Wachler & Associates Health Law Blog

Published on: June 10, 2013

Outpatient Therapy Services Must Assign G-Codes or Face Medicare Denials

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.

Published on: June 6, 2013

RACs to Recover Radiation Oncology Treatment Payments

by Wachler & Associates, P.C.

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.

Published on: June 5, 2013

Wachler & Associates Partner Quoted by Michigan Lawyers Weekly

by Wachler & Associates, P.C.

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.

Published on: June 4, 2013

Pharmaceutical Company Violates Anti-Kickback Statute and Pleads Guilty to Fraud

by Wachler & Associates, P.C.

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.

Published on: June 3, 2013

Medicaid fraud control units (MCFUs) to receive Federal funding for data mining activities to identify fraud

by Wachler & Associates, P.C.

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:

Published on: May 29, 2013

Hospital Lobbying Groups Push Congress to Pass RAC Bill

by Wachler & Associates, P.C.

Hospital lobbying groups are pushing for Congress to pass the Medicare Audit Improvement Act of 2013, which would put a cap on the amount of document requests that Recovery Audit Contractors (RAC) may demand from providers. Specifically, the bill would limit RAC document requests to 2% of hospital claims and a maximum of 500 additional document requests over 45 days.

The legislation was introduced in the House on March 19, 2013 by Representatives Sam Graves (R-MO) and Adam Schiff (D-CA); and was introduced two months later in the Senate by Senators Roy Blunt (R-MO) and Mark Pryor (D-AK). On March 19, 2013, Graves stated in a press release that “[d]octors and nurses should be focused on caring for patients, not trying to comply with the ever-increasing requests for documents.” Graves also stated that small, rural hospitals will benefit from this new legislation the most, since they are often ill-equipped to handle extensive document requests.

The American Hospital Association (AHA) endorsed both bills, and since the new year, has spent $4.3 million thus far in lobbying efforts. In addition, the Federation of American Hospitals and six state hospital associations also joined the AHA in its lobbying efforts. Despite this significant lobbying, neither bill has gained momentum. The same bill was also introduced last year by Graves, but failed to move out of committee. A spokeswoman for the AHA stated that the House bill was not expected to move soon. As a result, lobbying efforts have been placed on increasing the number of co-sponsors of the bill. Last year, only 26 members of Congress co-sponsored the bill, whereas the current legislation has 70 co-sponsors.

Published on: May 28, 2013

Idaho State University Agrees to $400,000 Settlement For HIPAA Violation

by Wachler & Associates, P.C.

On May 21, 2013, the Department of Health and Human Services (HHS) released its settlement agreement with Idaho State University (ISU) for Health Insurance Portability and Accountability Act (HIPAA) violations. The $400,000 settlement agreement involves ISU’s self-reported breach of unsecured electronic protected health information (ePHI) of about 17,500 patients.

HHS received notification of ISU’s breach on August 9, 2011, and shortly thereafter began an investigation into ISU’s HIPAA compliance. Due to disabled firewall protections on ISU’s servers, about 17,500 patients’ ePHI were left unsecured for a minimum of 10 months. Furthermore, according to the investigation conducted by HHS, ISU’s security measures were not adequate and ISU did not evaluate the possibility of potential risks occurring.

Most importantly, the Office for Civil Rights (OCR) which enforces HIPAA and oversees health information privacy in HHS, determined that processes for routine review were not in place at ISU. As a result, ISU was not able to detect the firewall breach as early as they could have if proper procedures were in place. Routine review is part of the HIPAA’s minimum necessary standard which every HIPAA covered entity must comply with.

Published on: May 23, 2013

HHS Announces Pre-Existing Condition Insurance Plan (PCIP) Payments to Providers Will Decrease

by Wachler & Associates, P.C.

On May 17, 2013, the Department of Health and Human Services (HHS) released an interim final rule, which lowers payments to providers for services furnished to individuals enrolled in the Pre-Existing Condition Insurance Plan (PCIP). The new rule will require providers to accept Medicare rates for services provided to PCIP participants instead of the commercial rates providers have received since the plan’s inception.

The PCIP was established under the Patient Protection and Affordable Care Act (PPACA) which was enacted in March 2010. The plan was intended to be a temporary bridge to provide health insurance to uninsured individuals with pre-existing conditions until 2014. In 2014, most health insurance providers will be required under PPACA to offer coverage to all individuals, regardless of pre-existing conditions. Initially, HHS predicted that up to 400,000 individuals would enroll in PCIP, and Congress provided $5 billion in funds for the program. In fact, only 135,000 individuals have enrolled in the program, but due to the cost of the claims per enrollee being higher than originally projected, most of the $5 billion provided by Congress has been exhausted.

Several changes have already been instituted since the PCIP’s creation in order to reduce costs, including ceasing referral payments to agents and brokers, changing provider networks, offering only a single plan option, increasing the maximum out-of-pocket limit for in-network services, and an increase in coinsurance once the enrollee’s deductible has been met. Furthermore, the federally administered PCIP suspended its acceptance of new enrollment applications on February 15, 2013 until further notice.

Published on: May 20, 2013

Bard Agrees to $48.26 Million Settlement for FCA Violations

by Wachler & Associates, P.C.

On May 13, 2013, the Department of Justice (DOJ) announced that C.R. Bard Inc. agreed to pay the United States $48.26 million to resolve allegations that Bard knowingly caused false claims to be submitted to Medicare in violation of the False Claims Act (FCA). Bard is a corporation based out of New Jersey which develops, manufactures, and markets medical products. The claims that purportedly violated the FCA were for brachytherapy seeds used to treat prostate cancer.

The government alleged that from 1998 to 2006, Bard delivered illegal remuneration in the form of grants, rebates, fees, marketing assistance, and/or free medical equipment to customers and physicians to induce them to purchase Bard’s brachytherapy seeds, in violation of the Anti-Kickback Statute. The government argued that the hospital bills submitted to Medicare for these seeds were rendered false due to Bard’s illegal kickback activity. The government alleged that Bard was liable for causing the submission of those false claims.

This settlement also resolves a lawsuit filed by Julie Darity, a former manager at Bard. Darity brought her claim under the whistleblower provisions of the False Claims Act, which allows private citizens to bring suits for false claims on behalf of the United States and share in the recovery obtained by the government. The former manager will receive $10,134,600 as her share of the civil settlement.

Published on: May 17, 2013

Jury Rules Tuomey Violated Stark Law and the FCA through Physician Employment Agreements

by Wachler & Associates, P.C.

On May 8, 2013, in a retrial of a 2010 case, a federal jury found that Tuomey Healthcare System (Tuomey) in Sumter, SC violated both the Stark Law and the False Claims Act (FCA). The jury found that Tuomey violated the FCA by submitting 21,730 claims to the Medicare program that were tainted by illegal compensation arrangements which induced physicians to refer patients to the hospital in violation of the Stark Law.

The underlying employment arrangements were made for 19 surgeons who each received base pay, significant benefits, and potentially two bonuses. The jury agreed with the government’s contentions that the pay was not consistent with fair market value and was not commercially reasonable. The government argued that the excess compensation was evidence that the employment agreements took into account the volume or value of the physicians’ referrals to Tuomey.

The jury assessed damages against Tuomey in the amount of $39,313,065, which is the full amount of the Medicare claims at issue. In addition, under the FCA, the government may seek up to three times the amount of damages plus $11,000 per claim, meaning Tuomey could potentially face up to $357 million in liabilities under the FCA. However, since Tuomey is a community hospital, they are likely to receive a penalty less than that amount. Each side will now submit motions interpreting what they think are the appropriate amount of damages, with a final damage amount coming sometime in the future.