Wachler & Associates Health Law Blog

In collaboration with Kaiser Health News, the New York Times recently reported on the concerns over the rising costs associated with hospice care. While Medicare is praised for its reimbursement of providers for hospice services because of the medical and emotional support hospice gives to dying patients, there are concerns that hospice is being misused. According to the article, four in 10 Medicare beneficiaries use hospice services before they die and the cost of hospice care has risen from $2.9 billion in 2000 to $12 billion in 2009.

In response to the growing anxiety that hospice is being abused, the Office of Inspector General of the Department of Health and Human services examined the provision of hospice services in nursing homes. The OIG found that hospices routinely failed to document whether the patients belong in hospice care or that the patients received the care they were entitled to. This discovery prompted the OIG to investigate any unusual patterns in hospice stays.

In light of this recent scrutiny of hospice costs, hospice providers should take extra precautions with regard to compliance programs and should consider conducting self-audits to identify potential risk areas within their organizations.

In contradiction of President Obama’s campaign promises to let states create their own policies regarding medical marijuana use, the Obama administration released a memo approving federal prosecution of anyone in the business of cultivating or supplying marijuana to patients, whether or not they comply with state law. The original guidelines that were set in October 2009 were put in place as a way to spare seriously ill patients and their caregivers from prosecution. However, the memo stated that these guidelines caused an increase in the commercial cultivation, sale, distribution and use of medical marijuana, in which many of these activities casts suspicion on whether it is truly for medical purposes. In the memo, Deputy Attorney General James Cole stated, “persons who are in the business of cultivating, selling, or distributing marijuana, and those who knowingly facilitate such activities, are in violation of the Controlled Substances Act, regardless of state law.”

There have already been raids on suppliers in the 16 states where medical marijuana is legal under state law. Additionally, officials in 10 states have recently received warnings about possible prosecution if they authorized marijuana-selling dispensaries. These warnings have caused states, such as Washington and Rhode Island, to abandon plans that would legalize medical marijuana dispensaries. Other states, including Delaware and Vermont, have decided to continue in their efforts to legalize medical marijuana by approving a number or dispensaries for patients in need of the drug.

If you are a provider with questions regarding participation in the certification of patients for medical marijuana usage and compliance with state or federal law, including compliance with the Michigan Medical Marihuana Act or the Michigan Medical Marihuana Program, please contact at Wachler & Associates attorney at 248-544-0888.

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.

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.

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.

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