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The University of California at Los Angeles Health System (UCLAHS) has agreed to settle potential HIPAA violations stemming from an investigation conducted by the U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR). UCLAHS has agreed to pay $865,500, along with implementing a plan of correction to ensure future compliance with HIPAA.

The investigation was sparked by two separate complaints filed with OCR from two celebrity patients. Allegedly, UCLAHS employees repeatedly viewed the electronic health information of these patients without the necessary authorization. OCR also discovered that the employees looked at the electronic protected health information of a number of other patients over a span of three years.

Under HIPAA, entities must reasonably restrict access to patient information to those employees who have a legitimate work-related reason to view the information. Furthermore, entities are required to sanction employees who have violated these policies. OCR maintains a firm stance that entities should properly train all employees about the current laws protecting patient health information and should have policies in place to ensure compliance with these policies.

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DCS Healthcare (RAC for Region A) added a new issue for medical necessity claims to its CMS-approved issues list for providers in Maryland.

    • APR-DRG 204-Syncope (All severity and risk of mortality levels). 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. This review will be of APR-DRG 204-Syncope.

CGI (RAC for Region B) added three new issues to its CMS-approved list issues for providers in all Region B states.

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The Centers for Medicare and Medicaid Services (CMS) released a MLN Matters article this week discussing Diagnosis Related Group (DRG) Coding vulnerabilities for inpatient hospitals. DRG validation review, executed by Recovery Audit Contractors (RACs), focuses on the hospital’s selection of principal and secondary diagnoses and procedures for a claim. The recent MLN Matters article notes that auditors in the RAC program have discovered coding errors that may result in RAC overpayment demands in connection with DRG validation reviews.

The MLN Matters article reminds inpatient hospitals of the risks associated with coding a record prior to receiving the complete medical record. For example, the article identifies the situation where the emergency room report, History and Physical, and early progress notes identify one condition, where continued evaluation reveals an entirely different condition. This practice may mean that the reported codes do not accurately portray a patient’s conditions and procedures throughout the course of treatment. The recovery auditors, however, will review the entire medical record during DRG validation review and may discover another more accurate code exists for the services provided.

In addition, the article noted that if there is conflicting or contradictory information in the record, the coder should ask the attending physician for clarification to identify the correct principal and secondary diagnoses.

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The Centers for Medicare and Medicaid Services (CMS) has proposed to rescind the current signature requirement for lab requisitions. Currently, the 2011 Medicare Physician Fee Schedule requires a physician’s or nonphysician provider’s signature on all lab requisitions for tests paid under the clinical lab fee schedule, regardless of whether there is a signed order. This requirement was to become effective at the beginning of 2011. However, CMS decided to postpone this requirement due to commentary by providers, labs and other stakeholders of the health care industry. The signature requirement on lab requisitions was proposed by CMS as a way to reduce fraud and improper payments. Recently, CMS has stated it underestimated the burdens that the rule would have on quality of care due to the amount of time it takes providers to obtain the required signatures, especially for providers who do not use electronic health records.

If you have any questions regarding compliance with the Medicare Physician Fee Schedule, or need help defending against a current or future audit, please contact a Wachler & Associates attorney at 248-544-0888.

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The Centers for Medicare & Medicaid Services (CMS) intends to reduce the Comprehensive Error Rate Testing (CERT) error rate by correcting vulnerabilities identified by Recovery Auditors and other Medicare contractors during DRG Validation reviews. DRG Validation review focuses on the hospital’s selection of principal and secondary diagnoses and procedures on a claim. Recovery Auditors found that a significant amount of claims contain incorrect principal diagnoses.

The Uniform Hospital Discharge Data Set (UHDDS) defines principal diagnoses as the condition responsible for occasioning the patient’s admission to the hospital. UHDDS Guidelines for coding and reporting secondary diagnoses allow the reporting of “any condition that is clinically evaluated, diagnostically tested for, therapeutically treated, or increases nursing care or the length of stay of the patient.”

CMS found that hospitals often code patient records prior to receiving the complete medical record. As Recovery Auditors review the entire medical record when performing DRG validation reviews, hospitals that code prior to receiving the entire report, e.g. without the discharge summary or operative reports, increase their chance of coding errors. Early progress notes may indicate that the patient has one condition, but continuing workup and evaluation determines something entirely different. Therefore, coders must have access to the complete record in order to assign accurate codes. Coders must also clarify any conflicting diagnoses by attending physicians and consultants in order to limit their exposure to Recovery Auditors, who will review data from the entire medical record.

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On June 14, 2011, the Office of Inspector General (OIG) issued an unfavorable advisory opinion addressing an existing and a proposed arrangement involving contracts between a durable medical equipment (DME) supplier and several independent diagnostic testing facilities (IDTF). The DME supplier (Requestor) provides continuous positive airway pressure supplies (CPAP), which may be prescribed by a physician for patients diagnosed with obstructive sleep apnea. The study may be performed at the IDTFs, and a patient must select a DME supplier to supply the equipment after being prescribed the CPAP.

The existing arrangement involves contracts between Requestor and several IDTFs, some of which have physician investors, where the IDTFs are permitted to display and provide equipment from multiple DME suppliers. The patients are given a list of local DME suppliers, and are advised by IDTFs their right to select which supplier will provide them with the equipment. The contracts only apply to non-federally insured patients. If a non-federally insured patient chooses Requestor’s DME, an IDTF staff member will prepare the CPAP for the patient, along with educating the patient on how to properly use the equipment. For completing these tasks, Requestor pays the IDTF a per-patient fee. Each contract between Requestor and IDTF is non-exclusive and is set for a term of at least one year. Furthermore, Requestor may only terminate the contract for breach or for cause, but the IDTF may terminate the contract at any time.

The proposed arrangement would be similar to the existing arrangements, except for the following three elements: (1) the proposed arrangement would include federally-insured patients; (2) IDTF would be paid a flat monthly/annual fee; and (3) Requestor would have the ability to terminate the contract if it is unsatisfied with the number or patients receiving the services.

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On Tuesday, the Obama Administration announced that it decided to abandon its “mystery shopper” survey. The survey was created as a way to address concerns about the shortage of primary care doctors, a problem that could continue to grow if more than 30 million Americans gain health care coverage as expected by the Obama Administration. The decision not to move forward with the survey came after doctors and politicians criticized the project for needlessly wasting taxpayer dollars, along with a number of privacy issues. According to Senator Mark Steven Kirk, Republican of Illinois, there have already been a number of reputable studies confirming the difficulties for Medicare patients to find doctors to see them. Kirk was joined by a number of others who ultimately persuaded the Obama Administration to put the survey on what a spokesman for the health department labeled as an “indefinite hold.”

Physicians should understand their options when dealing with Medicare patients. Physicians can choose to limit the number of Medicare patients that they see. Physicians can also choose to be “nonparticipating” or can choose to “opt-out” of Medicare. If you are a physician with questions about your Medicare participation options, please contact a Wachler & Associates attorney at 248-544-0888.

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The Centers for Medicare & Medicaid Services (CMS) recently issued an advisory opinion stating that a physician recruitment arrangement including a non-competition provision meets the requirements of the physician recruitment exception under the Stark law. The approved non-compete arrangement restricts the physician from establishing, operating, or providing professional medical services at any location within a twenty-five-mile radius of the hospital for one year.

Under the Stark law, the original Stark physician recruitment exception required that a practice not impose additional restrictions on a recruited physician other than conditions related to the quality of care. However, in Stark III, CMS stated that it now believes that categorically prohibiting non-compete provisions from recruitment arrangements makes it difficult to recruit physicians, and that practices may be unable to hire physicians despite receiving a hospital’s financial assistance in compliance with the Stark physician recruitment exception. CMS provided several factors that determine whether a non-competition provision imposes practice restrictions that “unreasonable restrict” a physician’s ability to practice medicine in the geographic service area. In Advisory Opinion 2011-01, CMS found that: 1) the time period restriction of one year was reasonable, 2) the distance requirement was reasonable based on the hospital’s geographic service area, 3) the physician would still be permitted to practice at certain hospitals both within and outside the hospital’s service area during the one year period, and 4) the non-competition provision complies with state a local laws.

The advisory opinion provides health care entities with a framework for structuring non-competition provisions under the requirements of the Stark law physician recruitment exception. Wachler & Associates regularly advises clients on Stark, fraud and abuse, and the anti-kickback law. If you have any questions regarding the physician recruitment exception, the Stark law in general, or other Stark exceptions please contact a Wachler & Associates attorney at 248-544-0888 or visit www.wachler.com

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The Obama administration has labeled the increasing shortage of primary care doctors as a “critical public policy problem.” In an effort to address this issue, the administration intends to assemble a team of “mystery shoppers” to pose as patients, call doctors’ offices, and request appointments in order to see how difficult it is for people to obtain care when their health problems arise. In addition to better understand the problematic shortage of primary care doctors, the survey will also attempt to discover whether doctors are accepting patients with private health insurance while at the same time refusing to attend to those insured by government health care programs.

The survey will be conducted by a federal contractor who will call 4,185 doctors’ offices. The number of surveys will be evenly conducted throughout nine states: Florida, Hawaii, Massachusetts, Minnesota, New Mexico, North Caroline, Tennessee, Texas, and West Virginia. Each office will be called at least twice, one call from a person claiming to be privately insured while another federally insured, inquiring about whether the office is accepting new patients. Some mystery shoppers will pretend to be in need of a routine checkup, while others will claim to have symptoms necessary of more urgent care. Furthermore, mystery shoppers will not identify themselves as government workers and will block the caller ID of the incoming calls. A third call will be made to eleven percent of doctors, in which the callers will identify themselves as calling on behalf of the U.S. Department of Health and Human Services. The caller will ask doctors about which types of insurance they accept and then compare those answers with the mystery shopper calls, noting any discrepancies. The survey data collected will be kept confidential and will not identify any individual doctors. With last year’s passing of the new health care law, it is predicted that more than 30 million people will obtain health care coverage. Therefore, the federal government finds it necessary to conduct this mystery shopper survey in an effort to fully understand the shortage of primary care doctors and ultimately fix the problem.

Physicians should understand their options when dealing with Medicare patients. Physicians can choose to limit the number of Medicare patients that they see. Physicians can also choose to be “nonparticipating” or can choose to “opt-out” of Medicare. If you are a physician with questions about your Medicare participation options, please contact a Wachler & Associates attorney at 248-544-0888.

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A group of U.S. senators is seeking an inquiry into the expansion and potential abuse of physician-owned distributorships (PODs). PODs are entities that allow doctors to purchase ownership shares in an organization that buys products used in surgery. In separate letters to the Centers for Medicare & Medicaid Services (CMS) and the U.S. Department of Health and Human Services (HHS), the report states that the Senate Finance Committee has received “numerous allegations” of physicians who performed more surgeries than medically necessary, or who used implants that were of “inferior quality or not best suited for the procedure,” due to their financial interest in PODs.

The Report asks each department to review the POD industry’s compliance with fraud and abuse and anti-kickback laws. Physicians who control the choice of medical devices may use their ability to generate referrals for hospitals in order to induce them to buy medical devices from companies in which the physicians have ownership. Further, the committee believes that the recently released regulations for accountable care organizations may “provide an inadvertent loophole allowing less reputable POD models to fall under the Stark and anti-kickback law waivers envisioned for ACOs.”

Physician-owned distributorships, according to a 2006 OIG opinion, carry “the strong potential for improper inducements.” The Senate committee noted that hospitals, physicians and medical device manufactures would benefit from “clear legal guidance.” For more information regarding PODs and their compliance with fraud and abuse and anti-kickback laws, please contact a Wachler & Associates attorney at 248-544-0888 or visit our website at www.wachler.com

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