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On July, 25, 2011, the U.S. Department of Health and Human Services, Office of the Inspector General (OIG) issued a favorable advisory opinion regarding an arrangement under which a company (Requestor), who provides administrative services to the State’s Medicaid program, will disburse pay-for-performance payments to physicians and dentists participating in the state’s Medical Home Program.

The Medical Home Program is the state’s enhanced primary care case management and disease management program for a number of Medicaid beneficiaries. Requestor, through a competitive bidding process, was awarded the contract to administer the disease management program on behalf of the state. The program includes a pay-for-performance program whereby Requestor is required to disburse checks, drawn from Requestor’s own bank account, to physicians and dentists who participate in the program. The payments are funded by the state’s Medicaid program, and Requestor has no discretion to revise the amount of the payments. Furthermore, the state clearly identifies itself as the payment source to the providers, as well as indicates that the Requestor is the administrator of the pay-for-performance program.

The OIG started its analysis by emphasizing that the advisory opinion only addresses the narrow question of whether Requestor’s disbursement of pay-for-performance program payments to physicians and dentists on behalf of the state implicates the anti-kickback statute. The OIG concluded that the arrangement did not implicate the anti-kickback statute and cited four reasons for its conclusion:

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On July 29, 2011, the Centers for Medicare and Medicaid Services (CMS) issued Change Request 7436 which shifts the duty of issuing demand letters for identified overpayments from the Recovery Audit Contractors (RACs) to the Medicare Administrative Contractors (MACs). RACs will continue to be responsible for determining whether an improper payment has been made to a provider. However, after identifying an overpayment, RACs will now submit the claim to the MACs who will then send the demand letters to the identified providers. All communications regarding payment recovery and appeal process timeframes will be handled by the MACs, but a provider’s questions or concerns relating to audit specificities should be directed towards the RACs.

Providers need to be aware of this recent change in order to prevent any miscommunications that could lead to missing an appeal deadline. A small error such as this could lead to forfeiting any appeal rights that a provider is granted. If you have any questions relating to RAC audits, or any other type of Medicare or Medicaid audit, please contact a Wachler & Associates attorney at 248-544-0888.

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According to a recent article written by the Detroit Free Press, 26 individuals have been indicted in an alleged Medicare scheme. The indictment alleged that a Michigan pharmacist gave kickbacks and other bribes to doctors in exchange for them writing prescriptions for opiate pain killers and depressants (e.g. Vicodin, Xanax and Oxycontin) and directing them to one of the pharmacies owned by the pharmacist. The alleged Medicare fraud was conducted at more than 20 pharmacies throughout the state, which billed $37 million to Medicare, along with over $20 million to Medicaid. The indictment included 12 pharmacists, 4 doctors, a psychologist, an accountant, and a number of patients who agreed to have their insurers billed.

This indictment is just one of many examples of the government’s focus on the Detroit area in Medicare and Medicaid investigations. For more information on Medicare Fraud defense, or assistance with interpreting and understanding Medicare and Medicaid regulations, including the anti-kickback statute, please contact a Wachler & Associates attorney at 248-544-0888.

Detroit Free Press Article: http://www.freep.com/article/20110803/NEWS05/108030363/Metro-doctors-pharmacists-charged-1-largest-drug-scams-Michigan-history

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The Department of Health and Human Services (HHS) recently issued a report to Congress on a Medicare Ambulatory Surgical Center (ASC) Value-Based Purchasing (VBP) Implementation Plan, as required by the Patient Protection and Affordable Care Act (PPACA).

In this report, HHS sets forth a “roadmap” for ASC VBP implementation which discusses the various issues which must be considered. While the current legislation only gives HHS the authority to impose penalties for failure to report, HHS’ plan presumes that Congress will also grant authority to award better outcomes, value and innovation. The report indicates that the failure to report data could result in a 2% reduction, while, subject to the granting of Congressional authority, ASCs meeting quality targets would see increases in reimbursement. The program may also be structured to reward low performers who demonstrate improvement.

In structuring the ASC VBP, HHS will look to the current quality reporting programs for hospitals and physicians.

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On July 14, 2011, the Department of Health and Human Services Office of Inspector General (OIG) issued a favorable advisory opinion regarding the use of a preferred hospital network as part of Medicare Supplemental Health insurance (Medigap) policies. Under the proposed arrangement, the requestors who offer Medigap insurance policies, would establish a preferred provider organization (PPO) comprised of certain hospitals. The PPO network would allow the requestors to receive discounts on Medicare inpatient deductibles for policyholders. Also under the proposed arrangement, the requestors would provide a $100 premium credit to policyholders who opt to use a network hospital for an inpatient stay. Any savings realized by the requestors would be filed with the state insurance departments accountable for regulating the premium rates charged by Medigap insurers.

The OIG determined that the proposed arrangement would implicate both the anti-kickback statute and Section 1128A(a)(5) of the Social Security Act which provides for the imposition of civil monetary penalties for providing remuneration to beneficiaries. However, because of several factors, the OIG concluded that the proposed arrangement would present a low risk of fraud and abuse. Although not directly on point, the OIG looked at the safe harbor for waivers of beneficiary coinsurance and deductible amounts, as well as the safe harbor for reduced premium amounts offered by health plans.

The OIG concluded that the discounts offered on inpatient deductibles by the network hospitals would present a low risk of fraud or abuse for the following reasons:

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According to a new report released by The Department of Health and Human Services Office of the Inspector General (HHS OIG), hospice companies have quickly expanded their services to patients residing in nursing homes. HHS OIG found that total Medicare spending for hospice care for nursing home residents had grown by nearly 70 percent between 2005 and 2009. In addition, the number of hospice beneficiaries in nursing facilities has increased by 40 percent during that same time period. The report also found that 263 hospices (nearly 8 percent of all hospices) had two-thirds or more of their Medicare beneficiaries residing in nursing homes, referred to in the report as “high-percentage hospices.” Moreover, high-percentage hospices were paid an average of $3,182 more per beneficiary by Medicare. Also, high-percentage hospice beneficiaries received hospice services nearly three weeks longer than beneficiaries served by hospices overall, and the costs to high-percentage hospices were much lower due to patients requiring less services because they are already receiving similar services from the nursing facilities.

In connection with the Inspector General’s recommendation, the Centers for Medicare and Medicaid Services (CMS) has announced that it is making an effort to reduce its Medicare payments for hospice patients residing in nursing facilities. As a result, hospice providers will likely see increased audits in this area, with a specific focus on skilled nursing facility referrals. If you are a hospice provider and need assistance in preparing or defending against an audit, or seek assistance with creating a compliance program to minimize audit risk, please contact a Wachler & Associates attorney at 248-544-0888.

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With the rise of the health-related mobile application market, the Food and Drug Administration (FDA) proposed its first-ever regulations on the industry. The regulations target three types of applications that require the FDA’s approval: an application that acts as an accessory to a regulated medical device, turns the mobile technology into a regulated medical device or makes recommendations pertaining to a patient’s treatment or diagnosis. The FDA believes that just because a medical device is used with a cellular phone, it should still face the same regulations as its traditional non-mobile counterpart.

The FDA plans to collect feedback over a 90 day period from manufacturers and other health care providers, and until this happens the regulations will not take effect. According to the Washington Post, some concerns have already surfaced in regards to the proposed regulations, such as the FDA’s ability to monitor the technology when the mobile industry faces such rapid changes. Another concern is the willingness of investors and companies to back these products when facing this sort of regulatory uncertainty. Jeff Shuren, director for the FDA’s Center for Devices and Radiological Health, said that the FDA will likely take a more subtle approach in reviewing the mobile applications due to the speeding change of the industry, such as focusing on the design of the product and eliminating the requirement of clinical trials.

If you have any questions relating to mobile application compliance with FDA regulations or any other compliance issues, please contact a Wachler & Associates attorney at 248-544-0888.

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The face-to-face requirements for Medicaid home health services will follow a similar timeframe to that set forth for Medicare. The timeframes were established by the Patient Protections and Affordable Care Act (PPACA), and CMS intends to enforce the regulation. A proposed rule creates the requirement that physicians document the existence of a face-to-face encounter with Medicaid beneficiaries within 90 days prior to the ordering of home health services. However, in circumstances where it is deemed not to be possible to meet the 90 day requirement, the face-to-face encounter would be satisfied by an encounter with the beneficiary occurring within 30 days after the start of home health services. Additionally, states that currently allow use of telehealth or telemedicine when delivering services under Medicaid will remain able to use these techniques to fulfill the face-to-face encounter.

If you have any questions pertaining to the Medicare or Medicaid face-to-face requirement, telemedicine rules or any other regulations under PPACA, please contact a Wachler & Associates attorney at 248-544-0888.

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According to a Boston Globe article, Tufts Medical Center and one of its primary care doctors are being sued by a patient whose privacy rights were allegedly violated when her medical history was sent to a fax machine at her workplace without her consent. The patient, Kimberly White, was recovering from a hysterectomy this past December. While recovering, she asked Dr. Kimberly Schelling to fax a form to White’s employer that was required to receive disability payments. Instead, medical records were allegedly sent to a shared fax machine in the office, which resulted in White’s medical records being viewed by at least two co-workers. White claimed that this disclosure has caused her extreme embarrassment and the inability to show her face at work again. Tufts has not yet filed a response to the complaint, but the hospital maintains that they were in full compliance with the patient’s request to share the medical information.

The HIPAA Privacy Rule allows information to be disclosed pursuant to a patient’s authorization or as otherwise permitted by the HIPAA Privacy Rule. The Office of Civil Rights (OCR) has issued guidance stating that the use of fax machines are permissible so long as reasonable safeguards are taken to protect the information from unauthorized or impermissible disclosure. If you have questions regarding patient privacy or assistance with HIPAA compliance policies and procedures, please contact a Wachler & Associates attorney at 248-544-0888.

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A Miami resident and Detroit clinic owner, Arnaldo Rosario, was recently sentenced to 27 months in prison for his role in recruiting patients to three clinics in the Detroit area. According to the FBI, the Medicare fraud scheme involved remuneration to Medicare beneficiaries for visiting the clinics and fraudulently representing that they had received treatments that were either not provided or not medically necessary. The services were then billed to Medicare and the beneficiaries would receive cash kickbacks for their role in the scheme. Rosario was responsible for obtaining cash from the clinics to pay the kickbacks to the beneficiaries and also to other co-defendants for their role in recruiting and paying Medicare patients. Over a span of one year, Medicare had paid approximately $10.8 million to the clinics based on the fraudulent claims. This case was brought as part of the Medicare Fraud Strike Force, which in its four years of operations, has already discovered more than $2.3 billion worth of allegedly fraudulent Medicare claims. Both Miami and Detroit are cities targeted by the Medicare Fraud Strike Force and providers in these cities should be aware of this heightened scrutiny.

If you have any questions regarding the Anti-Kickback Statute, inappropriate remuneration to beneficiaries, medical necessity issues, or any other compliance issues relating to Medicare fraud or allegations of Medicare fraud, please contact a Wachler & Associates attorney as 248-544-0888.

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