CMS Releases Final Rule On Return of Overpayments

By on February 12, 2016

The Centers for Medicare & Medicaid Services released its final rule today on the return of overpayments. The final rule requires providers and suppliers receiving funds under the Medicare/Medicaid program to report and return overpayments within 60 days of identifying the overpayment, or the date a corresponding cost report is due, whichever is later. As published in the February 12, 2016 Federal Register, the final rule clarifies the meaning of overpayment identification, the required lookback period, and the methods available for reporting and returning identified overpayments to CMS. See https://www.federalregister.gov/articles/2016/02/12/2016-02789/medicare-program-reporting-and-returning-of-overpayments.

Identification

The point in time in which an overpayment is identified is significant because it triggers the start of the 60-day period in which overpayments must be returned. CMS originally proposed that an overpayment is identified only when “the person has actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment.” The final rule changes the meaning of identification, stating that “a person has identified an overpayment when the person has or should have, through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment. The change places a burden on healthcare providers and suppliers to have reasonable policies and programs in place which monitor the receipt of Medicare/Medicaid payments.

6-Year Lookback Period

The final rule also softens the period for which health care providers and suppliers may be liable for the return of overpayments. As the rule was originally proposed, CMS required a 10-year lookback period, consistent with the False Claims Act. Now, overpayments must be reported and returned only if a person identifies the overpayment within six years of the date the overpayment was received.

Guidance in Reporting and Returning Overpayments

The final rule provides that providers and suppliers must use an applicable claims adjustment, credit balance, self-reported refund, or other appropriate process to satisfy the obligation to report and return overpayments. If a health care provider or supplier has reported a self-identified overpayment to either the Self-Referral Disclosure Protocol managed by CMS or the Self-Disclosure Protocol managed by the Office of the Inspector General (OIG), the provider or supplier is considered to be in compliance with the provisions of this rule as long as they are actively engaged in the respective protocol.

Filed under Centers for Medicare and Medicaid Services, Medicaid, Medicare

OIG Expresses Concerns about Medicare Skilled Nursing Therapy Billing

By on October 20, 2015

Calling for a reevaluation of the Medicare payment system for skilled nursing facilities (SNFs), the Department of Health and Human Services’ (HHS) Office of Inspector General (OIG) recently issued a report expressing concerns about Medicare payment for therapy services. The OIG found that Medicare payments for therapy “greatly exceed” SNFs’ therapy costs. The difference between Medicare therapy payments and facility costs for therapy averaged 29 percent—twice as high as the 14 percent overall Medicare margin for SNF payments in 2012. The OIG stated that Medicare payments for therapy rose faster than therapy costs between 2002 and 2010. According to the OIG, one factor leading to the increased payments was that SNFs increasingly billed for the highest level of therapy even though beneficiary characteristics remained largely unchanged. The OIG report also notes that SNFs used strategies to optimize revenues, such as providing the minimum number of therapy minutes for the higher levels of therapy. Finally, the OIG found that increases in SNF billing resulted in $1.1 billion in Medicare payments in 2012 and 2013.

As a result of this and prior OIG reports, the OIG called for the Centers for Medicare and Medicaid Services (CMS) to reevaluate the Medicare SNF payment system. The OIG recommended that CMS take the following actions: (1) evaluate the extent that Medicare therapy payment rates should be reduced; (2) change the method used to pay for therapy; (3) adjust Medicare payments to eliminate any increases that are not related to beneficiary characteristics; and (4) strengthen oversight of SNF billing. CMS agreed with all of the OIG’s recommendations. Accordingly, it is possible.

Filed under Centers for Medicare and Medicaid Services, Department of Health and Human Services, Office of Inspector General, Skilled Nursing Facilities

OIG’s Advisory Opinion Concludes that Free Introductory Visits by Home Health Provider Are Not Prohibited Remuneration

By on September 4, 2015

A home health care provider’s policy of offering free introductory visits to patients who had already selected it as their home health care provider does not generate prohibited remuneration under the federal antikickback statute, the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) concluded in a recent advisory opinion. (OIG Advisory Opinion No. 15-12.) The home health agency requesting the advisory opinion (requestor) stated that a physician or a health care professional provides a list of home health providers to a patient who needs home health services. The requestor has no involvement in the patient’s selection process, nor does it offer or pay any remuneration to the physician or other referral source. After a patient chooses the requestor as his or her home health agency, an employee of the requestor (liaison) contacts the patient by telephone to see if he or she would like to have an introductory visit with the liaison. The purpose of the introductory visit is to facilitate the patient’s transition to home health services and to increase compliance with the treatment plan. The liaison does not provide any diagnostic or therapeutic service reimbursed by any federal health care program during the introductory visit and the services provided during the introductory visit do not require clinical training.

The OIG concluded that the introductory visits were not remuneration because they did not provide any actual or expected economic benefit to patients. Although the services may have some “intrinsic value” to patients, the OIG concluded that the “intangible worth to patients” created by the introductory visits do not implicate the federal antikickback statute or the Civil Monetary Penalty law.

Filed under Civil Monetary Penalties, Department of Health and Human Services, Home Health Agencies, Home Health Care, Office of Inspector General, OIG Advisory Opinion

New York Federal Court Issues First Interpretation of “Identified” Under the Affordable Care Act’s 60-Day Rule

By on August 26, 2015

In Kane v. Healthfirst, Inc. et al., a New York federal court became the first court to interpret when the clock starts running on the 60 days allowed to report and return an overpayment of Medicare and Medicaid funds under the Affordable Care Act. The Affordable Care Act requires a person who receives an overpayment of Medicare or Medicaid funds to report and return the overpayment within 60 days of the “date on which the overpayment was identified.” 42 U.S.C. § 1320a-7k(d)(2)(A). Any overpayment that is kept beyond the 60 days may be a reverse false claim under the False Claims Act, which imposes liability for any person who “knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.” 31 U.S.C. § 3729(a)(1)(G).

Kane is significant for health care providers because the Affordable Care Act does not define the term “identified,” nor has the Centers for Medicare and Medicaid Services (CMS) defined this term in the Medicaid context. However, CMS has issued a final rule that applies to Medicare Advantage and the Medicare Part D Prescription Drug Program stating that an overpayment is identified when there is actual knowledge of the existence of an overpayment or if a person or entity acts in deliberate ignorance of, or with reckless disregard to the overpayment’s existence. 79 Fed. Reg. 29,844 (May 23, 2014). CMS has also issued a proposed rule applicable to Medicare providers and suppliers that adopts the same definition of “identified” that the agency adopted for Medicare Parts C and D. 77 Fed. Reg. 9,179 (Feb. 16, 2012). In this proposed rule, CMS noted that a provider or supplier may receive information about a potential overpayment that creates an obligation to inquire about whether or not there is an overpayment. If the inquiry reveals an overpayment, the 60-day deadline to report and return the overpayment runs from the date that the inquiry reveals the overpayment. CMS cautions that a failure to make a reasonable inquiry after receiving information about a potential overpayment could result in the provider knowingly retaining an overpayment. Id.

The Kane litigation arose out of a software glitch that mistakenly generated codes telling providers that they could seek additional payment from secondary payors such as Medicaid. The providers should have been told that they could not seek secondary payment for the services, except for co-payments from certain patients. As a result of this software glitch, three hospitals that were part of a network of non-profit hospitals incorrectly submitted claims to Medicaid.

Approximately 21 months after the hospitals began to bill improperly for Medicaid services, the New York State Comptroller’s office approached the hospitals with questions about the incorrect billing, ultimately revealing that there was a software problem. After the problem was discovered, an employee, relator Kane, was assigned to investigate what claims had been improperly billed to Medicaid. Five months after the Comptroller told the hospital network about the software problem, Kane informed management about 900 potential claims that contained the erroneous billing code. Kane indicated that further analysis would be needed to confirm his findings. The parties did not dispute that Kane’s listing of the incorrect billings was overly inclusive and included claims that were improperly billed as well as some claims that were billed appropriately.

Acknowledging that CMS’ rules do not technically apply in the context of Medicaid, the Kane court nonetheless adopted CMS’ interpretation of the term “identified” that the agency adopted for Medicare Parts C and D and proposed to adopt for Medicare suppliers and providers. Thus, the court concluded that Kane’s e-mail triggered the 60-day timeframe to report and return overpayments. The court reasoned that Kane had put the hospital network on notice of potential overpayments, rejecting the hospitals’ argument that the court should adopt a definition of “identified” that means “classified with certainty.”

As the first court to interpret the term “identified” under the 60-day rule, Kane is an important decision for health care providers. It is possible that other courts will also side with CMS’ interpretation of “identified.” Thus, absent further guidance from CMS or the courts, health care providers should proceed to investigate carefully and quickly all allegations of alleged overpayments and document their efforts, in order to defend against any possible violation of the 60-day rule.

Filed under Affordable Care Act, Centers for Medicare and Medicaid Services, False Claims Act, Medicaid, Medicare

CMS Proposes Rule Updating Nursing Home Conditions of Participation

By on July 31, 2015

On July 16, 2015, the Centers for Medicare and Medicaid Services (CMS) issued a lengthy proposed rule revising the requirements that long term care facilities must meet to participate in the Medicare and Medicaid programs. This is the first comprehensive revision of long term care facilities’ conditions of participation since 1991. CMS states that it revised many of the requirements to reflect current clinical practice standards, noting that innovations in resident care and quality assessment practices have emerged since the last revision. Comments on the proposed rule will be accepted until 5 p.m. on September 14, 2015.

Some of the major provisions in the proposed rule include the following.

  • CMS proposes updating resident rights provisions, including addressing roommate choice. Under the proposed rule, a resident has the right to share a room with the roommate of his or her choice.The rooming arrangement could include a same-sex couple, siblings, other relatives, long term friends, or another combination as long as certain requirements are met.
  • The rule proposes a new section that focuses on facility responsibilities, bringing together many of the facility responsibilities dispersed throughout the current regulations. CMS proposes to revise visitation requirements to establish open visitation.
  • The rule would add a new section titled “Comprehensive Person-Centered Care Planning.” This proposal would require facilities to develop a baseline care plan for each resident within 48 hours of admission, which includes instructions about providing effective and person-centered care. This section also adds several other requirements, including expanding the required members of the interdisciplinary care team to add a nurse aide, a member of the food and nutrition services staff, and a social worker.
  • While CMS considered establishing minimum nurse hours per resident day, the proposed rule does not impose minimum staffing numbers or ratios. However, the proposed rule does include some new requirements related to staffing. The proposed rule adds a competency requirement for determining sufficient nursing staff based on a facility assessment. The facility assessment includes the number of residents, resident acuity, ranges of diagnoses, and care plan contents.
  • The proposed rule changes some pharmacy requirements. The rule proposes requiring a pharmacist to review a resident’s medical chart at least every six months when the resident is new, a prior resident returns or is transferred from a hospital or other facility, and during each monthly drug regimen when the resident has been prescribed or is taking a psychotropic drug, an antibiotic, or any drug the Quality Assessment and Assurance Committee has requested be included in the pharmacist’s month review. In addition, there are several proposed revisions to requirements regarding antipsychotic drugs, which the proposed rule revises to be referred to as psychotropic drugs, defined to include any drug that affects brain activities associated with mental processes and behavior.
  • The rule proposes specific requirements for binding arbitration agreements, including provisions to ensure that the agreement is voluntary, not permitting admission to be contingent on signing an arbitration agreement, and not allowing arbitration agreements to prohibit or discourage a resident or anyone else from communicating with federal, state, or local health care or health-related officials.
  • There are several new physical environment provisions in the proposed rule. CMS proposes that facilities certified after the effective date of the regulation accommodate no more than two residents in a bedroom and have a bathroom equipped with at least a toilet, sink, and shower in each room.
  • The proposed rule adds a new section on training requirements setting out all the requirements of an effective training program that facilities must develop, implement, and maintain.
  • There are also new provisions relating to laboratory, radiology, and other diagnostic services; dental services; food and nutrition services; food safety; specialized rehabilitative services; administration; quality assurance and performance improvement; and infection control.

Filed under Centers for Medicare and Medicaid Services, Long Term Care, Medicaid, Medicare, Nursing Homes

Well, This Changes Things: King v. Burwell and the New(?) Chevron Doctrine

By on June 26, 2015

I first flagged this all the way back in 2013. As everyone reading this probably knows, the Supreme Court had its final say on the matter earlier today. Long story short: The administration won. Insurance exchange subsidies under the Affordable Care Act are available on state and federal exchanges.

My colleague Knicole Emanuel has a piece up about the decision here. I’m a little less skeptical of the majority opinion in general. I think it’s pretty clear that the subsidies were intended by Congress to be available on the federal exchange, and while we should be wary about reading unambiguous laws as we think they were intended to function, and not as their wording indicates they should function, I think Chief Justice Roberts has a fair-enough point that the seemingly unambiguous language in question isn’t so clear cut when one reads it in the context of the law as a whole.

But that’s not the most interesting part to me. The most interesting part is what this decision may well do to the Chevron doctrine. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., for those who don’t know, is perhaps the most cited Supreme Court case in history (hat tip to my former admin law professor, Cass Sunstein). The Chevron opinion basically says that when a federal agency is confronted with a potentially ambiguous statute, and that agency promulgates formal rules or regulations interpreting the statute, the agency’s interpretation will be upheld provided that (1) the intent of Congress on the issue in question is not clear (i.e., the statute is silent or ambiguous), and (2) the agency’s interpretation is “permissible.”

Law professors and courts have debated what this means and how it should be applied literally for decades. (For example, what does “permissible” even mean?) But those days may be over due to King. From the outset of the case – or, at least, the certiorari grant – there was a good deal of speculation that the Supreme Court would endorse the administration’s interpretation of the subsidy issue on Chevron grounds. This would be important because it would mean that the next Republican administration could reverse that interpretation just as easily. (That’s the whole point of Chevron!)

Uh, not so fast. In his King majority opinion, Chief Justice Roberts expressly decided not to go this route. He explained:

When analyzing an agency’s interpretation of a statute, we often apply the two-step framework announced in Chevron, 467 U. S. 837. Under that framework, we ask whether the statute is ambiguous and, if so, whether the agency’s interpretation is reasonable. Id., at 842–843. This approach “is premised on the theory that a statute’s ambiguity constitutes an implicit delegation from Congress to the agency to fill in the statutory gaps.” FDA v. Brown & Williamson Tobacco Corp., 529 U. S. 120, 159 (2000). “In extraordinary cases, however, there may be reason to hesitate before concluding that Congress has intended such an implicit delegation.” Ibid.

This is one of those cases. The tax credits are among the Act’s key reforms, involving billions of dollars in spending each year and affecting the price of health insurance for millions of people. Whether those credits are available on Federal Exchanges is thus a question of deep “economic and political significance” that is central to this statutory scheme; had Congress wished to assign that question to an agency, it surely would have done so expressly. Utility Air Regulatory Group v. EPA, 573 U. S. ___, ___ (2014) (slip op., at 19) (quoting Brown & Williamson, 529 U. S., at 160). It is especially unlikely that Congress would have delegated this decision to the IRS, which has no expertise in crafting health insurance policy of this sort. See Gonzales v. Oregon, 546 U.S. 243, 266–267 (2006). This is not a case for the IRS.

In other words, Chief Justice Roberts just added some teeth to the previously vague – and essentially inapplicable – language from Brown & Williamson. Now, Chevron will not apply to an agency’s interpretation of “question[s] of deep ‘economic and political significance.’” And what’s more, King seems to have given us some indication of what this might mean – if the issue in question is “central” to the legislation at issue, then Chevron appears to be inapplicable.

On the one hand, this may seem somewhat limited at first blush. After all, how many questions put in front of an agency involve those sorts of deeply significant issues? On the other hand, that kind of misses the point. A litigant can always argue that the agency interpretation at issue involves such a question. And a court inclined to disagree with a particular agency interpretation now has an out – it can always classify the statutory language being interpreted as involving a question of deep economic and/or political significance.

All of this is deeply problematic for one simple reason – under an expansive reading of King, the state of the Chevron doctrine is now up in the air. Heck, it’s unclear to me that the question at issue in Chevron itself – the definition of a “pollution source” under the Clean Air Act – would have been sufficiently unimportant or insignificant to invoke Chevron deference. In other words, it’s not settled to me that under the exception announced in King that the Chevron doctrine would have been appropriate to apply in the Chevron case itself. At the very least, this is going to spark a lot of litigation.

Filed under Affordable Care Act, Chevron Doctrine

OIG Issue Fraud Alert on Physician Compensation Arrangements

By on June 26, 2015

The Office of Inspector General (OIG) at the Department of Health and Humans Services (HHS) recently issued a fraud alert for physicians who enter into compensation arrangements. Every physician should review carefully the terms and conditions of compensation arrangements, such as medical directorships, to ensure that they reflect fair market value for bona fide services provided by the physician. The OIG cautioned that a compensation arrangement may violate the anti-kickback statute if even one purpose of the arrangement is to compensate a physician for past or future referrals of federal health care program business.

The fraud alert highlighted the OIG’s recent settlements with 12 individual physicians. According to the OIG, the compensation paid to these physicians under medical directorship arrangements violated the anti-kickback statute for several reasons, including the following:

  • The payments took into account the volume or value of the physicians’ referrals rather than the fair market value for the services;
  • The physicians did not actually provide the services; and
  • Some of the physicians entered into arrangements where an affiliated health care entity paid the salaries of the physicians’ front office staff which relieved the physicians of a financial burden resulting in improper remuneration to the physicians.

Given the OIG’s recent focus on physician compensation arrangements, physicians should proactively review their agreements to ensure that they meet anti-kickback statute requirements, including any applicable safe harbors.

Filed under Compensation Arrangements, Department of Health and Human Services, Fraud Alert, Office of Inspector General

U.S. Supreme Court Issues False Claims Act Ruling of Interest to Health Care Providers

By on June 19, 2015

The United States Supreme Court recently issued a ruling in a False Claims Act case with mixed implications for the health care industry. Kellogg Brown & Root Services, Inc. v. United States ex rel. Carter, No. 12-1497, decided May 26, 2015. In this qui tam lawsuit brought under the False Claims Act, a former employee of a defense contractor during the Iraqi conflict alleged that defense contractors and related entities had fraudulently billed the government for water purification services that were not performed or not performed properly. Although this was not a health care case, the Court’s ruling will impact False Claims Act matters involving health care providers.

The case involves two restrictions on qui tam lawsuits under the False Claims Act. The first restriction is the “first-to-file” bar which prohibits a qui tam lawsuit “based on the facts underlying [a] pending action.” 31 U.S.C. § 3730(b). The second restriction involves the statute of limitations: the False Claims Act requires that a qui tam action must be brought within six years of the violation or within three years of the date the United States should have known about the violation, but cannot be brought more than ten years after the date of a violation. 31 U.S.C. § 3731(b). The Court had to decide whether the Wartime Suspension of Limitations Act, which suspends the statute of limitations involving fraud whenever Congress authorizes the use of the armed forces as described in section 5(b) of the War Powers Resolution, is limited to criminal actions or whether it extends to civil claims.

In a unanimous decision, the Court issued a ruling that has both good and bad consequences for health care providers. The Court declined to extend the qui tam statute of limitations under the Wartime Suspension of Limitations Act to civil claims. After analyzing the statutory language, the Court concluded that the Wartime Suspension of Limitations Act applies only to criminal charges. Thus, the Wartime Suspension of Limitations Act did not suspend the time for filing civil claims under the False Claims Act.

Adopting the ordinary meaning of “pending,” the Court also decided that the False Claims Act’s first-to-file bar does not keep new claims out of court once the related suit is dismissed because a qui tam suit ceases to be “pending” once it is dismissed. The first-to-file bar does not forever prevent a subsequent lawsuit from being filed. Thus, an earlier suit bars a later suit only while the earlier suit remains undecided. However, the Court noted that the issue of claim preclusion, which may protect defendants if the first-filed action is decided on the merits, was not before it. Thus, a subsequent lawsuit may nonetheless be barred if it was decided on the merits under the doctrine of claim preclusion, which generally speaking, bars relitigation of a claim that was already decided on the merits.

Filed under False Claims Act, first-to-file bar, Health Care Providers

U.S. Supreme Court Declines to Review Oklahoma Case Denying Arbitration in Wrongful Death Case

By on June 17, 2015

The United States Supreme Court refused to review a decision by the Oklahoma Supreme Court denying a nursing home’s request to arbitrate a wrongful death claim with a resident’s family members. Thus, the Oklahoma Supreme Court’s decision will stand: family members of a deceased nursing home resident will not be required to arbitrate because they did not sign the arbitration agreement in their personal capacities and their claim is not wholly derivative of the former resident’s claim. Most nursing home arbitration agreements have language stating that the agreement binds a resident’s spouse and heirs, whether or not any claims are brought on behalf of the resident, and that the agreement covers wrongful death claims. Whether or not a court will enforce a provision that heirs arbitrate claims has been the subject of much litigation.

In Boler v. Security Health Care, LLC, the Oklahoma Supreme Court examined cases from other jurisdictions that considered whether a decedent’s heirs are bound by an arbitration agreement signed by or on behalf of the decedent. The Oklahoma high court noted that in states that consider wrongful death actions to be independent and separate causes of action, courts are more likely to hold that beneficiaries are not bound by the arbitration agreement. In contrast, the Oklahoma Supreme Court noted, beneficiaries are more likely held to be bound by a decedent’s agreement to arbitrate in states where wrongful death actions are wholly derivative of the decedent’s claims. Noting that Oklahoma’s wrongful death act created a new cause of action for the losses of the deceased’s spouse and next of kin and that recovery does not go to the estate of the deceased, the Oklahoma Supreme Court explained that wrongful death claims in Oklahoma are not wholly derivative claims. Thus, the court held that a decedent cannot bind beneficiaries to arbitration.

Colorado has taken a different approach from Oklahoma even though Colorado’s wrongful death act also creates a separate cause of action. Colorado’s Supreme Court did not analyze whether a wrongful death claim is wholly derivative or not in deciding whether a decedent can bind his or her heirs to arbitration. Instead, Colorado’s high court in Allen v. Pacheco turned to contract law. Thus, the court examined whether the parties intended to bind a spouse to arbitrate a wrongful death claim. Examining the plain language of the arbitration agreement, the court concluded that the agreement required a spouse to arbitrate her wrongful death claim.

While there is no way to guarantee that a court will enforce an arbitration agreement, this discussion illuminates the importance of knowing the nuances of arbitration case law in order to draft the strongest arbitration agreement possible. It is also advisable to review arbitration agreements periodically to determine whether they should be modified due to developments in the law, particularly evolving case law.

Filed under Arbitration, Nursing Homes, Wrongful Death

ONC Updates Guide to Privacy and Security of Electronic Health Information

By on June 1, 2015

The Office of the National Coordinator for Health Information Technology (ONC) recently issued an updated Guide to Privacy and Security of Electronic Health Information. The guide is a resource that can help health care providers comply with the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs’ privacy and security requirements and the HIPAA Privacy, Security, and Breach Notification Rules.

6-1The guide provides a summary of key information in the following areas:

  • Understanding HIPAA rules;
  • Patients’ Health Information Rights;
  • Electronic Health Records, the HIPAA Security Rules, and Cybersecurity; and
  • Medicare and Medicaid EHR Incentive Programs’ Meaningful Use Core Objectives that Address Privacy and Security.

The guide walks health care providers through the key components of each of these subject areas.

In addition, the guide provides tools for health care providers who want to implement a security management process or provide notification about a HIPAA breach. The guide has a sample seven-step approach that can be used to implement a security management process, including help addressing the security requirement contained in the Meaningful Use for the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs. Finally, the guide provides information about what to do if there is an impermissible use or disclosure under the Privacy Rule that compromises the security or privacy of protected health information. The information includes a risk assessment process for breaches, reporting breaches, and government investigation and enforcement of potential HIPAA violations.

Filed under Electronic Health Record, HIPAA Privacy Rule, Medicaid, Medicare, Office of the National Coordinator for Health Information Technology

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