficient documentation, including: 26 percent of E/M claims were up-coded; 15 percent of E/M claims were down-coded; 12 percent of E/M claims were insufficiently documented; and 7 percent of E/M claims were undocumented altogether. In order to ensure that payments for E/M services are properly coded and supported by sufficient documentation, the OIG made the following recommendations to CMS: (1) educate physicians on coding and documentation requirements for E/M services; (2) continue to encourage contractors to review E/M services billed for by high-coding physicians; and (3) follow up on claims for E/M services that were paid for in error.

As indicated by this report, providers can expect greater scrutiny of their E/M claims by CMS audit contractors. In our experience, CMS audit contractors routinely down-code the level of E/M service billed by providers. Often times, these services are down-coded because CMS determined that the level of E/M service billed is not supported by the accompanying medical records (e.g., the visit note did not support the level of medical decision making component required by the code that was billed). With the increased audit attention relating to E/M services, providers must ensure that they are thoroughly documenting the services provided, and that each component of the E/M service is supported by the medical record. Failure to do so could leave providers vulnerable to audit contractors.

Published on: June 13, 2014

Physicians Nationwide Face Terminations as Insurance Plans Move to Narrow Networks

by Wachler & Associates, P.C.

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: June 10, 2014

Medtronic Settles with DOJ for $9.9 Million to Resolve Kickback Allegations

by Wachler & Associates, P.C.

On May 28, 2014, the U.S. Department of Justice (DOJ) settled a whistleblower lawsuit against Medtronic, Inc. for $9.9 million. Medtronic, the fourth largest medical device supplier in the world, was accused of violating the Anti-Kickback Statute and False Claims Act by paying kickbacks to physicians for using Medtronic’s defibrillators and pacemakers.

The allegations came to light after former Medtronic employee-whistleblower notified authorities of the illicit payments, which occurred between 2001 and 2009. In addition to tying kickbacks to the usage of Medtronic products, the complaint details that Medtronic allegedly produced business development and marketing plans for the doctors at no cost, paid doctors to speak at events with the goal of increasing referrals, and gave doctors tickets to sporting events. The complaint further outlines that Medtronic’s sales staff provided doctors with lavish trips and gifts, and even offered cash payments for the utilization of Medtronic devices. Also, business plans were in place in which sales representatives were allegedly instructed to visit doctors’ offices to review patient charts and flag those who they thought should receive an implant despite patients not meeting the criteria for an implantable device.

This settlement should encourage providers to ensure their physician arrangements do not violate provisions of the Anti-Kickback Statute, False Claims Act, or any other fraud and abuse laws. Wachler & Associates healthcare attorneys regularly counsel providers in proactively addressing potential kickback violations and defending providers against government allegations. If you or your healthcare entity have any questions regarding the Anti-Kickback or Statute Stark Law, or wish to have your arrangement reviewed by our attorneys please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.

Published on: June 5, 2014

HHS Releases Proposed Rule Increasing OIG’s Authority to Combat Fraud under the ACA

by Wachler & Associates, P.C.

On May 12, 2014, the U.S. Department of Health and Human Services (HHS) issued a Proposed Rule to increase the Office of Inspector General’s (OIG) authority to combat fraud and abuse under the Civil Monetary Penalty (CMP) Regulations. The Proposed Rule implements changes enacted by the Patient Protection and Affordable Care Act of 2010 (ACA), which expanded OIG’s ability to assess CMP fines against individuals or entities that defraud Federal healthcare programs. Under the proposed rule, OIG may assess CMPs against individuals or entities for:

Failure to grant OIG timely access to documents, as determined on a case-by-case basis;
Ordering or prescribing medicine or services that the person knows or should know may be paid for by a federal health care program while excluded;

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: May 15, 2014

CGI Federal Sues HHS over New Contracts and Payment Terms

by Wachler & Associates, P.C.

On May 1, Recovery Audit Contractor (“RAC”) for Region B, CGI Federal, Inc., (“CGI”) filed a lawsuit against the United States Department Health and Human Services (“HHS”) in the United States Court for Federal Claims.

In the lawsuit, CGI seeks an injunction against the HHS’s award of new RAC contracts and to eliminate the new payment terms that prohibit RACs from being paid until after the second level of appeal. The lawsuit comes after CGI’s pre-award bid protests, where CGI asked for a change to the new payment terms, were denied by the Government Accountability Office (“GAO”).

Towards the end of 2013 and the beginning of 2014, CMS sent out a request for quotes (RFQ) for new RAC contracts. The Statement of Work, which accompanied the RFQ, contained most of the changes to which CGI objects. CGI’s main objection is to the changes in the payment terms. Under the current system, RACs bill and receive their contingency fees after the first level of appeal of a claim determination, which takes roughly 120 days. Under the new model, RACs would not receive their contingency fees until after the second level of appeal, which could span anywhere from 120 to over 400 days.

Published on: May 9, 2014

OCR Reaches $4.8 Million Settlement for HIPAA Violations

by Wachler & Associates, P.C.

On Wednesday, New York Presbyterian Hospital and Columbia University agreed to settle claims with the Department of Health and Human Services (HHS) Office for Civil Rights for a collective $4.8 million stemming from a data breach in 2010. This matter, along with other similar cases, should serve as an important warning to healthcare providers and other HIPAA covered entities that personal health information (PHI) of patients must be protected, especially in the electronic age. If a data network is breached and PHI is made available, HHS will use its enforcement powers to assess punitive penalties and institute corrective actions in order to achieve compliance.

Under the terms of the settlement, New York Presbyterian will pay $3.3 million while Columbia University will pay $1.5 million. Both entities must also institute corrective action plans. The settlement represents the highest combined total financial penalty issued to an entity covered by HIPPA. As part of the settlement, the entities must undergo a risk analysis, develop a risk management plan, revise policies and procedures, train staff and provide progress reports.

The investigation and subsequent settlement were brought on by a data breach incident in 2010 where the shared data system for New York Presbyterian and Columbia University was breached and the records of 6,800 patients were made available on the internet. The data breach occurred when a physician attempted to deactivate a personally owned computer server on the network. The Office for Civil Rights alleged that that due to a lack of technical safeguards, deactivation of the server resulted in PHI being accessible via internet search engines.

Published on: April 25, 2014

CMS Releases Physician Payment Data – Should E/M Providers Be Concerned?

by Wachler & Associates, P.C.

Earlier this month, CMS released its first set of Medicare Provider Utilization and Payment Data for physicians and physician practices. As part of the Obama Administration’s efforts to make Medicare more transparent, CMS has prepared a public data set providing information on services and procedures provided to Medicare beneficiaries under Medicare Part B. This information includes the types and number of services and procedures provided by physicians, as well as the amount of payments each physician received from the Medicare program in calendar year 2012.

According the data, office/outpatient evaluation and management services (e.g., CPT codes 99213 and 99214) were the most frequently billed services by physicians and accounted for nearly $11 billion of the $77 billion in Medicare payments to physicians in 2012.

Physician evaluation and management (E/M) services have been an increasing focus of audits by CMS contractors – typically, Medicare Administrative Contractors (MACs) and Zone Program Integrity Contractors (ZPICs). Furthermore, with the moratorium on Recover Audit Contractors (RACs) ability to audit Part A hospital claims being extended to March 2015, we expect the RACs to shift their audit focus from Part A to Part B claims. Based on the changing audit landscape and the utilization and payment data recently released by CMS, physicians can only expect to be an even greater target of Medicare audits.

Published on: April 17, 2014

AHA Files Lawsuit Contesting the Two-Midnight Rule

by Wachler & Associates, P.C.

With the “doc-fix” bill extending the enforcement delay of the two-midnight rule to March 31, 2015, the American Hospital Association (AHA) has decided to use that time challenging the new inpatient admission rules. Earlier this week, AHA filed a lawsuit in the United States District Court for the District of Columbia challenging the “arbitrary standards and documentations requirements” of the new inpatient admission rules which “deprive hospitals of Medicare reimbursement to which they are entitled.”

Specifically, AHA is challenging the definition of “inpatient” under the two-midnight rule, alleging that CMS’s “inpatient” definition requiring a patient to spend two nights in the hospital is arbitrary and capricious because it bears no resemblance to the actual definition of “inpatient” and CMS has made no attempt to explain its reasoning for adopting such a meaning. Additionally, AHA is challenging the Final Rule’s application of the one year time limit to file a Part B claim when a Part A inpatient claim is denied as not being medically necessary and reasonable. Recovery audit contractors (RACs) typically conduct post-payment reviews of inpatient hospital admissions with dates of admission in which the one year rebilling deadline has already elapsed. Finally, AHA asserts that CMS’s new requirement that all short-stay inpatient admissions include a physician order for admission as a condition of Part A payment is unlawful. Through its lawsuit, AHA seeks for the court to vacate and set aside the two-midnight rule, the one year time limit, and the physician order policy.

Wachler & Associates will continue to monitor the current AHA lawsuit, as well as any further developments regarding CMS’s new inpatient admission policies. If you have any questions pertaining to the two-midnight rule or the physician certification and order requirements, please contact an experienced health care attorney at Wachler & Associates via phone at 248-544-0888 or via email at wapc@wachler.com.