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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.

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The Centers for Medicare & Medicaid Services (CMS) recently announced four settlements via the Voluntary Self-Referral Disclosure Protocol (SRDP) under the federal Stark Law. CMS reached three Stark law settlements in August 2013 and on additional settlement in September 2013, totaling approximately $178,000.

On August 19, 2013, CMS settled Stark law violations by a Louisiana physician group practice. Under the SRDP, the Louisiana practice disclosed that it violated the Stark Law because two of its physician arrangements failed to satisfy the requirements of the in-office ancillary services exception to the Stark Law. The violations were settled for $13,572.

On August 20, 2013, CMS reached a settlement with a non-profit community hospital located in Minnesota which disclosed that its arrangement with a physician group practice for the rental of office space and performance of support services failed to satisfy the requirements of the applicable exception under the Stark Law. The Minnesota hospital’s violations were settled for $9,570.

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The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently issued a report addressing increased Medicare spending on polysomnography services. The OIG initiated this study in response to growing concerns of Medicare prescriber fraud.

A polysomnography is a type of sleep study that diagnoses sleep disorders such as sleep apnea. The claims submitted by sleep centers that conduct these studies have been under serious scrutiny by fraud investigators in recent years. In January 2013, American Sleep Medicine LLC, a sleep testing center operator based in Florida, agreed to pay $15.3 million to resolve allegations of false polysomnography claims submitted to Medicare, TRICARE, and the Railroad Retirement Medicare Program in violation of the False Claims Act (FCA).

According to the OIG’s report, Medicare spending for polysomnography services rose 39 percent between the years 2005 and 2011. The OIG analyzed Medicare claims from hospital outpatient departments, as well as non-hospital providers such as independent diagnostic testing facilities and physician-owned sleep laboratories, starting in 2011. The OIG found that almost $17 million in Medicare claims for polysomnography services were inappropriate, meaning the claims did not meet one or more of three requirements for Medicare reimbursement, including claims that had inappropriate diagnosis codes, were same-day duplicate claims or were submitted with an invalid NPI. In addition, the report stated that out of 6,339 providers of polysomnography services, 180 providers exhibited patterns of questionable billing. “Questionable billing” patterns included providers that billed an unusually high percentage of: (1) same-day duplicate claims, beneficiaries who had polysomnography claims from one or more other providers in 2011, (3) diagnostic polysomnography claims with a titration claim for the same beneficiary on the following day, or (4) claims in which there was no visit note from the ordering provider in the preceding year.

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A proposed bipartisan bill, titled the Preventing and Reducing Improper Medicare and Medicaid Expenditures (PRIME) Act, is aimed at combatting waste, fraud, and abuse in Medicare and Medicaid spending. If passed, the PRIME Act would continue CMS’ efforts to move away from the “pay and chase” model of combatting improper payments towards the more aggressive “prevent and detect” model.

The PRIME Act would enact a range of reforms designed to proactively target improper payments, including fraud, within the Medicare and Medicaid programs. The reforms include, for example, engaging Medicare beneficiaries in identifying waste and fraud through a program called the Senior Medicare Patrol (SMP). The bill also seeks to administer harsher penalties for instances of Medicare or Medicaid fraud, as well as identify theft and the sale or distribution of Medicare and Medicaid beneficiary ID numbers.

In a press release addressing the bill, Rep. Peter Roskam (R Ill.) announced,

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A proposed bill, H.R. 2914: Promoting Integrity in Medicare Act of 2013 (PIMA), was recently introduced in the House of Representatives. Representatives Jackie Speier (D-CA), Dina Titus (D-NV), and Jim McDermott (D-WA) initiated this legislation as a result of the increase in Medicare billing for in-office ancillary services through the in-office ancillary services (“IOAS”) exception to the Stark law. The Stark law, which functions to limit physician self-referrals, contains several exceptions. The current IOAS exception to the Stark law protects advanced imaging services, anatomic pathology, radiation therapy, and physical therapy services that meet the IOAS exception’s requirements. However, the bill proposes to remove the above-listed services (advanced imaging services, anatomic pathology, radiation therapy, and physical therapy), which the bill refers to as “Specified Non-Ancillary Services,” from protection under the IOAS exception. The initiating Representatives believe that the bill will save billions of Medicare dollars.

The legislation also proposes to increase civil monetary penalties for improper claims from $15,000 to $25,000 for the above Specified Non-Ancillary Services, and increase civil monetary penalties for circumvention schemes from $100,000 to $150,000 for the above Specified Non-Ancillary Services. In addition, PIMA proposes compliance review procedures for Specified Non-Ancillary Services that may include prepayment reviews, claims audits, focused medical review, and computer algorithms designed to identify payment or billing anomalies.

If PIMA is enacted, referring physician practices that rely on Stark law’s IOAS exception to perform advanced imaging services, anatomic pathology, radiation therapy, and physical therapy services, will need legal assistance in analyzing and possibly restructuring their business arrangements in compliance with the Stark law. If you or your healthcare entity would be affected by the passage of PIMA and have any questions about PIMA or need assistance in analyzing, structuring or restructuring business arrangements to comply with PIMA, please contact our experienced healthcare attorneys via phone at 248-544-0888 or via email at wapc@wachler.com.

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On September 30, 2013, Federal Judge Margaret Seymour of the United States District Court for the District of South Carolina ordered South Carolina’s Tuomey Healthcare System to pay $276.8 million for violating both Stark law and False Claims Act (FCA) provisions; however, this ordered amount was subsequently reduced by $39 million to correct a clerical error. The payment order came after a May 8, 2013 jury verdict in which the jury found that Tuomey had submitted 21,730 Medicare claims which stemmed from illegal compensation arrangements with physicians to induce patient referrals to the hospital. Tuomey has already filed a motion announcing its intent to appeal to the 4th Circuit Court of Appeals.

The Stark law prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he or she has a financial relationship (ownership, investment or compensation). As this case demonstrates, the penalties for violating the Stark law – denial of payment, civil monetary penalty (CMP) of $15,000 per service, and $100,000 CMP for each arrangement or scheme – are severe and can also lead to even more extreme penalties under the FCA. What many providers may not know is that although the requisite intent must exist under the FCA, the Stark law is a strict liability statute that does not take into account the intent of the providers involved. As such, providers should evaluate potential business arrangements, or reevaluate current business arrangements, to ensure such arrangement is not in violation of the Stark law. Moreover, when an arrangement potentially implicates the Stark law, providers should also be sure to analyze the arrangement under the Anti-Kickback statute and other applicable fraud and abuse laws.

If you would like assistance in analyzing a potential or existing business arrangement under the Stark law, including a detailed opinion of whether your arrangement qualifies as an exception to Stark, or if you have any other questions relating to the Stark law, Anti-Kickback statute, False Claims Act or other fraud and abuse laws, please contact an experienced health care attorney via phone at 248-544-0888 or via email at wapc@wachler.com.

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The Centers for Medicare and Medicaid Services (CMS) recently released a national provider Comparative Billing Report (CBR) focused on spinal orthotics and ordering providers. This CBR was conducted in response to an Office of Inspector General (OIG) report on inappropriate Medicare payments for orthotics. The Medicare Durable Medical Equipment (DME) data obtained for this report span from dates of service beginning January 1, 2012 through December 31, 2012. The final data was retrieved on August 15, 2013 from the Integrated Data Repository (IDR).

Under contract by CMS, Safeguard Services LLC is the authorized producer of all CBRs. Safeguard sends CBRs to about 5,000 ordering providers to help providers prevent improper billings. This CBR provides comparative data to orthotic providers across the nation to compare orthotics providers in terms of coding and billing practice, as well as utilization patterns. The sample spinal orthotics CBR may be useful to review if your entity did not receive one from Safeguard.

The following Healthcare Common Procedure Coding System (HCPCS) codes were analyzed in this CBR:

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The Centers for Medicare and Medicaid Services (CMS) announced during its September 26, 2013 Open Door Forum that, for a period of 90 days, CMS will not permit Recovery Audit Contractors (RAC) to review inpatient admissions of one midnight or less that begin on or after October 1, 2013. This three-month period, from October 1 through December 31, will give hospitals additional time to ensure that the necessary policies and procedures are in place to comply with CMS’s new inpatient status rules. Again, all inpatient admissions of one midnight or less will not be subject to pre-payment or post-payment review by the RACs.

As an effort to provide guidance and education to hospitals about the new inpatient rules, CMS will instruct the Medicare Administrative Contractors (MAC) to review 10 to 25 inpatient hospitals claims, per hospital, spanning less than two midnights after admission with dates of admission between October 1, 2013 and December 31, 2013. These probe reviews will be conducted by the MACs to determine whether the medical necessity of the patient status complied with the 2-midnight benchmark. The probe samples will be utilized by the MACs to evaluate hospitals’ compliance with the new inpatient rule and provide feedback to CMS to determine what additional guidance needs to be developed. If the MAC identifies issues from its review of a hospital’s inpatient admission claims, the MAC will conduct education for that hospital, as well as any additional follow up deemed necessary.

Wachler & Associates will continue to monitor any further developments regarding CMS’s new inpatient admission rule. In the meantime, hospitals should use the additional three-month implementation period to ensure its admission and documentation protocols comply with the new inpatient admission standards and certification and order requirements. If you need assistance in developing an effective compliance program, or need help navigating through the complexities of the new inpatient admission rule, please contact an experienced health care attorney at Wachler & Associates via phone (248-544-0888) or email (wapc@wachler.com).

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Today from 2:00-3:00 pm Eastern Time, the Centers for Medicare & Medicaid Services (CMS) will hold a special follow-up Open Door Forum to discuss the Fiscal Year (FY) 2014 Inpatient Prospective Payment System (IPPS)/Long-Term Care Hospital (LTCH) Final Rule (CMS-1599-F) as well as the CMS guidance on physician order and certification. The effective date of the Final Rule is October 1, 2013.

On August 2, 2013, CMS issued the FY 2014 IPPS/LTCH 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 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.

Questions may be sent to CMS before the Open Door Forum begins via email. Questions regarding the two midnight provision for inpatient admission in the final rule can be sent 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.

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Earlier this month, U.S. District Judge Denise Page Hood of the Eastern District of Michigan sentenced 53-year-old Michigan resident Muhammad Shahab to 50 months in prison and three years of supervised release for perpetrating almost $11 million in Medicare fraud between August 2007 and October 2009. Shahab and his co-defendants were also ordered to pay over $10.8 million in restitution to the Medicare Program.

The Department of Justice Press Release reported that Shahab, who had helped finance and establish two Detroit-area home health agencies, pled guilty to one count of health care fraud back in February 2010. Plea documents revealed that Shahab “admitted that while operating or being associated with both health agencies, he and his co-conspirators billed Medicare for home health visits that never occurred.” Shahab, the leader of the fraud scheme, admitted that he and his co-conspirators falsely used the Medicare numbers and signatures of Medicare beneficiaries who were not homebound or needed physical therapy service on medical documentations. Shahab and his co-conspirators offered cash kickbacks and other inducements to these Medicare beneficiaries in exchange for their participation.

In addition, through kickback payments to physicians and other individuals associated with physicians, Shahab obtained physician referrals for medically unnecessary home health services. Shahab confessed to billing and receiving payments from Medicare for medically unnecessary services and services never rendered.

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