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On October 8, U.S. District Judge George Steeh refused to grant an injunction that would prevent the implementation of the federal health reforms enacted through the Affordable Care Act.  Judge Steeh also dismissed several substantive portions of the suit, determining that Congress did not exceed its constitutional authority by requiring most people to buy health insurance.  The lawsuit was brought by the Thomas More Law Center, an Ann Arbor-based Christian legal center and four plaintiffs.  The Detroit Free Press reported that an attorney for the law center, Robert Muise, stated that the plaintiffs will appeal the decision.

The Michigan lawsuit is one of several lawsuits filed challenging provisions of the Affordable Care Act.  Another lawsuit filed by several attorney generals, including Michigan Attorney General Mike Cox, is in the appeals process with oral arguments scheduled for December 16.

For more information on federal healthcare reform, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888. 

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In September the American Hospital Association (AHA) released its RACTrac for the second quarter of 2010.  RACTrac is a nationwide survey conducted by the AHA which documents the ongoing Recovery Audit Contractor (RAC) activity.  The purpose of the survey is to fill the void of information provided by the Centers for Medicare & Medicaid Services (CMS) on the RAC program’s impact on hospitals. 

RACTrac reported that 1,389 hospitals participated in the survey from all of the RAC regions.  During the first quarter of 2010, more than two thirds of these hospitals experienced RAC activity.  The survey results indicated that the RACs primarily engaged in complex reviews.  For instance, during the first quarter of 2010, 88 percent (over $15.5 million) of the reported RAC activity by hospitals participating in the survey was involved in complex reviews, while 20 percent was involved in automated reviews.  Complex reviews require human review of the medical records and a determination of whether or not an improper payment was made.  If an improper payment is identified, the hospital will receive a letter stating that the associated claim has been “denied.”  Automated reviews, however, involve a claim determination without human review of the medical records.  Instead, the RACs utilize software to detect certain types of errors.  The RAC will send a demand letter to the hospital, providing notice that an overpayment has been detected. 
Participating hospitals also reported appealing 16 percent of the RAC denials available for appeal.  Of the claims that had completed the appeals process at the time of the survey, 13 percent were overturned in favor of the provider.  However, 1,571 of the claims are still in the appeals process and the overturned rate may increase once the appeals process is complete. 
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The Office of the Inspector General (OIG) recently released Advisory Opinion 10-17 which deals with donations made as part of a private settlement agreement stemming from a Certificate of Need (CON) dispute. These donations, made to programs, which provide services to children and families, were deemed not to violate the Anti-Kickback statute.

The proposed donations would be made by the children’s health system to the health system in exchange for the health system dropping its challenge to the CON applied for by the children’s system.  These donations would be made to the health system’s wholly owned, federally tax exempt, entity that raises funds for the health system but does not provide any healthcare services.  The settlement agreement does not stipulate that either entity needs to refer patients to the other entity.

Several factors mentioned by the OIG which make this arrangement copacetic are that both requestors are non-profit, tax exempt with no incentive to grant referrals to one another, the children’s health system is obligated to pay the funds regardless of whether they are paid to the health system or some other third party, other safeguards exist to make sure that there are no incentives to grant referrals between the entities and the donations will go towards helping children and families, many of which are uninsured.

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Last week the Office of Inspector General (OIG) issued two Advisory Opinions addressing proposed programs that could potentially implicate the anti-kickback statute and the imposition of civil monetary penalties (CMPs).

The first OIG Advisory Opinion, 10-18, analyzed a proposed program by a health system which involved post-surgical free hotel accommodations to pediatric tonsillectomy patients insured by federal healthcare programs.  The health system provides services in a rural area and consists of four facilities that provide tonsillectomies.  The proposed program would offer the free overnight stay to pediatric tonsillectomy patients who are treated at the health system’s Surgery Center.  All of the procedures performed at the Surgery Center will be by ear, nose and throat specialists (Clinic ENTs) who only perform tonsillectomies at hospitals in the Health System.  Even though the patients that stay at the adjacent hotel will be Federal healthcare program beneficiaries, neither Federal healthcare programs nor private insurers will be billed directly or indirectly for the costs.  The OIG’s Advisory Opinion listed several components of the proposed program which contributed to its determination that the program would not constitute grounds for violation of the anti-kickback statute.  These included:

– The Clinic ENTs that perform the services do not have privileges at hospitals outside the Health System and do not perform tonsillectomies at hospitals outside the Health System.

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On September 10, 2010, CMS released draft form CMS-10343, which will be used by state Medicaid plans to show that they have contracted with a RAC auditor.  The forms are used in connection with preparation for Medicaid RAC expansion and include criteria related to payments to the Medicaid RAC and the appeal of Medicaid RAC denials.  Under the Social Security Act section 1902(a)(42)(B)(i), States are required to have an operational program and contract with a Medicaid RAC by December 31, 2010.  Pursuant to CMS’s Supporting Statement, States will be able to tailor the Medicaid RAC’s activities to the uniqueness of the Medicaid program in their state, as well as identify and proposetargeted areas for improper payments.

As CMS begins to move towards expansion of the RACs to Medicaid, providers should start preparing for audits of their Medicaid claims.

For more information on RACs or if you need assistance defending a Medicaid audit, please visit www.racattorneys.com– or contract a Wachler & Associates attorney at 248-544-0888.

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On September 23, 2010 the Centers for Medicare and Medicaid Services (CMS) published the Medicare self-referral protocol (SRDP).  The SRDP was established by sec. 6409 of the Affordable Care Act (ACA) which required the Secretary of Health and Human Services to establish a Medicare self-referral program that affords providers of services and suppliers the opportunity to self-disclose actual or potential violations of the physician self-referral statute.  The SRDP is open to all health care providers of services and suppliers, whether individuals or entities, and is not limited to a particular industry, medical specialty or type of service.  The purpose of the SRDP is to facilitate the resolution of matters that the disclosing party reasonably assesses are actual or potential violations of the Stark Law.  Thus, disclosing parties should make a submission to the SRDP only with the intention of resolving its overpayment liability exposure for conduct it identified.  CMS will evaluate the facts and circumstances surrounding the disclosed conduct to determine an appropriate solution.  It is important to note that CMS is not obligated to follow conclusions made by a disclosing party regarding the matter and has no obligation to resolve the matter in a particular way.

The disclosing party must submit the disclosure electronically and submit an original and 1 copy by mail to the Division of Technical Payment Policy.  Information required to be in the disclosure includes: (1) description of actual or potential violation(s); (2) financial analysis; (3) a signed certification stating that best to the individual’s knowledge, the information provided contains truthful information and is based on a good faith effort to bring the matter to CMS’s attention.

For more information on the SRDP or for assistance with Stark compliance measures please call a Wachler & Associates attorney at 248-544-0888.

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Recently the RAC for Region A, DCS Healthcare (DCS), added new issues for medical necessity reviews to its list of approved issues. DCS approved nine medical necessity issues, including Respiratory (limited to MS-DRG 190, 191, and 192), Gastro Intestinal Disorders (limited to MS-DRGs 391 and 393) and Diseases and Disorders of Blood, Blood Forming Organs and Immunological Disorders (limited to MS-DRG 811).  RACs for Region B, C and D have also approved medical necessity reviews for certain MS-DRGs.

For more information on RAC approved issues or if you need assistance with a Medicare audit, please visit www.racattorney.com or contract a Wachler & Associates attorney at 248-544-0888.

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The Centers for Medicare and Medicaid Services (CMS) published a proposed rule implementing provisions of the Patient Protection and Affordable Care Act (PPACA) that help tackle Medicare and Medicaid fraud.  According to Peter Budetti, the Director of the new anti-fraud office at CMS, the proposed rules will provide federal authorities the power to identify fraud and reduce improper payments by an estimated $55 billion.

According to CMS, the proposed rule is essential to the implementation of healthcare reform since the expansion of healthcare coverage relies upon saving money on fraud and abuse in the healthcare systems.  Specifically, the rules will provide increased scrutiny to $900 billion in annual spending in federal Medicare, and the state-federal Medicaid and Children’s Health Insurance Program (CHIP), but it is unknown how much money the proposed rules will actually save.

Increased scrutiny over Medicare and Medicaid Programs will include the following measures:

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A manufacturer of cochlear implants (“Requestor”) inquired whether a Proposed Arrangement would violate the Anti-Kickback Statute and result in civil monetary penalties.  The Office of the Inspector General for the Department of Health and Human Services (OIG) concluded that the Proposed Arrangement presents more than a minimal risk of violation of the Anti-Kickback Statute.

Cochlear implants are devices, covered by the Medicare and Medicaid programs, which assist patients’ ability to hear.  The implants consist of both internal and external components.  The internal component of the device is surgically implanted and following the implantation an audiologist must program the external sound processor.  Patients may choose the cochlear implant device and this choice may be influenced by the patient’s audiologist or surgeon.  The Requestor warranties the external component and operates a toll-free telephone line for customer’s questions and concerns about their product.  However, since customers often contact the Clinics for assistance with their devices, Clinics will provide troubleshooting services (Services) pursuant to the Requestor’s established process.

The Proposed Arrangement would operate pursuant to a written agreement between the Requestor and the Clinics.  The Requestor would compensate the Clinics $37 per occurrence for the Services.  The compensated Services would include those provided the Requestor under the customer’s warranty.  The Requestor affirmed that the fee was consistent with the fair market value and that Clinics would be prohibited from billing third-party payors or patients for the services.  These services would not be marketed to the patients. 

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U.S. District Judge Roger Vinson indicated last Tuesday that he will likely allow a lawsuit to proceed that challenges the Constitutionality of the Healthcare Reform law.  The lawsuit, filed by 20 states, the National Federation of Independent Business and two individuals, challenges whether the Constitution permits the federal government to mandate Americans to purchase health insurance.  Earlier this summer the Obama Administration requested Judge Vinson to dismiss the lawsuit, arguing that the challenge requests the court to overturn precedent enforcing the federal government’s power to regulate interstate commerce.

After a two-hour hearing with the parties, Judge Vinson indicated that he would likely deny the federal government’s motion to dismiss on at least the count addressing whether Congress can require most citizens to purchase health insurance.

For more information on healthcare reform and its impact on providers, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.

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