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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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Auditing entities are utilizing more sophisticated electronic data mining methods than ever before. Today’s sophisticated data mining techniques enable auditors to identify greater cost recoveries, making auditing activities both more efficient and more effective.

Auditors utilize statistical data mining testing to determine whether a provider’s billing practices are statistically different from their peers’. If data patterns from a provider’s utilization rates are significantly different from that of their peers’, auditors are able to identify situations where a provider’s practices may be improper. By mining data on a regular basis, healthcare auditors isolate potential fraud and abuse.

Comparative Billing Reports (CBRs), a tool used by CMS to educate providers about their individual billing practices, detail complex statistical analysis in the form of charts and graphs and show how a practices’ utilization rates compare to those of their peer group. Safeguard Services, LLC, a company contracted by CMS, produces and sends out CBRs to certain provider types. CBRs compare both state and national standards and may help a provider detect possible billing and coding problems for their practice.

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As of July 1, 2013, Change Request 8005 requires outpatient therapy service providers to report new functional G-codes and modifiers on claims for physical therapy (PT), occupational therapy (OT), and speech-language pathology (SLP) services or face Medicare payment denials. The G-codes will be used to identify the primary issue being addressed by the therapy, and the modifiers will identify the severity or complexity of the patient, as well as their change over time. The policy includes a list of 42 new non-payable G-codes, 14 sets of three codes each, and seven new severity/complexity modifiers on therapy claims.

This change became effective for therapy services with dates of service on and after January 1, 2013. However, the first six months are a testing period for providers to acclimate to the new coding requirements. During this pre-July 1 testing period, claims without G-codes and modifiers will be processed. Claims for therapy services with dates of service on or after July 1, 2013 that do not have the appropriate G-codes and modifiers will be returned or rejected. In addition, providers may not bill the patient for the rejected services.

After July 1, 2013, the correct G-codes and modifiers must be included on claim forms at the outset of the therapy episode, every 10 treatment days or every 30 calendar days (whichever is less), and at discharge. According to CMS transmittal 1196, contractors are required to alert providers, with the exception of institutional providers, to include the new G-codes with modifiers on future therapy claims through a Remittance Advice Message as of April 1, 2013.

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Earlier this year, Connolly, Inc., the Recovery Audit Contractor (RAC) for Region C, posted a new issue to its CMS-Approved Issues List targeting Stereotactic Radiation Therapy (SBRT) and Stereotactic Radiosurgery (SRS) services for providers in the following states: Arkansas, Colorado, Delaware, District of Columbia, Florida, Louisiana, Maryland, Mississippi, New Jersey, New Mexico, Oklahoma, Pennsylvania, and Texas.

According to the issue’s description, CMS has approved auditing providers who have incorrectly billed for SBRT and SRS procedures found to be, upon review, “not medically appropriate.” Connolly will be able to audit the billed SBRT/SRS claims as far back as three years from the initial determination date of the procedures, and will be focusing its audit efforts on the outpatient hospital setting. Consequently, this Connolly initiative may affect radiology oncology providers that have performed SRS and SBRT procedures in the states mentioned above.

In response to this news, providers must ensure they are keeping accurate records regarding the rationale and medical necessity for these treatment procedures, as well as maintaining and following effective compliance plans. If you need assistance in preparing for, or defending against RAC audits, or implementing a compliance program geared towards identifying and correcting potential risk areas related to RAC audits, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.

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Michigan Lawyers Weekly, an independent newspaper that covers the legal profession in the State of Michigan, recently quoted Wachler & Associates partner Amy K. Fehn on the use of blogs by law firms.

The article, “Blogging: Making the words work,” surveyed legal experts from around the state on the proper uses and benefits of a well-run legal blog. Ms. Fehn discussed the role of our blog in keeping our attorneys on the cutting edge of legal developments related to health law as well as keeping our clients informed of changes that may impact their health care related businesses.

To subscribe to Wachler & Associates’ Health Law Blog, please add your email address and click subscribe in the window on the top right of this page. As always, check back here for continuing updates on health law developments around the country.

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On Friday, May 24, 2013, ISTA Pharmaceuticals, Inc., a pharmaceutical company recently acquired by Bausch & Lomb, Inc., pled guilty to violating the Federal Anti-Kickback Statute and the Food, Drug and Cosmetic Act (FDCA). Under the terms of a civil settlement agreement and ISTA’s guilty plea, the pharmaceutical company has agreed to pay a total of $33.5 million to states and the federal government in fines and fees for conspiracy, misbranding, false submissions to government health care programs, and under whistleblower provisions of the False Claims Act.

The Anti-kickback Statute provides criminal penalties for companies who knowingly and willfully offer, pay, solicit or receive remuneration in order to induce business payable by Medicare or Medicaid. According to the Department of Justice’s press release, ISTA violated the Anti-kickback statute by offering doctors illegal inducements, such as wine tastings and golf outings, in order to persuade doctors to prescribe ISTA’s eye drug, Xibrom, to their patients.

Under the FDCA, companies may not introduce drugs into interstate commerce for uses that have not been approved by the Food and Drug Administration. Although the Food and Drug Administration approved ISTA’s eye drug, Xibrom, for pain and inflammation after cataract surgery, ISTA pled guilty to marketing Xibrom for unapproved uses, such as to prevent swelling of the retina and to prevent cystoid macular edema.

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Effective June 17, 2013, state Medicaid fraud control units (MCFUs) will be authorized to receive Federal funding for data mining, an audit technique used to identify Medicaid provider fraud. The Department of Health and Human Services Department (HHS) released a final rule on May 17, 2013, which modified an existing regulation prohibiting MCFUs from Federal funding participation (FFP).

Data mining tools and methods electronically screen, sort, and analyze state Medicaid data to identify Medicaid fraud. Advances in data mining technology benefit MCFUs by increasing investigative effectiveness. According to interpretations of the 1978 FFP regulations, state MCFUs are prohibited from receiving federal funds for the use of data mining. As a result of the technological advances now available, this final rule modernizes the regulations adopted in 1978.

To ensure effective funding and use of data mining of MCFUs, MCFUs must adhere to three essential elements:

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