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The Director of Health Care for the Government Accountability Office (GAO), Kathleen M. King, recently testified before the Subcommittees on Health and Oversight, Committee on Ways and Means, House of Representatives. An important component of her testimony included a recommendation that Recovery Audit Contractors (RACs) should focus their post-payment review activities on home health and durable medical equipment providers.

Ms. King reported in her testimony that the Centers for Medicare & Medicaid Services (CMS) estimates improper payments for Medicare fee-for-service (FFS) reached $24.1 billion for calendar year 2009. However, Ms. King emphasized that this may not be the full figure, and identified challenges to and strategies for preventing fraud, waste, and abuse and to reduce improper payments. The GAO identified five strategies to help CMS address these challenges. The strategies are: (1) strengthening provider enrollment processes and standards, (2) improving pre-payment review of claims, (3) focusing post-payment claims review on most vulnerable areas, (4) improving oversight of contractors, and (5) developing a robust process for addressing identified vulnerabilities.

Ms. King also discussed the future strategy for RACs. She stated that since RACs are paid on a contingent fee basis, they often focus their post-payment reviews on health provider with expensive claims. However, the GAO recommends that RACs focus their post-payment review activities on items and services where RACs are not expected, specifically home health and durable medical equipment.

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Accountable Care Organizations (ACOs) are beginning to populate Michigan’s healthcare sector. ACOs are integrated groups of hospitals, physicians, long-term care facilities and home health agencies. A provision in the Patient Protection and Affordable Care Act (PPACA) authorized provider organizations to create ACOs so long as they agree to manage care for a minimum of 5,000 Medicare patients. The purpose of the ACOs is to provide providers with a financial incentive to coordinate care and improve the quality of care.

Crain’s Detroit Business reported several ACOs forming in Michigan. The article notes that Oakwood Healthcare Inc., University of Michigan Health System, Detroit Medical Center, and Trinity Health are all in various stages of forming ACOs.

Despite their popularity, some critics fear that ACOs will prevent doctors from participating in other healthcare contracts or take away doctors’ ability to effectively negotiate.

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The American Board of Internal Medicine (ABIM) has filed suits against 5 physicians for alleged copyright infringement, the misappropriation of trade secrets, and breach of contract. In addition, ABIM immediately suspended or revoked a total of 139 physicians’ board certification. The ABIM is an organization that certifies internal-medicine specialists and sub-specialists. The organization alleges that the physicians solicited or shared confidential examination questions used to certify doctors in internal medicine and its subspecialties. The Wall Street Journal reported that the law suits stem from participation in Arora Board Review, an independent test review course. Last year, ABIM sued Arora alleging that Arora instructors told class participants that the review questions were from actual certification exams and encouraged them to inform the company of additional questions they remembered after taking the exam.

Our firm represents numerous physicians who have been affected by this unprecedented action. We are in the process of conducting a comprehensive evaluation of their legal rights regarding the suspension of their board certifications and individualized analyses of potential efforts to mitigate any collateral effects.

If you have been adversely affected by this lawsuit and would like assistance in evaluating your legal rights, please contact a Wachler & Associates attorney at 248-544-0888.

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The RAC for Region D, HealthDataInsights, added two new RAC issues for Part B claims review to its CMS-approved list. The new issues are co-surgery not billed with modifier 62 and global days. The issues apply to providers in all Region D states.

For more information on RAC approved issues or if you need assistance with a RAC or third party payor audit, please visit www.wachler.com or contact a Wachler & Associates attorney at 248-544-0888.

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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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