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On June 24, 2013, the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) issued an advisory opinion announcing that by request of a surgical products manufacturer (the “Requestor”), based on the certifications and information provided, a proposed tiered rebate program will meet the requirements of the discount safe harbor of the anti-kickback statute (AKS) and will not generate prohibited remuneration under the AKS. Thus, the OIG concluded that it would not impose administrative sanctions in connection with the proposed arrangement.

The AKS makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services reimbursable by a Federal health care program. At the discretion of the OIG, a violation of the AKS may constitute a felony punishable by imprisonment fines, or both, possible exclusion from Federal health care programs, and possible administrative proceedings and civil monetary penalties. However, safe harbor protection may be afforded to arrangements that meet all of the conditions set forth in the applicable AKS safe harbor. The regulatory AKS safe harbor for discounts interprets the Social Security Act’s exception for discounts, which protects “a discount or other reduction in price obtained by a provider of services or other entity under a Federal health care program if the reduction in price is properly disclosed and appropriately reflected in the costs claimed or charges made by the provider or entity under a Federal health care program.”

In this advisory opinion, the Requestor, a corporation that manufactures ophthalmologic products including pharmaceuticals, surgical equipment, and vision aids, sought an advisory opinion on whether a proposed arrangement would generate prohibited remuneration under the AKS. The Requestor’s proposed arrangement involved tiered, percentage-based rebates based on customer purchases of federally reimbursable and non-federally reimbursable surgical products. The rebate would be calculated based on a customer’s total annual purchases of such products regardless of whether such products are reimbursable by Federal health care programs and would not vary based on the volume of Federally reimbursable products purchased. In addition, the Requestor certified the various manners in which it would notify all customers receiving rebates of their obligation to report any rebates received based on sales of Federally reimbursable surgical products. Further, the Requestor certified that it would refrain from doing anything to impede the customer’s ability to meet its obligations under the AKS discount safe harbor.

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The Centers for Medicare and Medicaid Services (CMS) have recently announced a tally of 29 settlements under the Voluntary Self-Referral Disclosure Protocol (SRDP). In the month of June alone, CMS settled six different cases of violations of the physician self-referral statute, also known as the Stark law, throughout the country. Disclosing providers make SRDP submissions with the intent of resolving overpayment liability exposure for conduct that the providers voluntarily identify.

Most recently, on June 20, 2013, CMS and an acute care hospital in Pennsylvania settled a Stark violation case for $24,740 after the hospital disclosed that “arrangements for medical director services with certain physicians and a physician practice did not satisfy the requirements of any applicable [Stark] exception.” On June 18, 2013, CMS and a critical access hospital based in Wisconsin settled a case for $12,724.00. In this case, the hospital revealed a situation where a physician arrangement for emergency room call coverage services at the hospital’s nearby walk-in clinics did not meet the requirements of a Stark exception. Also on June 18, a Tennessee hospital settled a case with CMS for $72,270 after disclosing an arrangement involving a physician supervising cardiac stress tests which did not satisfy any requirements of a Stark law exception. On June 12, an acute care hospital in Alabama and CMS settled a case for $187,340 involving a physician group practice arrangement for rental of office space that did not satisfy the requirements of the applicable Stark exception. CMS announced on June 6 that Florida General Acute Hospital settled a case for $76,000 based on multiple disclosures regarding several arrangements that did not satisfy the requirements of any Stark exceptions, and on June 5, CMS announced that Florida Acute Hospital settled a case for $109,000 that involved multiple arrangements with physicians for emergency cardiology call coverage that did not meet requirements of any applicable Stark exceptions.

Wachler & Associates healthcare attorneys have regularly counseled hospitals and other providers in navigating the Stark law since 1995. The amount of high settlements announced in June involving hospitals may suggest that CMS is directing astute attention towards hospitals when resolving matters under the SRDP. For more information on the Stark law, or for assistance with Stark compliance measures for your healthcare entity, please call an experienced healthcare attorney at 248-544-0888.

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On July 2, 2013, the United States Department of Treasury (DOT) announced that the enforcement of the penalty for large employers not offering health insurance to its employees under the Affordable Care Act (ACA) will be delayed until January 1, 2015. This provision is known as the employer mandate.

The employer mandate is one of the key provisions of the ACA, and requires that large employers pay a penalty for every month they fail to offer full-time employees and their dependents the opportunity to enroll in an employer-sponsored health insurance plan. A full time employee is defined as an employee who works at least 30 hours per week. The penalty was originally one-twelfth of $750 per employee, but in 2010 under reconciliation legislation the penalty was raised to one-twelfth of $2000 per employee for every month the employee is not offered the opportunity to enroll in the employer-sponsored plan. A “large employer” is defined in the ACA as an employer who employs an average of at least 50 full time employees on business days during the preceding year. Included in the number of full-time employees is the number of part-time employees multiplied by the aggregate number of hours they worked for the month, divided by 120.

According to the DOT announcement, the Administration decided to delay the employer mandate as a result of concerns from the business community regarding the complexity of the employer mandate, and businesses requests for more time to implement the mandate effectively. The delay will allow the Administration to consider how to simplify the reporting requirements under the ACA, and give more time to businesses to adapt to the ACA standards. The DOT committed to publish formal guidance for this transition within the week.

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A recent June 2013 Office of Inspector General (OIG) report titled, “Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority,” revealed that Medicare mistakenly paid a sum of $5.4 million for 75,552 Part D drug prescriptions ordered by 14 prescriber types without the authority to prescribe in any State. The 14 selected prescriber types the OIG based its study on include practitioners such as massage therapists, athletic trainers, nutritionists, dental hygienists, and nutritionists. Medicare does not pay for prescriptions ordered by practitioners who are not licensed to prescribe drugs.

The OIG piloted this study as part of the OIG’s Spotlight on Drug Diversion and also complements last week’s hearing on “Curbing Prescription Drug Abuse in Medicare,” which was held by the Senate Committee on Homeland Security and Governmental Affairs on June 24, 2013.

According to the report, the Centers for Medicare and Medicaid Services (CMS) agreed to the OIG’s urge to heighten monitoring over Part D prescribers. Specifically, CMS has concurred with the OIG’s recommendations to:

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On June 27, 2013, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule which would cut payments to home health agencies (HHA) by 1.5 percent, or $290 million, in calendar year (CY) 2014.

Home health agencies serve approximately 3.5 million beneficiaries, which cost Medicare about $18.2 billion in 2012. The proposed rule is designed to cut spending by updating the Home Health Prospective Payment System (HH PPS) rates. As mandated by the Affordable Care Act (ACA) the rule proposes a 4-year phase-in adjustment to the HH PPS rate updates starting in CY 2014. The payments will be adjusted by rebasing the rates to the national standardized 60 day rates, the national per visit rates, a new non-routine supplies (NRS) conversion factor, and updating the LUPA (an episode consisting of four or fewer visits within 60 days) add-on amounts.

Furthermore, the rule proposes many ICD-9-CM codes should be deleted in order to limit the eligibility of patients with less serious diseases, such as uncomplicated diabetes. This proposed rule defines CMS’s transition to ICD-10-CM coding, and states that a draft ICD-10-CM HH PPS Grouper should be on the CMS website today. The proposed rule also adds two new claims-based measures for recently hospitalized patients, as these patients are at an increased risk of further acute hospital care.

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The Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently announced that it expects to recover an estimated $3.8 billion in overall recoveries for the first half of fiscal year 2013. This report covers October 1, 2012 through March 31, 2013.

The OIG’s semiannual report is released every 6 months to keep Congress and the HHS Secretary Kathleen Sebelius informed of the OIG’s important findings, recommendations, and activities. In connection with its Medicare and Medicaid investigations, audits, and reviews, the OIG anticipates $521 million in audit receivables and $3.28 billion in investigative receivables.

In the report’s introductory message, Inspector General Daniel R. Levinson attributed the department’s success to the OIG’s cooperative activities and effective partnerships with organizations such as the Health Care Fraud Prevention and Enforcement Action Team (HEAT). The OIG featured the following items in its semiannual report:

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The Recovery Audit Contractors (RACs) have issued a complex review targeting intensity-modulated radiation therapy (IMRT). IMRT has been used in radiation oncology to treat many different types of cancer by modulating high intensity X-ray beams directed at a tumor and thus minimizing the amount of radiation to healthy tissue. In the aggregate, IMRT uses significantly lower doses of radiation than traditional treatment.

Beginning July 18, 2013, the RACs will be looking more carefully at the medical necessity of IMRT treatment as well as whether the diagnoses listed on claims for reimbursement are also listed in the local coverage determination (LCD). Practitioners should review the coding and medical necessity sections in the LCD to determine whether the patient’s condition meets these standards. The LCD also sets forth strong documentation requirements for IMRT that should be carefully reviewed, including, among other items, the need for performing IMRT, prescription of a treatment plan, target verification methodology and documentation, an approved IMRT inverse plan (PTV), immobilization and positioning documentation, fluence distribution in the phantom, monitor units, and respiratory motion.

If you need assistance defending a Medicare audit or need help creating a compliance plan, please contact an experienced health care attorney at 248-544-0888.

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This morning, the Senate Finance Committee, a committee responsible for the oversight of Medicare, met with providers to discuss their experience with the Medicare Recovery Audit Contractors (RACs). The Centers for Medicare & Medicaid Services (CMS) contract RACs to detect and recuperate improper Medicare program payments.

At the hearing, Chairman Max Baucus (D-Mont.) and Ranking Member Orrin G. Hatch (R- Utah) urged the seriousness of the improper Medicare payments problem. The senators issued statements stressing the importance of RACs working efficiently to ensure the best use of the Medicare trust fund. They voiced their concerns at the high numbers of RAC decisions which are overturned on appeal and the senseless red tape which frustrates providers.

Two providers and one prominent contractor gave witness testimonies to the Committee. Jennifer J. Carmody, CPA, Director of Reimbursement Services for the Billings Clinic of Billing, Montana, discussed the time and expense her organization has incurred appealing inappropriate payment denials. In her witness testimony, she disclosed, “… the combined audit activity becomes overwhelming. In total, we are currently being audited by the Medicare RAC, Medicaid, Medicare Advantage, commercial payers and others.” The Billings Clinic pays an outside contractor, EHR, to assist the clinic with their overflow of audits and appeals. Amongst other recommendations, Ms. Carmody told the Finance Committee that clearer guidance, a limit to the number of record requests, and more effective supervision of the RACs’ performance would help improve the overall RAC process.

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Today the Department of Health and Human Services (HHS) Office of Inspector General (OIG) issued a report revealing new data on prescribers with questionable billing patterns under the Medicare Part D program. The OIG conducted this study to investigate rising concerns of Medicare prescriber fraud.

According to the OIG’s report, over 700 of nearly 87,000 general-care providers had “questionable” Part D prescribing patterns. A total of 2,238 general-care providers were labeled as outliers, but 736 doctors had what the OIG considered to be “extreme” prescriber patterns. A majority of these “extreme” outlier physicians ordered what the OIG considered to be extraordinary quantities of Schedule II or III drugs. Other examples of “extreme” patterns included doctors writing over 400 prescriptions for one patient and the number of pharmacies dispensing a single doctor’s orders. The OIG’s report noted that “Although some of this prescribing may be appropriate, such questionable patterns warrant further scrutiny.”

The Centers for Medicare and Medicaid Services (CMS) contracts with sponsors that provide drug coverage to beneficiaries enrolled in Medicare Part D. In addition, CMS contracts with a Medicare Drug Integrity Contractor (MEDIC), a contractor responsible for detecting and preventing fraud and abuse. The OIG recommended that CMS heighten its oversight of the Medicare Part D program by working in conjunction with MEDIC and the private insurers. According to the report, CMS has agreed to the OIG’s following recommendations:

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On June 18, 2013, Julian Kimble was sentenced to 17 years in federal prison and ordered to pay $3,676,587 to the Medicare program as restitution following his 2011 convictions for conspiracy to commit health care fraud and other crimes.

In November 2011, Kimble pled guilty to conspiracy to commit healthcare fraud, money laundering, and tax evasion. Kimble admitted to owning four ambulance companies – Tamimi International Inc, Monarch Ambulance, HKO Group Inc, and Houston EMS – and that he frequently billed basic life support to Medicare for ambulance transports and services that were not medically necessary or not provided at all. Kimble and the other conspirators often transported multiple beneficiaries together in cars or vans, and then billed Medicare for individual transports in ambulances with trained emergency medical personnel.

Furthermore, Kimble received kickbacks from several owners of community mental health centers in exchange for transferring patients to their facilities. The patients also received payments in exchange for assenting to be transported to different facilities in the Houston area. In total, Kimble’s ambulance companies billed Medicare nearly $8.7 million and received over $3.6 million.

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