Wachler & Associates Health Law Blog

Published on: October 26, 2011

Recent RAC Updates

CGI Federal, RAC for region B, has recently added a new issue to its CMS-approved issue list for providers in all region B states.

Pharmacy Supply Dispensing Fee. Medicare pays pharmacy supply/dispensing fees for immunosuppressive, oral anti-cancer, chemotherapeutic, and oral anti-emetic drugs as well as drugs used as part of an anti-cancer chemotherapeutic regimen when they are submitted on the same claim as the drug being billed. A claim submitted with a pharmacy supply/dispensing fee in the absence of any of the previously mentioned drugs represents an overpayment and will be denied as not medically reasonable and necessary.

Connolly Healthcare, RAC for region C, added two new issues to its CMS-approved issue list for suppliers that bill CIGNA Government Services.

Published on: October 26, 2011

CMS Announces the Creation of Its Advance Payment Model

by Wachler & Associates, P.C.

On October 20, 2011, the Centers for Medicare and Medicaid Services (CMS) released its final rule for Accountable Care Organizations (ACO) participation in the Medicare Shared Savings Program. With this rule, in response to concerns related to start up costs associated with ACOs, CMS has also announced the creation of its Advance Payment Model, which is scheduled to commence in 2012. The Advance Payment Model was created to assist participants in the Share Savings Program that may not have the necessary funds to become and ACO (e.g. physician-owned hospitals and rural providers). These participants would be advanced future payments, which would later be recouped from future shared savings. However, if the ACO fails to complete the full agreement period or earned shared savings then it will be required to return the advance payment. An ACO would receive future payments in three ways: (1) an upfront, fixed payment, (2) an upfront, variable payment, and (3) a variable monthly payment.

The Advance Payment Model may be available to two types of organizations participating in the Shared Savings Program: (1) ACOs that do not include any inpatient facilities AND have less than $50 million in total annual revenue; and (2) ACOs in which the only inpatient facilities are critical access hospitals and/or Medicare low-volume rural hospitals AND have less than $80 million in total annual revenue. ACOs that are co-owned by a health plan will not be eligible to participate. Participants of Pioneer ACOs will also be ineligible. CMS expects to select approximately 50 ACOs that meet the above eligibility requirements to receive funding.

The Advance Payment Model will only be available for ACOs beginning participation in the Medicare Shared Savings Program in either April 2012 or July 2012.

Published on: October 24, 2011

20 Notable Aspects of the Final ACO Rule

by Wachler & Associates, P.C.

On October 20, 2011, CMS released the much awaited final rule for implementation of the Medicare Shared Savings Program for providers and suppliers participating in Accountable Care Organizations (ACOs). The following are 20 notable aspects of the final rule:

•1. While the proposed rule would have required all ACOs to share risk of loss in the final year of the three year participation period, the final rule created an alternative for a “shared savings only” track (one-sided model) that will not require any sharing of losses. The final rule also retains the proposed two-sided model that will allow ACOs to share in an increased portion of savings, so long as the ACO also agrees to share in any losses to the program.

•2. The final rule will allow ACOs beginning in April 1, 2012 or July 1, 2012 to have a longer first performance year (21 months or 18 months respectively) and an option to receive an interim payment calculation following the first 12 months of participation. One-sided ACOs receiving an interim payment will be required to demonstrate a self-executing repayment mechanism similar to that which the two-sided ACOs must demonstrate.

Published on: October 20, 2011

CMS Releases Final Rule for Accountable Care Organizations

by Wachler & Associates, P.C.

Today, the Centers for Medicare and Medicaid Services (CMS) released its final rule for Medicare’s Accountable Care Organizations (ACO). The program is designed to encourage health care providers to coordinate care in order to achieve cost-savings and improve the quality of care for Medicare patients. Due to substantial criticism from the health care industry, CMS made a number of significant modifications to the proposed rules that were released in March. According to CMS, these modifications include:

Greater flexibility in eligibility to participate in the Shared Savings Program
Multiple start dates in 2012

Published on: October 20, 2011

OIG Releases Unfavorable Advisory Opinion Regarding an Arrangement Between a Physician-Invested Entity and a Pathology Laboratory

by Wachler & Associates, P.C.

On October 3, 2011, the Department of Health and Human Services Office of Inspector General (OIG) issued an unfavorable advisory opinion regarding a proposed arrangement under which physicians would invest in a company that would provide pathology laboratory management services to a third party.

Under the proposed arrangement, a physician who owns and manages a limited liability company (“Requestor”) would enter into a management contract with a pathology laboratory (“Path Lab”), whereby the Requestor would provide the Path Lab with various clinical laboratory services for a fixed number of hours each year. The Requestor would also provide utilities, furniture, fixture, the exclusive use of laboratory space and equipment, and marketing and billing services. In return, the Path Lab would pay a usage fee to the Requestor that would be calculated based on a percentage of the lab’s income which would be fixed in advanced for a 12-month term.

The Requestor’s owner/manager would offer an opportunity for physicians to invest in the Requestor. The new physician investors are anticipated to have little or no background experience in the clinical laboratory services field. According to the Requestor, the value of the investment interest that would be held by physician investors in a position to generate business for the Requestor through referral of laboratory specimens to the Path Lab would exceed 40 percent. Additionally, the Requestor anticipates that the business generated through referrals by physician investors would equate to substantially more than 40 percent of the Requestor’s gross revenue related to the furnishing of health care items and services. Finally, the Requestor has certified that each of the physician investors would have the option of referring specimens to the Path Lab but referrals are not implicitly or explicitly a condition of the arrangement.

Published on: October 19, 2011

US District Court Denies an Ambulance Services’ Request for Preliminary Injunction Against a Medicare PSC

by Wachler & Associates, P.C.

On October 7, 2011, the United States District Court of New Jersey, made a ruling denying an ambulance services’ request for a preliminary injunction against a Medicare program safeguard contractor (PSC). National Ambulance Services, Inc. (“Nationwide”) sought a preliminary injunction to restrain SafeGuard Services, LLC (“Safeguard”) from continuing its pre-payment audit of the ambulance service Part B claims for non-emergency ambulance transportation to patients. On January 13, 2011, the Centers for Medicare and Medicaid Services (CMS) had notified Nationwide that the PSC for its district would conduct a pre-payment process to ensure that all payments to Nationwide were consistent with Medicare policies. Subsequently, Safeguard conducted a pre-payment audit and recommended that 92.1% of Nationwide’s claims should be denied Medicare reimbursement. At the time of the request for preliminary injunction, Nationwide had only appealed a portion of the total claims to an Administrative Law Judge and none of the claims had reached the Medicare Appeals Counsel level of appeal.

The district court began its analysis by holding that it does not have the authority to make a ruling that involves the interpretation of the Medicare statute in regards to the evidentiary standard for coverage. Judicial review over matters arising under the Medicare statute was not available to the plaintiff until all available administrative remedies were exhausted. The court stated that without a final judgment of the Medicare Appeals Council, the plaintiff had not exhausted its administrative remedies, and consequently, the court lacked the authority to review any claims arising under the Medicare statute.

The court next moved to the issue of awarding Nationwide a preliminary injunction. In order to issue this type of emergency relief, the court stated it must consider the following four factors: (1) the likelihood that Nationwide would succeed on the merits; (2) the extent to which Nationwide will suffer irreparable harm without injunctive relief; (3) the extent to which SafeGuard will suffer irreparable harm if the injunction is issued; and (4) the public interest in the matter.

Published on: October 14, 2011

CMS Sends ACO Final Rule to the Office of Management and Budget for Review

by Wachler & Associates, P.C.

According to a breaking news article by HealthData Management, the Centers for Medicare and Medicaid Services (CMS) has sent a Shared Saving/Accountable Care Organizations final rule to the Office of Management and Budget (OMB) for review. A review by OMB is one of the last stages before a rule becomes published in the Federal Register. The final rule is expected to include several changes due to the substantial amount of industry criticism the proposed rule faced during the comment period. According to HealthData Management, the concerns raised about the proposed rule included: (1) the proposed 65 measures would be excessively burdensome for newly formed ACOs, (2) allowing pathologists and laboratory professionals to be included as eligible physicians, and (3) giving ACO-enrolled patients the ability to restrict access to their health information could severely limit the ACO’s ability to improve the health of the individual.

If you have any questions about ACO participation, or any other health law questions, please contact a Wachler & Associates attorney at 248-544-0888.

Published on: October 14, 2011

OIG Releases Fiscal Year 2012 Work Plan

by Wachler & Associates, P.C.

Today, the Office of Inspector General (OIG) released the fiscal year 2012 Work Plan. The plan describes the activities the OIG plans to continue, as well as activities it plans to initiate. The 2012 fiscal year, and the programs described, runs from October 1, 2011 through September 30, 2012. Below is a list of several new and continuing OIG activities for various health care providers.

Home Health Services (New)

States’ Survey and Certification of Home Health Agencies: Timeliness, Outcomes, follow-up, and Medicare Oversight

Published on: October 12, 2011

Recent RAC Updates (DCS Healthcare and CGI Federal)

by Wachler & Associates, P.C.

DCS Healthcare, the RAC for Region A, posted four new issues to its CMS-approved issues list for providers in Maryland.

Medical Necessity Review (MNR)- MDC 5 conditions of the circulatory system (medical) MS-DRGs: 286-293, 299-305, and 308- 316. Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary. MS-DRGs: 286-293, 299-305, and 308- 316.
Medical necessity: acute inpatient admission neurological disorders MS-DRG’s: 068-074, 103, 312 (Collaborative). RACs will review documentation to validate the medical necessity of short stay, uncomplicated admissions. Medicare only pays for inpatient hospital services that are medically necessary for the setting billed and that are coded correctly. Medical documentation will be reviewed to determine that the services were medically necessary and were billed correctly for MS-DRG’s, 068-074, 103, and 312.

Published on: October 12, 2011

Recent RAC Updates (CGI Federal New Issues and CIGNA Government Services New Issues)

by Wachler & Associates, P.C.

CGI Federal, the RAC for Region B, added two new issues to its CMS-approved issues list. In addition, two more issues were added to the CMS-approved issues list for DME suppliers who bill CIGNA Government Services.

CGI Federal New Issues

Leuprolide 3.75mg incorrect code reported (Region B). The purpose of the complex review is to identify the incorrect use of HCPCS code and corresponding number of units billed for services of Leuprolide (depot suspension) 3.75mg. An overpayment exists when a provider bills for greater than 3 units of service for HCPCS code J1950, as defined by applicable Local Coverage Determination documents.