Wachler & Associates Health Law Blog

Published on: May 17, 2013

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

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.

Published on: May 15, 2013

Recovery Auditors (RACs) target Hospice Face-to-Face Recertifications

by Wachler & Associates, P.C.

Hospice providers must always obtain written certification that a patient meets Medicare’s hospice coverage criteria. Written certification of terminal illness needs to be obtained no later than 2 days after hospice care is initiated, and must be on file in the hospice patient’s record prior to the submission of a claim to the Medicare contractor. Certification must be made by the medical director of the hospice and, if applicable, the patient’s attending physician. Payment for hospice care will begin the date certification is obtained.

This initial certification satisfies the hospice certification requirement for the first 90-day period of coverage. Additional periods require recertification, which can be obtained 15 days prior to the next benefit period, but no later than 2 days after that period begins.

Per the Medicare Benefit Policy Manual, the written certification must include:

Published on: May 14, 2013

Blue Cross Blue Shield of Michigan Auditing Physicians Performing In-Office Drug Screens

by Wachler & Associates, P.C.

Blue Cross Blue Shield of Michigan (BCBSM) is auditing physicians who have conducted in-office Drug of Abuse (DOA) screening test. The purpose of these BCBSM audits is to determine whether the services, treatment, devices, and procedures that the physician billed to BCBSM conformed to Current Procedural Terminology (CPT) codes at the time of billing.

In auditing physicians who billed drug screening procedure codes, BCBSM is alleging that those physicians have incorrectly billed under current CPT codes for dates of services prior to the effective date of the current billing policies. In these cases, BCBSM sent notices to physicians enclosing current copies of the Physician Office Laboratory List (POLL) – a list of payable laboratory services allowed to be performed in the physician office setting – instead of the relevant POLL covering the audited time period. The drug screening procedure code at issue is CPT code 80101 [drug screen, qualitative; single drug class method (e.g., immunoassay, enzyme assay), each drug class], which is not listed on the current POLL. Instead, BCBSM states that codes 80104 and G0434 are the proper and payable drug screening tests when performed in the physician’s office. BCBSM is seeking returns of alleged overpayments from these physicians who billed 80101 in the office setting, as opposed to billing the lesser-paying drug screening procedure codes.

BCBSM may not hold physicians retroactively accountable for recent changes in billing. We are currently representing a number of physicians that have been audited by BCBSM. Based upon our review, we believe these audits can be successfully defended and the amount for overpayment substantially reduced. If you have been audited by BCBSM, we believe we can help, as we are currently representing physicians in similar cases and have been successfully defending providers against BCBSM audits since 1980. For further information on BCBSM audits, please contact an experienced Wachler & Associates healthcare attorney at 248-544-0888.

Published on: May 9, 2013

OIG Issues Special Advisory on Exclusion Issues

by Wachler & Associates, P.C.

On May 8, 2013 the Office of Inspector General (“OIG”) for the Department of Health and Human Services issued an Updated Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs (“the Updated Bulletin”) to replace and supersede a bulletin issued in 1999.

The Updated Bulletin reiterates, clarifies and/or provides guidance on many points, including the following with regard to the effect of exclusion on participation in Federal health care programs:

Payment cannot be made from a Federal health care program for items or services furnished by an excluded person or at the medical direction or on the prescription of an excluded person.

Published on: May 8, 2013

OIG Release Report Focusing on Hospice’s Use of General Inpatient Care

by Wachler & Associates, P.C.

On May 3, 2013, the Office of Inspector General (OIG) released a memorandum describing hospice general inpatient care (GIP) provided to Medicare patients in 2011, for which Medicare paid $1.1 billion. According to the memorandum, the OIG will be conducting an in-depth medical record review to evaluate the appropriateness of GIP provided by hospices. The study will be focused on the accuracy of reimbursement for GIP and the proportion of GIP provided in different settings, specifically Medicare-certified hospice inpatient units, hospitals, and skilled nursing facilities.

This ongoing study is a continuation of prior studies released by the OIG, which show that the amount of GIP services provided differs significantly depending on the setting. For example, hospices that have their own inpatient units provided GIP to 35% of their Medicare patients. In contrast, hospices that have to outsource GIP care sent only 12% of their Medicare beneficiaries to receive that care. Furthermore, hospices that provided GIP in their own inpatient units recorded 50% longer patient stays and three times the proportion of Medicare payments for GIP services than did hospices that have to outsource GIP care.

The memorandum states that the OIG will begin a new study which will use actual beneficiary medical records to determine the accuracy of reimbursement. In addition to its own investigations, the OIG advised CMS to ensure that the hospices not currently providing GIP are still providing beneficiaries with appropriate access to the types and amount of care needed at the end of their lives. These studies are part of OIG’s continuing investigations related to Medicare hospice care. In 2011, Medicare paid $13.7 billion for hospice services on behalf of 1.2 million beneficiaries, and both of those numbers are expected to increase with the aging of the baby boomer generation.

Published on: May 6, 2013

Therapy Providers Face Manual Review of Outpatient Therapy Claims, CMS Releases FAQ

by Wachler & Associates, P.C.

As mandated by the American Taxpayer Relief Act of 2012, Medicare Part B outpatient therapy providers now face manual medical review of claims at or above a $3700 statutory cap. Due to some confusion in the provider community, the Centers for Medicare and Medicaid Services (CMS) published a Frequently Asked Questions to clarify the new therapy manual medical review process.

In the FAQ, CMS explains that the manual medical review process is triggered when a beneficiary’s services for that year exceed one of two threshold caps dictated in Section 603 of the Act. The cap for Occupational Therapy (OT) services is $3700 per year, per beneficiary. Separately, the combined cap for Physical Therapy (PT) and Speech Language Pathology (SLP) is $3700 per year, per beneficiary. CMS also points out that although physical therapy and speech language pathology services are combined to trigger the cap, the medical review of those claims will be conducted separately.

The FAQ states that the cap and manual medical review process applies to all Part B Outpatient Therapy settings and providers, including private practices, Part B skilled nursing facilities (SNFs), home health agencies (HHAs), outpatient rehabilitation facilities, rehabilitation agencies and hospital outpatient departments.

Published on: May 3, 2013

CMS Releases Proposed Rule to Revise Provider Enrollment Provisions and the Incentive Reward Program

by Wachler & Associates, P.C.

On April 24, 2013, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule that increases CMS’ ability prevent fraudulent Medicare providers from enrolling, or remaining enrolled in the Medicare program. The provisions that CMS proposes to implement include:

Allowing CMS to deny the enrollment of any provider, supplier or owner affiliated with an entity that has unpaid Medicare debt in order to prevent entities with such debt to avoid repayment by leaving the Medicare program and re-enrolling as a new business.
Denying enrollment or revoking a provider or supplier’s Medicare billing privileges if a managing employee has been convicted of certain felony offenses.

Published on: April 29, 2013

CMS Releases Proposed Rule Regarding Hospital Inpatient Admissions

by Wachler & Associates, P.C.

On April 26, 2013, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to clarify when a Medicare beneficiary is appropriately admitted to a hospital as an inpatient and what is required for Medicare Part A payment of hospital inpatient services. In this rule, CMS proposes a time-based presumption of medical necessity for hospital inpatient services based on the beneficiary’s length of stay. More specifically, RACs and other Medicare contractors would presume that hospital inpatient admissions are appropriate for payment under Medicare Part A if the beneficiary is admitted to the hospital pursuant to a physician order and receives care for at least two midnights. Similarly, there would be a presumption that hospital inpatient admissions spanning less than 2 midnights should have been provided on an outpatient basis, unless there is clear documentation in the medical record supporting the physician’s order and expectation that the beneficiary would require care spanning more than 2 midnights or the beneficiary is receiving a service or procedure designated by CMS as inpatient-only. In contrast, CMS’s current manual instructions indicate that physicians should use a 24-hour period and the expectation of a beneficiary’s need for an overnight stay in the hospital as inpatient admission benchmarks. In reviewing inpatient stays that did not reach the 2 midnight threshold, RACS and other Medicare contractors will be instructed to employ factors similar to those currently included in the Medicare Benefit Policy Manual (MBPM) to determine the medical necessity of the inpatient admission. These factors include, for example, the severity of the signs and symptoms exhibited by the patient and the medical predictability of something adverse happening to the patient. Later in the proposed rule, however, CMS indicates that it will codify the general 2 midnight threshold rule at 42 CFR 412.3(c)(1) and that 42 CFR 412.3(c)(2) would include an exception stating that “…if an unforeseen circumstance, such as beneficiary death or transfer, results in a shorter beneficiary stay than the physician’s expectation of at least 2 midnights, the patient may be considered to be appropriately treated on an inpatient basis, and the hospital inpatient payment may be made under Medicare Part A.” This language tends to suggest that a Medicare contractor’s review of an inpatient admission of less than 2 midnights will focus less on the clinical factors listed above, and more on “unforeseen circumstances.” Clarification will likely be sought during the open comment period.

In addition, the proposed rule also clarified the requirement that a patient is admitted as an inpatient only on the recommendation of a physician or licensed practitioner permitted by the State to admit patients to the hospital. The proposed rule explained that this requirement is understood to mean that a patient is admitted through an inpatient admission order given by the practitioner responsible for the care of the patient, provided that the practitioner, either a physician or other licensed practitioner, has been authorized by the State and granted admitting privileges by the hospital. However, CMS clarifies that although the Conditions of Participation (CoPs) do not specifically prohibit the delegation of an inpatient admission to a non-physician practitioner, for payment purposes CMS will clarify in regulation that the authority to admit cannot be delegated to an individual who lacks that authority in his or her own right.

This proposed policy is intended to address longstanding concerns from hospitals that they need more guidance on when a patient is appropriately treated and paid by Medicare as an inpatient. Although CMS’ proposed rule provides some clarity on how a medically necessary inpatient admission would be defined by a Medicare review contractor, it raises other questions, particularly how Medicare review contractors will review inpatient admissions spanning less than 2 midnights. Please note that CMS will accept comments on the proposed rule until 5:00 p.m. EST on June 25, 2013. The comments must be received by that time and date, not postmarked. CMS will respond to comments in a final rule to be issued by August 1, 2013.

Published on: April 24, 2013

CMS Announces Plans to Introduce a Fifth RAC for DME and HHH

by Wachler & Associates, P.C.

The Centers for Medicare & Medicaid Services (CMS) plans to make significant changes to the Recovery Auditor (RAC) program. In doing so, CMS hopes to address providers’ complaints and improve the RAC program through new Recovery Auditor contracts that will be awarded next year.

The most significant change is the creation of a fifth, nationwide Recovery Audit Contractor that is solely responsible for the identification and correction of improper payments for home health and hospice claims and payments for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). The change leaves the existing four regional RACs in place to identify overpayments for all other Medicare A/B claims and provider types.

In the Statement of Work for DME and Home Health Recovery Auditors, CMS claims that the changes will further the Recovery Audit Program’s goal of “efficient detection and correction,” and assist the Agency in “lowering future error rates and identifying improper payments that will have the greatest impact on the [Medicare and Medicaid] Trust Fund.”

Published on: April 23, 2013

CMS Updates Additional Document Requests Limits for Medicare Providers

by Wachler & Associates, P.C.

The Centers for Medicare & Medicaid Services (CMS) updated the Medicare provider Additional Documentation Requests (ADR) limitations, which relate to the Medicare Fee-for-Service Recovery Audit Program. These changes went into effect April 15, 2013. The limitations include:

Recovery Auditors can select up to 75% of any claim type for review (compared to 100%). The remaining 25% can be requested from any or all other types. For example, if a provider submitted three different claim types, the Recovery Auditor may select up to 75% of the calculated ADR from one of the claim types, and the balance of the calculated ADR may be selected from any single or combination of the remaining claim types.
Recovery Auditors may request up to 20 records per 45 days from providers whose calculated limit is 19 additional documentation requests or less (compared to a minimum of 35 records).