Physician Law

White House Steps Up Efforts to Curb Health Care Fraud

Todd Rodriguez — Fri, 29 Jan 2010 09:44:20 -0500

According to a PR Newswire article today, the White House intends to significantly increase efforts to curb health care fraud and abuse. At the National Summit on Health Care Fraud this week, Secretary of Health and Human Services, Kathleen Sebelius announced that President Obama's FY 2011 Budget is expected to include historic support for anti-fraud efforts focusing on programs that have successful in preventing fraud and reducing payment errors. For physicians, this is just one more warning that it's is time to get your compliance efforts in order.

Medicare Eliminates Consult Codes

Todd Rodriguez — Tue, 19 Jan 2010 11:38:18 -0500

In case you missed it, the Centers for Medicare and Medicaid Services (CMS) eliminated use of the evaluation and management Consultation Codes. Consultations are now to be billed using the standard E/M visit codes. According to CMS Transmittal 1875:

"Effective January 1, 2010, the consultation codes are no longer recognized for Medicare Part B payment. Physicians shall code patient evaluation and management visit with E/M codes that represent where the visit occurs and that identify the complexity of the visit performed. In the inpatient hospital setting and the nursing facility setting all physicians (and qualified nonphysicians where permitted) who perform an initial evaluation and management may bill the initial hospital care codes (99221 – 99223) or nursing facility care codes (99304-99306). As a result of this change, multiple billings of initial hospital and nursing home visit codes could occur even in a single day."

Hospital to Pay Feds Based on Improper Physician Arrangement

Todd Rodriguez — Mon, 11 Jan 2010 10:29:32 -0500

According to a Department of Justice Press Release, a Texas Hospital has agreed to pay the federal government close to a million dollars in settlement of allegations that the hospital violated the federal False Claims Act. Specifically, Arlington Memorial Hospital has agreed to pay the U.S. $990,509.50 to resolve allegations that it improperly submitted claims to Medicare for services ordered by physicians who were allegedly being paid by the hospital to perform unnecessary services. The DOJ alleged that the hospital paid a physician group for blood gas lab study interpretations even though such tests no longer required any professional interpretation, and then failed to correct such arrangement after learning of it (and self-disclosing it to the government).

Congressional Budget Offices Revises Estimated Savings from Tort Reform - Finds $50 Billion in Extra Savings

Todd Rodriguez — Wed, 16 Dec 2009 09:57:30 -0500

In a 2008 report, the the Congressional Budget Office estimated that the savings from tort reform would amount to only about $4 Billion over the period from 2010 to 2019. However, acording to a letter dated December 10, 2009 to Senator Rockefeller, the CBO's original estimate failed to take into consideration that tort reform would result in lower utilization of services. Based on this previously omitted consideration, the CBO has now revised its estimate and now believes that tort reform would result in saving of $54 Billion over the same period of time!

Amendments to Charges for Medical Records

Todd Rodriguez — Tue, 08 Dec 2009 10:52:31 -0500

The Pennsylvania Department of Health has published the amounts which may be charged by a health care facility or health care provider in Pennsylvania upon receipt of a request or subpoena for production of medical charts or records. Effective January 1, 2010, the following fees may be charged by a health care facility or health care provider for production of records in response to subpoena or request:

Not to Exceed
Amount charged per page for pages 1—20 $ 1.32
Amount charged per page for pages 21—60 $ .98
Amount charged per page for pages 61—end $ .33
Amount charged per page for microfilm copies $1.95
Flat fee for production of records to support any claim under Social Security $24.94
Flat fee for supplying records requested by a district attorney $19.68
* Search and retrieval of records $19.68

The list, which is published annually, can be found in the Pennsylvania Bulletin.

Use the Correct Modifier When Billing for Diagnostic Tests

Todd Rodriguez — Tue, 08 Dec 2009 09:00:03 -0500

According to a recent Transmittal from the Centers for Medicare and Medicaid Services, physicians and others are using modifier -PC to designate the "professional component" of diagnostic tests. However, the -PC modifier is actually to be used to designate "Wrong Surgical or Other Invasive Procedure Performed on a Patient."

Apparently many providers assume that because the modifier for technical component services is -TC, the corresponding modifier for professional components is -PC. In fact, the correct modifier for professional component services is -26.

Note that Claims submitted with the wrong modifier will be denied.

Medicare Physician Fee Reform May be on the Way

Todd Rodriguez — Wed, 02 Dec 2009 09:30:23 -0500

On November 24, 2009, the U.S. House of Representatives passed the Medicare Physician Payment Reform Act" (H.R. 3961) which would repeal the scheduled 21% fee reduction scheduled for January 2010. The legislation would also permanently replace the existing Sustainable Growth Rate (SGR) formula with a new formula that, according to the House summary:

Removes items such as drugs and laboratory services not paid directly to practitioners from spending targets;
Allows spending on most services to grow at the rate of GDP plus 1 percentage point per year (compared to GDP without any adjustment today);
Allows spending on primary and preventive care services to grow at GDP plus 2 percent per year; and
Encourages coordinated, innovative care by allowing Accountable Care Organizations to be responsible for their own growth paths, irrespective of reductions or increases that apply elsewhere in the system.

The bill is now on the Senate calendar for consideration.

President to Sign Executive Order to Curb Medicare Fraud

Todd Rodriguez — Fri, 27 Nov 2009 09:13:18 -0500

According to a report issued by the Office of Management and Budget (OMB) of the White House, the Federal government made $54 billion in improper payments in 2009 from the Medicare and Medicaid programs. The OMB reports that in response, President Obama is expected to sign an Executive Order this week designed to boost inter-agency transparency, hold agencies accountable, and create incentives for compliance. This is just another indication that fraud, waste and abuse enforcement efforts will likely spike considerably in the coming months and years, and physicians and other providers need to be sure they are devoting adequate resources compliance efforts.

Senate Bill Would Strengthen Anti-Fraud Efforts

Todd Rodriguez — Tue, 17 Nov 2009 08:44:02 -0500

While all eyes are on the health care reform debate, a new Senate bill would give the government improved tools for investigating and prosecuting fraud and abuse in both federal and private health insurance programs. One of the most significant proposed changes would authorize a qui tam whistleblower action under the False Claims Act based solely on allegations of a violation of the Anti-Kickback law.

Senator Ted Kaufman (D-DE) introduced the Health Care Fraud Enforcement Act of 2009, co-sponsored by Committee Chairman Patrick Leahy (D-VT) and Committee members Arlen Specter (D-PA), Herb Kohl (D-WI), Chuck Schumer (D-NY) and Amy Klobuchar (D-MN).

Kaufman’s proposed legislation would modify federal sentencing guidelines, health care fraud statutes, and forfeiture, money laundering, and obstruction statutes, including:

Sentencing increases: The bill directs the Sentencing Commission to increase the guidelines range for health care fraud offenses and clarifies that the full potential scope of the fraud should be considered at sentencing.

Redefining “health care fraud offense”: The bill includes all health care crimes within the definition of “health care fraud offense,” regardless of where they are codified. (ERISA, drug marketing, and kickback crimes are currently not included) This change will make available to law enforcement the full range of antifraud tools, including criminal forfeiture and obstruction penalties, to combat these offenses.

Improving whistleblower claims: kickbacks lead to unnecessary and risky medical care and pervert the doctor-patient relationship. This bill clarifies that all payments made pursuant to illegal kickbacks are false for purposes of the False Claims Act, regardless of who submitted the claim.
Creating a common-sense mental state requirement for health care fraud offenses: some courts have held that defendants must be aware that their conduct violates a specific provision of criminal law in order to be held accountable. This bill restores the original intent of Congress that a person is guilty of a health care offense if he knowingly does what the law forbids.

Increasing funding: Money spent on health care fraud prevention and enforcement is returned manifold through costs savings and civil and criminal recoveries. This bill authorizes a modest, yet significant, increase in federal antifraud spending of $20,000,000 per year through 2016.

If enacted, this bill would reduce a number of obstacles that have frustrated enforcement efforts and discouraged private qui tam cases. Since Congress is under pressure to find ways to pay for the increased coverage which may be mandated by the larger reform efforts, it is reasonable to anticipate that some form of increased enforcement efforts will garner bipartisan support. Plaintiff’s lawyers who represent whistleblowers are already beginning to publicize this bill on their web sites, so look for increased qui tam activity if it is passed.

For Sen. Kaufmann’s section-by-section summary, Click here. For more information on the Health Care Fraud Enforcement Act of 2009, contact William H. Maruca.

Texas Hospital System Settles Sham Lease/Directorship Claims for $27.5 Million

Todd Rodriguez — Mon, 16 Nov 2009 10:30:17 -0500

A cautionary tale for physicians who lease space or provide medical director services to hospitals. These common arrangements are coming under increasing scrutiny, and must be commercially reasonable to withstand challenge.

McAllen Hospitals L.P., d/b/a/ South Texas Health System entered into a settlement agreement with the Department of Justice on October 30, 2009 to pay $27.5 million to resolve allegations of violations of the Stark and Anti-Kickback law arising from lease and medical directorship payments to physicians. A qui tam whistleblower suit was brought by a former employee fired by the health system who will receive $5.5 million from the settlement. The system also agreed to a five-year Corporate Integrity Agreement.

The suit alleged that McAllen leased an unfinished office suite with a dirt floor from a referring physician for $8,000 per month, paid four physicians questionable medical director fees, wrote off a $150,000 loan to a cardiology group, and provided free rent, equipment, supplies and housekeeping services to other referring physicians, among other violations. The small Texas community had attracted national attention earlier this year when an article in the New Yorker reported that its average Medicare spending per enrollee was nearly two times the national average, and $3,000 more than the average local annual income, without a notably sicker population or better medical outcomes. These statistics may help the government publicize the connection between hospitals that pay kickbacks to induce referrals and increased costs passed along to Medicare.

The DOJ press release is here: http://www.justice.gov/opa/pr/2009/October/09-civ-1175.html

For more information, see: http://www.themonitor.com/articles/suit-32626-fraud-system.html

For more information regarding this settlement agreement, please contact William H. Maruca.

Red Flag Rule Enforcement Date Extended to June 2010

Todd Rodriguez — Tue, 03 Nov 2009 10:29:47 -0500

According to a Federal Trade Commission (FTC) press release, the FTC is once again delaying the "Red Flag Rule" identity theft enforcement date. In its current form, the Red Flag Rule could apply to many physician practices. The new enforcement date is June 1, 2010. For more information on the Rule, click here.

West Penn Allegheny Antitrust Suit Dismissed

Todd Rodriguez — Fri, 30 Oct 2009 07:40:51 -0500

According to a recent article in the Pittsburgh Post-Gazette, West Penn Allegheny Health System's federal antitrust lawsuit against University of Pittsburgh Medical Center and Highmark Inc., has been dismissed. Filed in April of this year, the lawsuit alleged that UPMC and Highmark conspired to raise prices and squeeze out competition. According to the article, the Court found that West Penn's position was inconsistent and that there was no conspiracy on the part of UPMC and Highmark.

No Long Term Fix for Medicare Physician Fee Cuts

Todd Rodriguez — Thu, 22 Oct 2009 14:03:28 -0500

Despite efforts by Senator Harry Reid to pass legislation which would have effectively frozen Medicare payment rates for physicians, it looks like Congress will once again look to freeze physician payment rates with a one-year patch. According to an article published by the Wall Street Journal, Senator Reid’s proposed bill would have permanently prevented Medicare payment cuts to doctors. However, the bill was estimated to cost $247 billion over ten years and Senator Reid was unable to secure the votes necessary to get the bill out of the Senate. The bad news for physicians is that there’s no permanent fix for the sustainable growth rate formula in the Medicare Physician Fee Schedule. The good news however is that Senator Reid has indicated an intention to pass a measure which would forestall the projected 21% decease in physician payments expected for 2010.

Substantial Reduction in Medicare Payment Rates Under Baucus Bill

Todd Rodriguez — Thu, 08 Oct 2009 16:59:08 -0500

According to the Congressional Budget Office (CBO), the Chairman’s mark for the Healthy Futures Act of 2009 proposed by Senator Max Baucus will be paid for, in part, through a reduction in Medicare payment rates. Specifically, according to a blog post by the CBO, the legislation would "substantially reduce the growth of Medicare’s payment rates for most services".

The CBO also acknowledges that it's estimated cost projections is based on the proposed legislation and legislation currently in effect such as the current Sustainable Growth Rate system pursuant to which physicians are already scheduled to see a major reduction in Medicare reimbursement. Lower reimbursement means physicians will likely need to see more patients (the bill would result in an estimated 29 million more insured patients) than they are currently seeing to generate the same revenue.

Doctor to Return to U.S. to Face Fraud Charges

Todd Rodriguez — Wed, 07 Oct 2009 10:45:58 -0500

According to an article in the News Tribune, the long arm of the federal government has tracked a Washington state doctor to Madagascar and brought him back to the U.S. to face fraud charges. The doctor, who operated four clinics in Washington, will be charged with conspiracy to commit health care fraud following an audit of the doctor's Medicaid billing practices. According to the article, undercover agents posing as patients visited the practice and claims were allegedly submitted for higher levels of service than were actually provided and/or for services not rendered.

OIG Blesses Chiropractic Referral Network

Todd Rodriguez — Wed, 30 Sep 2009 17:23:46 -0500

In the recently released OIG Advisory Opinion No. 09-16, the OIG found that participation by chiropractors in a referral network would not run afoul of the federal antikickback statute. In AO 09-16, the OIG reviewed a proposed arrangement whereby chiropractors who are members of an association would each pay $200 per month to participate in a "network" that would advertise chiropractic services through internet, print, radio, or television advertising and provide referrals for such services. A prospective patient who contacts the network for a chiropractor referral would be asked to provide a zip code. The network would then provide contact information for a participating chiropractor who practices in that zip code or, if no participating chiropractor practices in that zip code, in a nearby zip code. If more than one participating chiropractor is in the particular zip code, a name would be provided in sequence from a rotating list. The network would pay the chiropractic association $10 for each chiropractor that participated in the network.

Although the compensation paid by the network to the association would vary with the number of chiropractors who join the network, the OIG stated that it would not prosecute the arrangement because (1) the network itself would not provide any items or services payable by Federal health care programs, (2) the participation fee would not vary on the basis of referrals of Federally payable business, (3) referral of potential patients to participating chiropractors would be on a rotating basis, by geographic area, and (4) the referral service would be open to participation by any chiropractor licensed to practice in the state, and participating chiropractors would receive referrals on an equal basis, would not be influenced by the variation in fees paid by participants.

No More "Under Arrangements" Effective October 1, 2009

Todd Rodriguez — Wed, 30 Sep 2009 09:32:39 -0500

In case you somehow missed the news, effective October 1, 2009 (that's right, tomorrow), 'under arrangements' ventures involving Stark services are no longer permissible. An under arrangements venture usually involves provision of a diagnostic or therapeutic service on a turn-key basis by an outside supplier (often a physician office) on behalf of a hospital. The hospital then bills for the service to Medicare as if the service was performed by the hospital pays the under arrangements provider a fee for performing the service. In the 2009 Inpatient Prospective Payment System Regulations, CMS revised the definition of a designate health service "entity" for purpose of the Stark law to include not only the entity that submits the claim and receives payment from the Medicare program for the service (i.e., the hospital) but also the entity that performs the service (i.e., the under arrangements physician office). As a result of this change, physician practice will, as of tomorrow, no longer be able to provide services under arrangements to hospitals to which they refer Medicare patients. If for some reason you have not terminated or corrected any of your under arrangements contracts, you need to act quickly to avoid on-going Stark liability.

Medicare Rules on Preventive Care Services

Todd Rodriguez — Sat, 26 Sep 2009 08:19:56 -0500

It is apparent that preventive care will take on greater importance in the "reformed " health care system and while Medicare historically did not cover routine or preventive screening services, the list of preventive services now covered by Medicare has grown in recent years. Physicians should familiarize themselves with the applicable coverage and billing rules so as not to miss an opportunity to capture revenue for these services where appropriate. To help physicians in this regard, CMS has published a guide to preventive and screening services for physicians and other providers. Also, for a good overview on the OIG's current thinking on offering free screening services, physicians and other providers should have a look at the recent OIG Advisory Opinion 09-11 addressing free blood pressure screenings to walk-in visitors at a hospital.

Physician Owned Hospitals Targeted in Baucus Reform Proposal

Todd Rodriguez — Fri, 25 Sep 2009 10:02:53 -0500

The original Stark II regulations included an 18 month moratorium on an exception to Stark that would have permitted physician to invest in specialty hospitals. Since expiration of that moratorium some physicians seeking more control over their practice environments have embarked on a mission to develop specialty hospitals as an alternative to the traditional acute care hospital setting. However, hospital groups and certain legislators have also (unsuccessfully so far) attempted to ban physician ownership in these hospitals permanently.

Efforts to ban physician ownership in these hospitals continue and in fact, if passed, the health care reform bill proposed by the Senate Finance Chairman, Max Baucus, would effectively prohibit physician ownership of specialty hospitals unless those hospitals had a Medicare Provider Agreement in place on November 1, 2009. This means that physicians who have invested money in hospitals that are under development could expect to lose their entire investment.

Support for Mr. Baucus’s ban on physician ownership in hospitals would appear, however, to not be unanimous in the Senate, according to a September 15, 2009 letter from Senator Diane Feinstein to Mr. Baucus. In that letter, Ms. Feinstein states that “as the federal government continues to spend hundred of billions of dollars in federal funds to create jobs and stimulate the economy, it is nonsensical to approve legislation that will force ongoing construction on desperately needed projects to come to a halt.” Ms. Feinstein concludes her letter by requesting that Mr. Baucus consider changes to his proposed legislation that will allow facilities currently under construction to be brought to completion.

Physicians concerned about these developments should contact their representatives and professional societies.

Get Your COmments In the the 2010 Proposed Physician Fee Schedule

Todd Rodriguez — Thu, 27 Aug 2009 10:29:02 -0500

As reported previously on this Blog, the Centers for Medicare and Medicaid Services published the proposed Medicare Physician Fee Schedule CY 2010 on July 13, 2009 in the Federal Register. Unless Congress takes action before the end of the year, physician payment rates with be reduced by an average of 21.5%. Some specialties will face deeper cuts.

If you haven't already done so, you may wish to submit comments to CMS on the proposed rule, but you'll need to do so soon. The deadline for submitting comments is 5PM on August 31, 2009 - this Monday. Comments can be submitted electronically at http://www.regulations.gov, by regular mail, by express or overnight mail or by hand or courier. Instructions for submitting comments can be found at the beginning of the Federal register document.