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As part of the Patient Protection and Affordable Care Act (PPACA), i.e., health care reform, states received more than $46 million in grants from the U.S. Department of Health and Human Services (HHS).  Crain’s Detroit Business reported that Michigan has received $1 million of grants from HHS to go towards improving oversight and review of proposed health insurance premium increases.  Although the Michigan Office of Financial and Insurance Regulation (OFIR) will ultimately use the grant for this purpose, OFIR first must obtain additional legislative authority to enforce consumer protections in the federal bill.  This will require the Michigan Legislature to amend the Michigan Insurance Code to incorporate the specific consumer protections.  At this time, the OFIR only has the authority to review, investigate, examine and encourage compliance from health insurance companies. 

Crain’s Detroit Business also reported that Michigan plans to use the $1 million grant to:

(1) Contract with consulting actuaries for targeted, in-depth analysis and review of health insurance premium filings made by HMOs and commercial carriers.

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The OIG recently published a report showing that from 2006 to 2008, Medicare allowed $2.2 million for routine maintenance and servicing of capped rental durable medical equipment (DME) with rental periods.  These payments were erroneously made because the Deficit Reduction Act of 2005 (DRA) dramatically limited, if not eliminated, routine maintenance and servicing for beneficiary-owned DME with rental periods that began after January 1, 2006.  During the same time period, OIG found that Medicare allowed nearly $4.4 million for repairs for beneficiary-rented capped rental DME.  Medicare has never allowed payments for repairs of beneficiary-rented capped dental DME as the cost for repairs are already included in the monthly rental payments to suppliers.

As a result of its discoveries, the OIG is recommending that the Centers for Medicare and Medicaid Services (CMS) establish an edit to deny claims for routine maintenance and services of capped rental DME periods beginning after January 1, 2006 and for claims for repair of beneficiary-rented capped rental DME.  In addition, the OIG urges CMS to enhance the enforcement of existing payment requirements for beneficiary-owned capped rental DME, to begin to track repair costs for capped rental DME and to take appropriate action on erroneously allowed claims for maintenance and servicing, repair and payment errors.

DME suppliers should expect to see audit activity from CMS contractors on this issue and may want to consider conducting self-audits as part of their compliance programs.

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The Department of Health and Human Services Office of Inspector General (OIG) published a report finding that Medicare contractors overpaid physicians an estimated $13.8 million for services provided during calendar year 2007 with incorrect place of service codes.  The OIG report reminded physicians that they must identify the place of service on health insurance claim forms submitted to Medicare contractors.  This is because physicians are reimbursed at different rates depending on where the services are performed.

In addition to its identification of common billing errors, OIG recommended that the Centers for Medicare and Medicaid Services (CMS) instruct its Medicare contractors to recover the overpayments found from the services OIG sampled for its report.  OIG also encouraged the CMS to reopen nonsampled services to recover any overpayments and to continue its effort to educate physicians and billing services on the importance of identifying the place of service in Medicare billing records.

Providers should ensure that their billing practices follow the Medicare requirements, including proper place of service codes.

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The Centers for Medicare and Medicaid Services recently published an MLN Matters Article regarding the length of time physicians are required to retain documentation.  The article reiterated that the Health Insurance Portability and Accountability Act (HIPAA) of 1996 requires a covered entity to retain required documentation for six years from the date of its creation or the date when it was last in effect, whichever is later.  Although some state laws may have shorter periods, HIPAA requirements preempt these laws.  In addition, the HIPAA Privacy Rule requires covered entities to utilize appropriate administrative, technical and physical safeguards to protect the privacy of medical records and other protected health information (PHI) for the period in which the information is maintained by the covered entity, including disposal.

The MLN Matters Article also reminded providers that submit cost reports that they are required to retain the original or legally reproduced for at least 5 years after the closure of the cost report.

As is reiterated by this MLN Matters Article, the maintenance of accurate medical records for Medicare beneficiaries is very important.  The medical records should be completed promptly, accessible, retained and providers should implement a system of author identification to ensure authenticity and security.

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The American Hospital Association (AHA) reported on August 10 that the Centers for Medicare and Medicaid Services (CMS) have approved “medical necessity review” audits for the Recovery Audit Contractor (RAC) program.  According to the AHA, the approved audits include 18 types of inpatient hospital claims and one type of durable medical equipment claim.  Although the report did not include the specific new audit issues, providers should expect to see these issues posted on RAC websites and may begin receiving additional documentation requests (ADRs) within the next two weeks. 

For more information on recovery audit contractors, please visit www.racattorneys.com or contact a Wachler & Associates attorney at 248-544-0888.  
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The Office of Inspector General (OIG) for the Department of Health and Human Services recently announced a discovery that during the time period from July 15, 2010 through August 4, 2010 the search/verification function on the online searchable List of Excluded Individuals/Entities (LEIE) was not working properly.  Therefore, health care providers who conducted searches during this time period are advised to repeat the searches because it is possible that searches may have resulted in false negative results, i.e. individuals and/or entities that are actually excluded may have shown up as not excluded.

Medicare providers who contract with or employ excluded providers are subject to civil monetary penalties, nonpayment for services and possible exclusion themselves.

For more information regarding obligations to search the excluded providers list as well as other compliance issues, please contact a Wachler & Associates attorney 248-544-0888.

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Michigan’s Attorney General Mike Cox announced a community forum to be held next week regarding the proposed sale of the Detroit Medical Center to Vanguard Health Systems, Inc.  Earlier this year, DMC signed a purchase agreement that would require Vanguard to make $850 million in capital improvements over the next five years.  The forum will take place from 5:00-7:00pm on August 18 at the Cadillac Place in Detroit.  It will provide the public with an overview of the proposed sale, explain the Attorney General’s review process for the transaction and provide the public an opportunity to comment and question representatives of DMC and Vanguard.

For more Michigan healthcare legal news, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888. 

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The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) published an advisory opinion regarding the Anti-Kickback Statute.  The OIG concluded that the Anti-Kickback Statute would not be implicated where a charitable donation is made in the name of a healthcare provider, so long as the healthcare provider does not receive a tax deduction or other monetary benefit from the donation.

The request of the advisory opinion created an online scheduling website for certain manufacturers (pharmaceutical, medical and diagnostic) to schedule a time to meet with healthcare providers to educate the providers about new products.  Although the manufacturers would pay a fee for the time, healthcare providers would not be paid for their availability, nor would they have to pay to participate.  Rather, healthcare providers would designate a public charity to receive donations “in name of” the healthcare provider.  Restrictions on the donation include, the healthcare provider will not be entitled to a tax deductions or other monetary benefit from the donation and neither the healthcare provider nor a member of the healthcare provider’s family may be closely affiliated with the charity (i.e. serve on the charity’s board or be employed by the charity). 

In its conclusion that this arrangement would not violate the Anti-Kickback Statute, the OIG stressed that the healthcare provider must not receive any form of remuneration, including tax incentives.  In addition, the OIG noted that the requestor had put in place several safeguards to ensure that the program was not abused.

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On July 28 the U.S. District Court of the Southern District of California granted the Department of Health and Human Services’ (HHS) motion for summary judgment in the case, Palomar Medical Center v. Sebelius.  The case, filed on May 26, 2010, challenged a magistrate judge’s recommendation that HHS is correct in its position that a decision to reopen a Medicare audit claim is not subject to appeal, regardless of whether “good cause” was given for the audit.

Palomar Medical Center originally alleged that the Centers for Medicare and Medicaid Services (CMS) unlawfully reopened a claim without showing “good case” for the reopening as required by Medicare regulations.  In addition, Palomar argued that CMS was incorrect in its position, that Administrative Law Judges (ALJs) may not review whether Medicare contractors, such as recovery audit contractors (RACs), have followed federal regulations when reopening claims.

This case has important consequences for Medicare providers because there appears to be no recourse when a Medicare contractor does not abide by CMS’ reopening rules.

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The Department of Health and Human Services (HHS) announced on July 29 that it will make available $51 million in grants to help states initiate health insurance exchanges, mandated by the Patient Protection and Affordable Care Act.  Grants of up to $1 million will be made available to each state.  The purpose of the grants is to help states develop consumer-centered health insurance marketplaces that will encourage competition and greater control in the hands of individuals and small businesses.  The exchanges will be “one stop shops” for consumers and businesses to purchase health insurance coverage.

The HHS recognized the importance of the grants to encourage the implementation of the health insurance exchanges, given states’ struggles to maintain balanced budgets.  The Secretary of the HHS, Kathleen Sebelius voiced this concern by emphasizing that, “these grants will give [states] the resources to conduct the research and planning needed to build the health insurance marketplace of the future.”

States have the option to establish and operate their own exchange or partner with another state or states to operate a regional exchange.  Secretary Sebeilus said that if a state decides not to create an exchange for its residents, the HHS will establish one on their behalf.

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