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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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Congressman Adrian Smith (R-NE), along with 13 co-sponsors, introduced a new bill on June 12, 2013, titled the Administrative Relief and Accurate Medicare Payments Act of 2013. This initiative, House Rule (H.R.) 2329, aims to ease administrative burdens on healthcare providers and efficiently allocate energy and resources related to Medicare payment and audits.

In addition to addressing the concerns of administrative burdens and short timeliness-of-filing requirements, the bill also seeks to improve payment accuracy. By increasing the filing period for claims and making other changes to streamline the appeals process, the Act is designed to ease the burden on hospitals.

In a press release, Congressman Smith announced,

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As of July 1, 2013, 799 suppliers will participate in Round 2 of the Competitive Bidding Program (CBP) for Medicare Durable Medical Equipment Prosthetics, Orthotics, and Supplies (DMEPOS), offering medical equipment and supplies to Medicare beneficiaries in the United States. The CBP has been in effect for one year in nine areas, and, according to the Centers for Medicare & Medicaid Services (“CMS”), has already resulted in $202 million in savings.

The CBP was established under Section 302 of the Medicare Modernization Act of 2003. Section 302 requires all DMEPOS entities within selected areas to compete to become Medicare suppliers by submitting bids to furnish equipment and supplies. The lower bids resulting from the competition replace the old Medicare DMEPOS fee schedule amounts for the bid items. Under the Act, the CBP must be phased in. Round 1 of the CBP occurred in 10 areas in 2007. The program was then implemented on July 1, 2008 for two weeks until the contracts were terminated by the Medicare Improvements for Patients and Providers Act of 2008. The program began again in 2009, as the Round 1 Rebid.

CMS granted 13,126 Round 2 DMEPOS CBP contracts to 799 suppliers, which collectively have 2,988 locations in 91 established communities across the United States. In addition to the 2,988 locations, the National Mail-order Program suppliers have 52 locations and have been contracted to serve the entire country by delivery. All suppliers must comply with Medicare standards. The Affordable Care Act expanded the program to require that all areas of the country are subject either to DMEPOS competitive bidding or payment rate adjustments using competitively bid rates by 2016.

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A recent study published by Bailit Health Purchasing, has revealed that bundled payment programs are an effective option for organizations interested in an alternative to fee-for-service reimbursement for providers. Bundled payment differs from fee-for-service reimbursement by compensating a provider for all of the services a patient receives during a single hospital stay or during recovery from that stay on the basis of expected costs for an episode of care. Bundled payment initiatives seek to give providers greater incentive to better coordinate care with other providers, thereby reducing unnecessary duplication of services, reducing medical errors, improving patient health, and lowering costs.

Bailit Health Purchasing was commissioned by the Health Care Incentives Improvement Institute to research the viability of 19 active programs that have piloted bundled payment initiatives. Bailit released an initial report in May 2012. Bailit’s most recent study, published on May 30, 2013, provides a status update on the 19 active programs and highlights early adopters that have been successful in making bundled payment part of their permanent reimbursement strategy.

Bailit’s study, shared on Tuesday at the National Bundled Payment Summit in Washington, DC, highlights two successful case studies that have moved a bundled payment program from a pilot stage to a permanent reimbursement strategy: Blue Cross Blue Shield of North Carolina (BCBSNC) and Horizon Healthcare Services, Inc. (Horizon). The case studies reveal factors that have helped carry BCBSNC and Horizon to successful application of bundled payment.

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Wachler & Associates is pleased to announce the appointment of two of our attorneys to leadership roles within the American Bar Association’s Health Law Section.

Amy K. Fehn will serve as Vice Chair of three ABA Health Law Sections, including the Health Law and Policy Coordinating Committee, the ABA Health eSource Editorial Board, and the ABA Health Law Section Publication Committee. Ms. Fehn has represented healthcare organizations for 15 years, focusing on HIPAA, Stark Law and the Anti-Kickback Statute, and other regulatory compliance matters. She also serves on the ABA’s Accountable Care Organization (ACO) task force.

Reesa N. Handelsman received her first ABA Health Law Section leadership appointment. Ms. Handelsman will serve as Vice Chair of the Business & Transactions Interest Group. Ms. Handelsman has significant experience counseling healthcare entities in a variety matters, including Stark law and Anti-Kickback Statute compliance, hospital and physician contracting, and all types of healthcare transactions.

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