American Hospital Association Strikes Back at the RACs

Many health care providers are familiar with the costly exercise of fighting a Recovery Audit Contractor’s (“RAC”) determination of an overpayment through the administrative appeal process. But where providers take on the expense, the statistics on appeal are largely favorable. For fiscal year 2011, 43.4% of RAC determinations were reversed in the providers’ favor. The problem is that of the 903,372 claims identified as overpayments by RACs, only 56,620 claims were appealed at any level. Of those 56,620 claims, the 24,458 claims overturned during the appeal process translate to $37.9 million, or $1,550 per case. The low appeal rate is likely due to frustration, costs of appeal, and other high-priority issues, such as patient care. For hospitals, the biggest fight has centered on the RACs’ intense focus on inpatient care. In the first quarter of 2012, the claims most frequently identified by RACs as overpaid related to the provision of service on an inpatient basis when, according to the RAC, only outpatient service was necessary, despite the fact that the services were largely conceded to be reasonable and medically necessary. Reports indicate that when hospitals pursue appeals of these RAC determinations, they are successful 75% of the time. But the biggest problem is that where the RAC correctly determines that an inpatient admission was not warranted, hospitals are not being paid under Part B for outpatient care. In other words, while the only problem cited by the RAC is the setting where services were provided, claims for the services are being denied in their entirety, and hospitals are receiving no reimbursement for the underlying reasonable and medically necessary services provided. This issue is now at the center of a lawsuit filed by the American Hospital Association (“AHA”) and several hospitals against the Secretary of Health and Human Services. The AHA argues that the Social Security Act requires CMS to reimburse hospitals for reasonable and medically necessary services, and that by allowing the RACs to claw back the entire payment for the inpatient services under Part A and then denying payment under Part B, CMS is running afoul of federal law. The AHA seeks an order declaring the practice to deny all payment invalid and an order that the hospitals be paid in full for the reasonable and medically necessary services that CMS concedes were provided to beneficiaries. The complaint can be viewed at the AHA’s website: www.aha.org.

Delaware Bar Association Health Law Section Seminar

Please plan to attend a very special CLE/CME Seminar, “Health Law 101: What Every Lawyer and Healthcare Provider Should Know,” on Friday, November 30th, 2012, at the Medical Society of Delaware’s Conference Center in Newark. During this all-day seminar leading Delaware health law practitioners will cover a range of health law topics, from recent HIPAA-related developments and federal fraud and abuse laws to state law topics such as prescription drug monitoring and medical malpractice litigation. You can view the full agenda on the attached registration form. A link to the form on the DSBA’s website is also below. The seminar is not only approved for 6 hours of CLE credit, including 1 hour of Ethics credit, it is also approved for AMA PRA Category 1 Credit.TM http://www.dsba.org/cle/pdfs/HealthLaw2012.pdf This promises to be an interesting and informative event!

OIG RELEASES 2013 WORK PLAN

Yesterday the OIG issued its Work Plan describing the activities the OIG plans to initiate or continue with respect to HHS programs and operations in fiscal year 2013. The Plan identifies areas of government focus for each type of healthcare provider, as well as the OIG’s planned activities related to its oversight of Medicare Part A and B contractors, Medicare Part C and D programs, state Medicaid plans, and public health and human services agencies within the U.S. Department of Health and Human Services. With respect to particular healthcare providers, the Plan identifies 11 new initiatives related to hospitals, 3 related to nursing homes, 2 related to home health agencies, 8 related to medical equipment suppliers, and 8 related to all other providers and suppliers. The new hospital initiatives include a review of Medicare payments made to hospitals for beneficiary discharges that should have been coded as transfers, a review of Medicare payments made to hospitals for beneficiary discharges that were coded as discharges to a swing bed in another hospital, and an analysis of costs incurred by Medicare related to inpatient hospital claims for canceled surgical procedures. For nursing homes, two of the new initiatives relate to evaluating whether states are properly performing oversight functions mandated by federal regulations, specifically whether State survey agencies verified correction plans for deficiencies identified during nursing home recertification surveys, and the extent to which CMS and the States oversee the accuracy and completeness of Minimum Data Set (MDS) data submitted by nursing facilities. The OIG plans to determine the extent to which home health agencies are complying with the statutory requirement that physicians who certify beneficiaries as eligible for Medicare home health services have face-to-face encounters with the beneficiaries. The OIG will also review which home health agencies are complying with State requirements for conducting criminal background checks of applicants and employees. With respect to medical equipment and supplies, the OIG plans to audit payments for lower limb prosthetics, power mobility devices and blood glucose test strips and lancets. As to all other providers, the OIG’s new initiatives include reviews of Medicare Part B claims for personally performed anesthesia services to determine whether they were supported in accordance with Medicare requirements, an examination of questionable billing practices for ophthalmological services during 2011, and a review of questionable billing for electrodiagnostic testing, which is used in the diagnosis and treatment of nerve or muscle damage and includes the needle electromyogram and the nerve conduction test. These efforts described in these new initiatives, as well as the others identified in the OIG Work Plan, are in addition to the OIG’s ongoing audits and analyses of numerous other provider-specific issues, all of which are outlined in the Work Plan, which is available at http://go.usa.gov/Y2Cx. The OIG is also planning a webcast on October 24, 2012, during which top OIG personnel will describe the OIG’s priorities for combating fraud, waste and abuse in federal health care programs for 2013. More information about the webcast is available at the above link.

CMS Proposes Raising Medicaid Payments to Primary Care Physicians

In a proposed rule announced on Wednesday, CMS seeks to provide states more than $11 billion in new funds to improve Medicaid primary care from 2013 through 2014. The proposal, if finalized, would implement requirements of the Patient Protection and Affordable Care Act designed to help primary care physicians and networks prepare for the increased enrollment following implementation of healthcare reform. Assuming the Affordable Care Act is not declared unconstitutional by the Supreme Court this summer, CMS will likely finalize the rule later in the year. The Affordable Care Act requires that Medicaid reimburse certain primary care specialties, including family medicine, general internal medicine, and pediatric medicine, at the levels of Medicare reimbursement for calendar years 2013 and 2014. This increase in payment is entirely funded by the federal government and States will not need to provide matching payments. Currently, the national average Medicaid payment rate is only two-thirds of what Medicare pays. In Delaware, the payment rate is 54% and below, according to data published by American Medical News. Some physicians are expressing concern about what will happen after 2014 to practices that accept more patients during the pay increase. Once the payment rates return to current numbers after 2014, will primary care practices suffer the consequences of taking in a larger patient population with lower paying insurance? The rule can be read here. (http://www.ofr.gov/OFRUpload/OFRData/2012-11421_PI.pdf)Comments are due June 11th.

Board of Medical Licensure and Discipline Proposes New Licensure Requirements

The United States Supreme Court’s review of the Affordable Care Act dominates the news and is on the minds of health care attorneys across the country. The constitutional fate of the Act will be decided when the Supreme Court releases its opinion in June, an event all health care providers will anticipate as the landscape of American health care awaits its fate.

Yet, there are still local developments to report that affect Delaware practitioners. In recent months the Delaware Board of Medical Licensure and Discipline has grappled with the degree to which a practitioner must demonstrate clinical competency in order to obtain a license, particularly when the applicant has been away from clinical practice for an extended period of time. The Board’s focus on this issue has been reflected in two recent written decisions.

So it was no surprise that earlier this month, the Board published notice of a proposed rule that amends “outdated” requirements for license renewal and for examination of practitioners out of clinical practice for three or more years seeking initial licensure in the State. Under the proposed rule, practitioners seeking initial licensure, but who have been out of clinical practice for three or more years, must demonstrate clinical competency. The proposed rule will require such practitioners to complete an approved “clinical and didactic” practice assessment program and demonstrate that the applicant has kept current with BMLD CME requirements.

The proposed rule indicates that a list of approved practice assessment programs will be posted on its website. Nothing has been posted yet and it will be interesting to see the list. From our experience, the availability of clinical and didactic practice assessment programs is somewhat limited, with the most prominent programs located in Colorado and California. We are also aware that a similar program is underway in Pennsylvania.

The proposed rule also seeks to make important procedural changes to the license renewal process. For any provider who fails to renew a license within one year after it expires, the renewal process will not be available. Instead, the practitioner will be required to seek licensure under the same conditions that govern applicants for new licensure and the requirements that govern reentry to practice.

Additionally, all applicants seeking renewal of a license after it has expired must certify that he or she has not practiced in Delaware while the license has expired.

A public hearing on the proposed rule will be held on April 3, 2012. More information on the hearing and the text of the proposed rule can be found at http://regulations.delaware.gov/register/march2012/proposed/15%20DE%20Reg%201293%2003-01-12.htm.

CMS Issues Proposed Rule on Reporting and Returning Overpayments

One of the provisions of the Affordable Care Act (“ACA”) that has gotten a great deal of attention is Section 6402(a), which requires a person who receives an overpayment to report and return the funds within 60 days after the overpayment is identified (or the date any corresponding cost report is due, if applicable.) The provision is significant because the failure to report and return overpayments creates False Claims Act liability, exposure to Civil Monetary Penalties, and potentially exclusion from participation in the federal programs.

On February 16, 2012, CMS released a proposed rule (77 Federal Register 9179) to implement the requirements of Section 6402(a), and if finalized in its current form it will guide providers on what is required when information indicating a potential overpayment comes to light. While the ACA already creates the obligation to report and return overpayments, the proposed rule imposes additional burdens in an attempt to clarify and define key terms of the statute.

The most significant burden in the proposed rule is a new ten-year look-back period, which would require providers to report and return any overpayment that is identified within ten years from when it was received. CMS stated in the preamble to the rule that the ten-year period was chosen to “further our interest in ensuring that overpayments are timely returned to the Medicare Trust Fund.”

The proposed rule defines an “overpayment” just as the ACA: any funds received or retained under the Medicare program to which the person, after applicable reconciliation, is not entitled. This includes, but is not limited to, payments for non-covered services. An overpayment will be considered “identified” if the provider has actual knowledge of the existence of the overpayment or acts in “reckless disregard” or “deliberate ignorance” of the overpayment. “Reckless disregard” and “deliberate indifference” essentially mean that a provider cannot ignore information brought to his/her attention that a potential overpayment exists. The provider is thus required to make a “reasonable inquiry” to confirm whether or not an overpayment exists.

The definition of “identified” and the lack of guidance regarding “reasonable inquiry” introduce significant uncertainty. What is a “reasonable inquiry”? The preamble to the proposed rule seems to state that this means self-audits, compliance checks, or other research and suggests that such inquiry must be taken with “all deliberate speed.” When considered alongside the proposed ten-year look-back period, it is unclear whether CMS intends to obligate providers who recognize a problem to consider whether this same problem has occurred over the course of the last ten years with regard to similar claims. Is that enough information to trigger the obligation to investigate with all deliberate speed? If it is, this rule places a significant burden on providers to engage in extensive retrospective audits and generates substantial difficulties where information regarding ten-year-old claims may not be readily available.

The proposed rule contains other provisions, such as an explanation of the impact of the Anti-Kickback Statute and how the sixty-day reporting period is tolled when a provider submits a self-disclosure to either the OIG (Self-Disclosure Protocol) or to CMS (Self-Referral Disclosure Protocol).

Again, this rule is not final. The health care industry has an opportunity to comment and potentially impact the final rule’s requirements. Comments are due on April 16, 2012.

The proposed rule can be found at: http://www.regulations.gov/#!documentDetail;D=CMS_FRDOC_0001-0905

New Regulation Imposes Strict Requirements on Medical Practitioners who Prescribe Controlled Substances for Treatment of Chronic Pain

On October 14th, we posted on the Delaware Health Law Blog that the Board of Medical Licensure and Discipline had proposed a rule regarding the use of controlled substances for the treatment of pain. A public hearing was held on November 1, 2011 without comment in opposition to the rule. On February 1st, Rule 32 was adopted as proposed and will go into effect on February 11, 2012. The Rule is designed to assist practitioners by providing them with the minimum requirements for meeting the necessary standard of care in prescribing controlled substances for the treatment of pain. In order to demonstrate that your practice has met the standard of care, you must be vigilant in documenting specific aspects of care and medical decision-making.

This new regulation is likely to change the way most medical practitioners treat chronic pain patients and it imposes significant documentation requirements.

What is Required

The Board will consider prescribing, ordering, dispensing or administering controlled substances for pain to be for a legitimate medical purpose if based on sound clinical judgment. The key to the standard of care is to document a diagnosis with unrelieved pain and the sound clinical judgment to prescribe controlled substances. Additional specific requirements are listed below.

Evaluation of Patient

A medical history and physical examination must be obtained, evaluated, and documented in the medical record. The following must be documented in the evaluation:

• One or more recognized medical indications for the use of a controlled substance
• Etiology, the nature, and intensity of pain
• Current and past treatments for pain
• Underlying or coexisting diseases or conditions
• The effect of the pain on physical and psychological function
• History of substance abuse

Treatment Plan

A written treatment plan is required, and must outline the goals and objectives that will be used to determine treatment success. The plan should note all diagnostic evaluations and any planned alternative treatments. Importantly, the plan must note whether other treatment modalities or rehabilitation programs are necessary.

Informed Consent

You must discuss the risks and benefits of treatment with controlled substances with the patient and document that discussion, including the patient’s informed consent.

Pain Treatment Agreement

You must use a written treatment agreement only if the patient is at “high risk” for medication abuse or has a history of substance abuse. The agreement must include required medication level screenings upon request, the number and frequency of prescription refills, the reasons drug therapy will be discontinued, and the requirement that the patient receive prescriptions from one physician and one pharmacy, where possible.

Periodic Review

The course of drug therapy must be periodically reviewed and documented, including any new information about the etiology of the pain and the patient’s state of health. A periodic review must include whether the treatment should be continued or modified, whether the patient’s pain has improved, and whether the patient has an increased level of function or improved quality of life. If not, it should be noted that the practice has considered the appropriateness of continued drug therapy or alternative modalities. A periodic review must also consider all objective evidence of improved or diminished function, including information from family members or other caretakers.

Consultation

During the course of treatment, the practitioner must refer the patient as necessary for additional evaluation and treatment in order to meet the goals and objectives of treatment. “The management of pain in patients with a history of substance abuse or with a co-morbid psychiatric disorder requires extra care, monitoring, documentation and may require consultation with or referral to an expert in the management of such patients.” Importantly, the rule states that “practitioners who regularly treat patients for chronic pain must educate themselves about the current standards of care applicable to those patients.”


Records must be maintained in an accessible manner. The record should also include documentation appropriate for each visit’s level of care, including interim history, vital signs, an assessment of progress, and the continued medication plan.

With the final rule becoming effective in ten days, it is important make sure that new documentation meet these standards. Notes used for initial and follow-up visits should be scrutinized to ensure that each of these new requirements is achieved in order to meet the these regulatory requirements.

Physicians Opting Out of Medicare?

Last week the OIG released its long-awaited report evaluating the extent to which doctors are opting out of Medicare and the reasons why they are opting out. Spoiler alert: The report was inconclusive. The OIG reported that CMS and its contractors “do not maintain sufficient data regarding physicians who opt out of Medicare. As a result, we are unable to conduct the proposed evaluation at this time.”

For those of us who are frequently asked by the OIG to review and analyze historical Medicare claims, the temptation to ask why that excuse does not work for us is hard to suppress. However, the OIG’s desire for accuracy and its unwillingness to provide a report based on conjecture is admirable. It is important to understand the factors that will impact access to care for our aging population. A less than thorough analysis would have been a mistake.

The OIG notes in its report that the number of opted-out physicians appears to have increased in each year from 2006 to 2010. The report goes on to predict that more physicians may opt out in the near future due to potential legislated decreases in Medicare reimbursements. A Medical Society of Delaware survey for 2012 validated the OIG’s intuition. More than 50% of the physicians polled said that they were considering changing their Medicare participation status due to the proposed 27.4% proposed reduction to the fee schedule.

This is an issue worth monitoring. A recent Texas study reported that 37% of its primary care practices limit the number of new Medicare patients in the practice and another 13% do not accept any Medicare patients. If the OIG is correct and the national trend is that more physicians are opting out of Medicare each year, we may be closer to a crisis of access of care for seniors than anyone realizes.

The OIG has pledged to conduct a full evaluation when CMS and its contractors are in a position to provide more accurate information.

Bill Authorizing Medical Practice Inspections Up for Consideration by Delaware’s General Assembly

The 146th General Assembly reconvened this week and one of the bills it may consider is SB51, which authorizes the Division of Professional Regulation to investigate complaints of unsafe or unsanitary conditions at any location where “medical or health-related treatment” is rendered, excluding hospitals, freestanding birthing centers, freestanding surgical centers or freestanding emergency centers. The bill also provides that a Delaware-licensed physician may be disciplined for maintaining an unsanitary or unsafe condition in his/her office. Complaints must be in writing, may not be anonymous, must be filed within 5 days of observing the complained-of condition, and can only be filed by a person over the age of 18 who has observed the condition and reported it to the staff at the location where the condition was observed. So while the proposed legislation does not give the Division free reign to conduct inspections of physicians’ offices, it authorizes discipline against Delaware physicians who operate their practices in an “unsafe” or “unsanitary” manner, leaving open to interpretation just what constitutes an “unsafe” or “unsanitary” condition.