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St. Jude Medical Center will pay $3.7 million in a settlement with the Department of Justice regarding allegations that the organization paid illegal kickbacks to hospitals. In the settlement, St. Jude does not admit wrongdoing. The Department of Justice alleged that St. Jude paid kickbacks to hospitals in order to obtain opportunities in the heart device business. St. Jude argued that the allegations were based on “small, isolated product rebates “that had been paid over five years ago. The government argued, however, that these were kickbacks merely disguised as rebates. The case came to the attention of the Department of Justice through a whistleblower who had filed a False Claims Act qui tam action exposing the kickbacks. The whistleblower will receive $640,000 as part of the settlement.

If you would like any of your financial arrangements analyzed for risk of Stark or Anti-Kickback Statute violations, please contact a Wachler & Associates attorney at 248-544-0888.

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The Office of Inspector General (OIG) of the Department of Health & Human Services (HHS) issued two advisory opinions.

The first advisory opinion released by the OIG involves a continuing care retirement community’s proposed rewards program for referrals by current residents and employees. The OIG determined that the proposed arrangement would not be a violation of the Anti-Kickback Statute, and thus would not subject the requestor to administrative sanctions.

The requestor for the OIG’s opinion on the proposed arrangement operates continuing care retirement communities (CCRCs). The CCRCs provide three levels of care: independent living, assisted living, and skilled nursing. Although continuing care residents have a contractual right to move to a higher level of care, a 2005 actuarial study conducted by the requestor found that two-thirds of those who enter the CCRCs at the independent living level are not expected to become residents of the community’s skilled nursing units. The CCRCs do not provide health care, nor do they participate in Federal health care programs.

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Beginning July 1, 2010, Blue Cross Blue Shield of Michigan (BCBSM) will cease payment on CPT consultation codes for Medicare Plus Blue PFFS and Medicare Plus Blue PPO. This decision follows after the Centers for Medicare & Medicaid Services (CMS) discontinued reimbursement as of January 1, 2010 for consultation codes in CPT ranges *99241-*99245 and *99251-*99255.

BCBSM outlined three situations in which consultation codes will not be payable, beginning with dates of service on or after July 1, 2010:

  • Services performed in various settings that were previously billed to inpatient facility and office or outpatient settings.
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    The sale of the Detroit Medical Center (DMC) to Vanguard Health System, a hospital chain based in Nashville, has been delayed ten days. The DMC Board of Trustees and Vanguard Health Systems extended the letter of intent to allow each organization’s legal teams to complete the necessary work for the parties to reach an agreement.

    The proposed deal involves Vanguard’s investment of $850 million over five years in 20 projects, including a new tower at DMC’s Children’s Hospital of Michigan, and the expansion of the emergency department at Sinai-Grace Hospital. In addition, Vanguard would pay DMC $417 million to retire its debt and fund $278 million in pension obligations.

    For more information on health law issues, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.

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    Recovery Audit Contractors (RACs) recently posted new issues approved for review:

  • The RAC for Region A, DCS Healthcare, added three RAC issues for non-medical necessity claims for providers in the District of Columbia, Maine, Delaware, New Jersey, New York, New Hampshire, Pennsylvania, Rhode Island and Vermont.
  • CGI, the RAC for Region B, added a new issue for non-medical necessity DRG-validation inpatient claims and a new issue for durable medical equipment (DME) claims to its CMS-approved list for providers in all Region B states.
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    The Department of Health and Human Services Secretary Kathleen Sebelius filed a motion to dismiss in U.S. District Court to dismiss the Virginia Attorney General’s challenge of the healthcare reform law. The suit is separate from the legal action filed in Florida that includes 20 states. The Virginia Attorney General, Ken Cuccinelli, argued that Virginia was in a position to challenge the healthcare reform measure because of a law adopted in Virginia that states that individuals cannot be forced to buy health insurance in Virginia. The motion to dismiss filed by the Obama administration on Monday argues that Virginia had no standing to sue and that the Congressional power to regulate commerce renders the law constitutional.

    Although the Obama administration has remained clear on its federal arguments defending the healthcare reform law, this motion to dismiss is the first time that these arguments have been formally submitted to a court.

    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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    The U.S. Department (DOJ) and the Health Alliance of Greater Cincinnati entered into an agreement to settle a False Claims Act lawsuit with the DOJ alleging that from 1997 to 2004 Christ Hospital, a former member of the Health Alliance, scheduled cardiologists at a diagnostic unit based on the amount of business they brought to the hospital. The DOJ alleged that the arrangement was a kickback scheme because the cardiologists could bill for their diagnostic services and obtain new patients for follow-up procedures. The case was initiated by a whistle-blower lawsuit that the DOJ joined in 2008.

    In the settlement agreement, Health Alliance of Greater Cincinnati and Christ Hospital deny the allegations and do not admit liability. The organizations agreed to pay a total of $108 million in the agreement.

    This case – and similar cases that have been brought against health care providers by the DOJ over the past several years – highlight the importance of ensuring compliance with federal laws including the Stark law and the Anti-Kickback Statute to protect against the possibility of costly False Claims Acts lawsuits.

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    On May 14, 2010, the Centers for Medicare and Medicaid Services (CMS) released an MLN Matters article explaining Change Request (CR) 6954. CR 6954 adds Section 3.14 to the Medicare Program Integrity Manual. This section clarifies language regarding clinical review judgments. It requires Medicare claim review contractors to instruct their clinical review staffs to use the clinical review judgment process when making complex review determinations about a claim. The clinical review judgment involves two steps:

    (1) The synthesis of all medical record information to create a longitudinal clinical picture of the patient; and

    (2) The application of the clinical picture to the review criterial to determine whether the clinical requirements in the relevant policy are met.

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    Last month the Centers for Medicare and Medicaid Services (CMS) published an MLN Matters Article regarding changes to remittance advice coding. The article is directed towards Home Health Agencies that submit claims to a Regional Home Health Intermediary (RHHI) or to the Home Health Medicare Administrative Contractor (HH MAC – National Heritage Insurance Corporation (J14 only)) for services provided to Medicare beneficiaries.

    The article explains that CMS released Change Request (CR) 6897 to instruct Medicare RHHIs and the J14 HH MAC to use a new Remittance Advice Remark Code (RARC) and a changed Claims Adjustment Reason Code (CARC) for home health agencies (HHAs) that are subject to the Home Health Prospective Payment System (HH PPS) outlier limitation. Up to CR 6897, the code “CARC 45” had been used to alert HHAs that an outlier payment, which would be eligible for payment, was not eligible because the HHA’s outlier limitation had been met. CMS found that CARC 45 did not adequately explain the reasoning for the denial of the payment, and therefore created a new remittance advice remark code (RARC) to be used in situations where the outlier limitation has been met. Then new RARC is N523. In addition to N523, HHAs can expect to see the claim adjustment reason code B5 (CARC B5).

    The new RARC and updated CARC are effective for claims with dates of service on or after March 1, 2010. Therefore, if a calculated outlier amount is not paid because the HHA has reached the outlier limitation, HHAs can expect to see the following on their remittance advice: (1) Group Code CO: “Contractual Obligation,” (2) Claim adjustment reason code B5 (CARC B5); (3) RARC N523.

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    The Centers for Medicare & Medicaid Services (CMS) issued Change Request (CR) 6698 to clarify how Medicare claim review contractors review claims and medical documentation submitted by providers. This clarification included an outline of new rules for signatures and added language for e-prescribing.

    The previous language in the Program Integrity Manual (PIM) required a “legible identifier” in the form of a handwritten or electronic signature for every service provided or ordered. CR 6698 updates these requirements to require that every service provided or ordered be “authenticated by the author” by handwritten or electronic signature; stamp signatures are generally unacceptable.

    CR 6698 also provides some exceptions to the signature requirement. First, facsimiles of original written or electronic signatures are acceptable for certifications of terminal illness for hospice. Second, there are other circumstances for which an order does not need to be signed. For example, orders for clinical diagnostic tests are not required to be signed, but there must be medical documentation by the treating physician that s/he intended the clinical diagnostic test to be performed. The documentation showing intent must be authenticated by the author with a handwritten or electronic signature. Finally, other regulations and CMS instructions regarding signatures take precedence. For example, if the NCD, LCD, and CMS manuals have specific signature requirements, those signature requirements take precedence. However, if these are silent as to signature requirements, the reviewer should follow the guidelines set forth in CR 6698.

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