Medicare Auditors Fail to Follow the Jimmo Settlement

Auditors are not lawyers. Some auditors do not even possess the clinical background of the services they are auditing. In this blog, I am concentrating on the lack of legal licenses. Because the standards to which auditors need to hold providers to are not only found in the Medicare Provider Manuals, regulations, NCDs and LCDs. Oh, no… To add even more spice to the spice cabinet, common law court cases also create and amend Medicare and Medicaid policies.

For example, the Jimmo v. Selebius settlement agreement dictates the standards for skilled nursing and skilled therapy in skilled nursing facilities, home health, and outpatient therapy settings and importantly holds that coverage does not turn on the presence or absence of a beneficiary’s potential for improvement.

The Jimmo settlement dictates that:

“Specifically, in accordance with the settlement agreement, the manual revisions clarify that coverage of skilled nursing and skilled therapy services in the skilled nursing facility (SNF), home health (HH), and outpatient therapy (OPT) settings “…does not turn on the presence or absence of a beneficiary’s potential for improvement, but rather on the beneficiary’s need for skilled care.” Skilled care may be necessary to improve a patient’s current condition, to maintain the patient’s current condition, or to prevent or slow further deterioration of the patient’s condition.”

This Jimmo standard – not requiring a potential for improvement – is essential for diseases that are lifelong and debilitating, like Multiple Sclerosis (“MS”). For beneficiaries suffering from MS, skilled therapy is essential to prevent regression.

I have reviewed numerous audits by UPICs, in particular, which have failed to follow the Jimmo settlement standard and denied 100% of my provider-client’s claims. 100%. All for failure to demonstrate potential for improvement for MS patients. It’s ludicrous until you stop and remember that auditors are not lawyers. This Jimmo standard is found in a settlement agreement from January 2013. While we will win on appeal, it costs providers money valuable money when auditors apply the wrong standards.

The amounts in controversy are generally high due to extrapolations, which is when the UPIC samples a low number of claims, determines an error rate and extrapolates that error rate across the universe. When the error rate is falsely 100%, the extrapolation tends to be high.

While an expectation of improvement could be a reasonable criterion to consider when evaluating, for example, a claim in which the goal of treatment is restoring a prior capability, Medicare policy has long recognized that there may also be specific instances where no improvement is expected but skilled care is, nevertheless, required in order to prevent or slow deterioration and maintain a beneficiary at the maximum practicable level of function. For example, in the regulations at 42 CFR 409.32(c), the level of care criteria for SNF coverage specify that the “. . . restoration potential of a patient is not the deciding factor in determining whether skilled services are needed. Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities.” The auditors should understand this and be trained on the proper standards. The Medicare statute and regulations have never supported the imposition of an “Improvement Standard” rule-of-thumb in determining whether skilled care is required to prevent or slow deterioration in a patient’s condition.

When you are audited by an auditor whether it be a RAC, MAC or UPIC, make sure the auditors are applying the correct standards. Remember, the auditors aren’t attorneys or doctors.

The Reality of Prepayment Review and What To Do If You Are Tagged – You’re It!

Prepayment review is a drastic tool (more like a guillotine) that the federal and state governments via hired contractors review the documentation supporting services for Medicare and Medicaid prior to the provider receiving reimbursement. The providers who are placed on prepayment review are expected to continue to render services, even if the provider is not compensated. Prepayment review is a death sentence for most providers.

The required accuracy rating varies state to state, but, generally, a provider must meet 75% accuracy for three consecutive months.

In the governments’ defense, theoretically, prepayment review does not sound as Draconian as it is. Government officials must think, “Well, if the provider submits the correct documentation and complies with all applicable rules and regulations, it should be easy for the provider to meet the requirements and be removed from prepayment review.” However, this false reasoning only exists in a fantasy world with rainbows and gummy bears. Real life prepayment review is vastly disparate from the rainbow and gummy bears prepayment review.

In real life prepayment review:

  • The auditors may use incorrect, inapplicable, subjective, and arbitrary standards.

I had a case in which the auditors were denying 100% ACTT services, which are 24-hour mental health services for those 10% of people who suffer from extreme mental illness. The reason that the auditor was denying 100% of the claims was because “lower level services were not tried and ruled out.” In this instance, we have a behavioral health care provider employing staff to render ACTT services (expensive), actually rendering the ACTT services (expensive), and getting paid zero…zilch…nada…for a reason that is not required! There is no requirement that a person receiving ACTT services try a lower level of service first. If the person qualifies for ACTT, the person should receive ACTT services. Because of this auditor’s misunderstanding of ACTT, this provider was almost put out of business.

Another example: A provider of home health was placed on prepayment review. Again, 90 – 100% of the claims were denied. In home health, program eligibility is determined by an independent assessment conducted by the Division of Medical Assistance (DMA) via Liberty, which creates an individualized plan of care. The provider submitted claims for Patient Sally, who, according to her plan, needs help dressing. The service notes demonstrated that the in-home aide helped Sally dress with a shirt and pants. But the auditor denies every claim the provider bills for Sally (which is 7 days a week) because, according to the service note, the in-home aide failed to check the box to show she/he helped put on Sally’s shoes. The auditor fails to understand that Sally is a double amputee – she has no feet.

Quis custodiet ipsos custodes – Who watches the watchmen???

  • The administrative burden placed on providers undergoing prepayment review is staggering.

In many cases, a provider on prepayment review is forced to hire contract workers just to keep up with the number of document requests coming from the entity that is conducting the prepayment review. After initial document requests, there are supplemental document requests. Then every claim that is denied needs to be re-submitted or appealed. The amount of paperwork involved in prepayment review would cause an environmentalist to scream and crumple into the fetal position like “The Crying Game.”

  • The accuracy ratings are inaccurate.

Because of the mistakes the auditors make in erroneously denying claims, the purported “accuracy ratings” are inaccurate. My daughter received an 86 on a test. Given that she is a straight ‘A’ student, this was odd. I asked her what she got wrong, and she had no idea. I told her to ask her teacher the next day why she received an 86. Oops. Her teacher had accidentally given my daughter an 86; the 86 was the grade of another child in the class with the same first name. In prepayment review, the accuracy ratings are the only method to be removed from prepayment, so the accuracy of the accuracy ratings is important. One mistaken, erroneously denied claim damages the ratings, and we’ve already discussed that mistakes/errors occur. You think, if a mistake is found, call up the auditing entity…talk it out. See below.

  • The communication between provider and auditor do not exist.

Years ago my mom and I went to visit relatives in Switzerland. (Not dissimilar to National Lampoon’s European Vacation). They spoke German; we did not. We communicated with pictures and hand gestures. To this day, I have no idea their names. This is the relationship between the provider and the auditor.

Assuming that the provider reaches a live person on the telephone:

“Can you please explain to me why claims 1-100 failed?”

“Don’t you know the service definitions and the policies? That is your responsibility.”

“Yes, but I believe that we follow the policies. We don’t understand why these claims are denied. That’s what I’m asking.”

“Read the policy.”

“Not helpful.”

  • The financial burden on the provider is devastating.

If a provider’s reimbursements are 80 – 100% reliant on Medicaid/care and those funds are frozen, the provider cannot meet payroll. Yet the provider is expected to continue to render services. A few years ago, I requested from NC DMA a list of providers on prepayment review and the details surrounding them. I was shocked at the number of providers that were placed on prepayment review and within a couple months ceased submitting claims. In reality, what happened was that those providers were forced to close their doors. They couldn’t financially support their company without getting paid.

Ok, now we know that prepayment review can be a death sentence for a health care provider. How can we prepare for prepayment review and what do we do if we are placed on prepayment review?

  1. Create a separate “what if” savings account to pay for attorneys’ fees. The best defense is a good offense. You cannot prevent yourself from being placed on prepayment review – there is no rhyme or reason for such placement. If you believe that you will never get placed on prepayment review, then you should meet one of my partners. He got hit by lightning – twice! (And lived). So start saving! Legal help is a must. Have your attorney on speed dial.
  2. Self-audit. Be proactive, not reactive. Check your documents. If you use an electronic records system, review the notes that it is creating. If it appears that all the notes look the same except for the name of the recipient, fix your system. Cutting and pasting (or appearing to cut and paste) is a pitfall in audits. Review the notes of the highest reimbursement code. Most likely, the more the reimbursement rate, the more likely to get flagged.
  3. Implement an in-house policy about opening the mail and responding to document requests. This sounds self evident, but you will be surprised how many providers have multiple people getting and opening the mail. The employees see a document request and they want to be good employees – so they respond and send the documents. They make a mistake and BOOM – you are on prepayment review. Know who reviews the mail and have a policy for notifying you if a document request is received.
  4. Buck up. Prepayment review is a b*^%$. Cry, pray, meditate, exercise, get therapy, go to the spa, medicate…whatever you need to do to alleviate stress – do it.
  5. Do not think you can get off prepayment review alone and without help. You will need help. You will need bodies to stand at the copy machine. You will need legal help. Do not make the mistake of allowing the first three months pass before you contact an attorney. Contact your attorney immediately.

Do the Anti-Kickback and Stark Laws Apply to Private Payors?

Good question.

Anti-Kickback statutes (AKS) and Stark law are extremely important issues in health care. Violations of these laws yield harsh penalties. Yet, many healthcare professionals have little to no knowledge on the details of these two legal beasts.

The most common question I get regarding AKS and Stark is: Do AKS and Stark apply to private payers? Health care professionals believe, if I don’t accept Medicare or Medicaid, then I don’t need to worry about AKS and Stark. Are they correct??

The general and overly broad response is that the Stark Law, 42 USC § 1395nn, only applies to Medicare and Medicaid. The AKS, 42 USC § 1320a-7b(b)),applies to any federal healthcare program.

Is there a difference between AKS and Stark?

Answer: Yes. As discussed above, the first difference is that AKS applies to all federal healthcare programs. This stark difference (pun intended) makes the simple decision to not accept Medicare and Medicaid, thus allowing you to never worry about AKS, infinitely more difficult.

Let’s take a step back… What are AKS and Stark laws and what do these laws prohibit? When you Google AKS and Stark, a bunch of legal blogs pop up and attempt to explain, in legalese, what two, extremely esoteric laws purport to say, using words like “renumeration,” “knowing and willful,” and “federal healthcare program.” You need a law license to decipher the deciphering of AKS and Stark. The truth is – it ain’t rocket science.

The AKS is a criminal law; if you violate the AKS, you can be prosecuted as a criminal. The criminal offense is getting something of value for referrals. You cannot refer patients to other health care professionals in exchange for money, reduced rent, use of laboratory equipment, referrals to you, health services for your mother, marketing, weekly meals at Ruth’s Chris, weekly meals at McDonalds, oil changes, discounted theater tickets, Uber rides, Costco coupons, cooking lessons, or…anything of value, regardless the value. 

Safe harbors (exceptions to AKS) exist. But those exceptions better fit squarely into the definition of the exceptions. Because there are no exceptions beyond the enumerated exceptions.

AKS is much more broad in scope than Stark. Other than Medicare and Medicaid, AKS applies to any health care plan that utilizes any amount of federal funds. For example, AKS applies to Veterans Health Care, State Children’s Health Programs (CHIP), Federal Employees Health Benefit Program, and many other programs with federal funding. Even if you opt to not accept Medicare and Medicaid, you may still be liable under AKS.

Stark law, on the other hand, is more narrow and only applies to Medicare and Medicaid. I find the following “cheat sheet” created by a subdivision of the Office of Inspector General to be helpful in understanding AKS and Stark and the differences between the two:

One other important aspect of Stark is that is considered “strict liability,” whereas AKS requires a proving of a “knowing and willful” action.

Feel free to print off the above chart for your reference. However, see that little asterisk at the bottom of the chart? It applies here as well.

Health Care Providers: Where Do You File an Appeal?

It depends.

For a Notice of Overpayment? Providers should request a reconsideration review and hire an attorney.

For a denial of endorsement? Providers have very limited time to appeal a denial. Hire a lawyer. Appeal as the denial explains.

For a Medicaid recipients’ rights? Most appeals will be to the Office of Administrative Hearings (OAH).

I wrote the above “blog” back in 2012. It was one of my first blogs and one of my shortest. Looking back, I must admit that the blog is not even good…it’s accurate-ish. I cannot believe that I have been blogging for over 10 years of my life…and about Medicare and Medicaid regulatory compliance litigation — who knew?

As the year ends, I want to thank all my readers for reading this blog for TEN YEARS. I am humbled and appreciative. As all of you are aware, I do not get paid to blog about Medicare and Medicaid. It actually eats-up quite a lot of my time, which I do not have in Spades, as a mother of a Senior in HS, a wife, and an attorney.

Now I will rewrite the 2012 blog for 2022-2023:

Health Care Providers: Where Do You File an Appeal?

If you are filing a Medicaid provider appeal claiming that you do not owe an overpayment, your State will have an administrative process for you to seek redress. You must exhaust administrative remedies, so read the notice of overpayment for clarification of the 1st and maybe 2nd steps. You normally have a reconsideration and a red-determination before presenting to an administrative law judge.

Hire a lawyer from the beginning.

If you are filing a Medicare provider appeal, see blog. Still hire an attorney.

I look forward to another year of defending health care providers against the State and federal governments. I see it as I have the chance to keep health care providers in business and accepting Medicaid and Medicare. Thank you for accepting Medicare and Medicaid, and I will be here to fight!! I have represented providers from Alaska to New Mexico to New York and Florida and all in between!

CMS Published 2023 Medicare/caid Health Care Providers’ Audit Process

THE CENTER FOR MEDICARE AND MEDICAID SERVICES (“CMS”) 2023 Program Audit Process Overview came out recently. The report is published by the Division of Audit Operations. CMS will send engagement letters to initiate routine audits beginning February 2023 through July 2023. Engagement letters for ad hoc audits may be sent at any time throughout the year. The program areas for the 2023 audits include: 

  • CDAG: Part D Coverage Determinations, Appeals, and Grievances
  • CPE: Compliance Program Effectiveness
  • FA: Part D Formulary and Benefit Administration
  • MMP-SARAG: Medicare-Medicaid Plan Service Authorization Requests, Appeals, and Grievances
  • MMPCC: Medicare-Medicaid Plan Care Coordination 
  • ODAG: Part C Organization Determinations, Appeals, and Grievances
  • SNPCC: Special Needs Plans Care Coordination

The Program Audit Process document is only 13 pages. Yet, it is supposed to set forth the rules that the auditors must abide by in 2023. My question is – what if they don’t. What if the auditors fail to follow proper procedure.

For example, similarly to last year, an audit consists of 4 phases.

  1. Audit engagement and universe submission
  2. Audit field work
  3. Audit reporting
  4. Audit validation and close out

I would like to add another phase. Phase 5 is appeal.

According to the Report, and this is a quote: “the Audit Engagement and Universe Submission (which is the 1st stage) is a six-week period prior to the field work portion of the audit. During this phase, a Sponsoring organization is notified that it has been selected for a program audit and is required to submit the requested data, which is outlined in the respective Program Audit Protocol and Data Request document.” My question is: The sponsoring organization? CMS is referring to the provider who getting audited as a sponsoring organization. And why does CMS call the provider who is getting audited sponsoring? Is it because after the audit the sponsoring organization will be paying in recoupments?

It is interesting that the first phase “Audit Engagement and Universe Submission,” lasts 6 weeks. At this point, I want to know, does the provider know that the facility has been targeted for an audit? As an attorney, I get to see the process in the aftermath. Folks call me in distress because they got the results of an audit and disagree. I have never had the opportunity to be involved from the get go. So, if any of y’all receive a notice of an audit, please call me. I won’t charge you. I just would love the experience of walking through an audit from the get go. I think it would make me better at my job.

In other news, as you know, CMS may issue civil money penalties to providers for alleged noncompliance. Other penalties exist as well, which may or may not be worse that civil penalties. On January 23, 2023, CMS published a correction that Total Longterm Care, Inc. d/b/a InnovAge Colorado PACE (InnovAge CO) corrected its violations. In 2021, CMS had suspended its ability to re-enroll. Another facility was imposed with pre-payment review, which means that the facility must submit claims to an auditor prior to receiving reimbursements. Pre-payment review is probably the worse penalty in existence. A client of mine was told yesterday that pre-payment review is imminent. The only recourse for pre-payment review is a federal or State injunction Staying the suspension of reimbursements. You cannot appeal being placed on pre-payment review. But you do have a chance to Stay the suspension. The suspension makes no sense to me. It’s as if the government is saying that you are guilty before an ability to prove innocence.

Recoupment, Recoupment, Everywhere and Not a Drop to Keep

The Rime of the Ancient Mariner, a poem written by Samuel Coleridge, states “Water, water everywhere, nor any drop to drink.” It is a tale of retribution. The poem talks about a mariner who is traveling with his fellow sailors. Suddenly, when the mariner finds an albatross chasing them, the mariner at once kills the albatross in cold blood without any major reason. After the killing of the bird, nothing goes well with the mariner. He is not in a position even to hold communion with God. Killing an albatross is symbolic of showing a criminal disregard for a creature of nature.

Now, imagine the mariner is a Medicare or Medicaid auditor. You are the albatross. According to Coleridge, an auditor that needlessly and mindlessly accuses you of owing $1 million in alleged overpayments should suffer dire consequences. However, unlike in poetry, the auditors suffer nothing. The albatross may or may not perish. A health care company may or may not go bankrupt due to the mariner/auditor’s inane actions.

I have a case right now that the auditor applied the 1995 AND 1997 guidelines, instead of only the 1995 or 1997 guidelines. The auditor created a more rigid criteria than what was actually required. Not ok.

So, how do you stop recoupment when you are accused of owing money for allegedly improperly billing Medicare or Medicaid?

  1. Hire an attorney as soon as you receive a Tentative Notice of Overpayment (“TNO”). Do not do, what multiple clients of mine have done, do not wait until the last few days of being allowed to appeal the TNO until you contact an attorney. You want your attorney to have time on his or her side! And yours!
  2. Appeal timely or recoupment will begin. If you do not appeal, recoupment will occur.
  3. Start putting money aside to pay for attorneys’ fees. I hate saying this, but you are only as good (legally) as what you can pay your attorneys. Attorneys have bad reputations regarding billing, but in a situation in which you are accused of owing mass amounts of money or, in the worst case scenario, of fraud against Medicare, you want an experienced, specialized attorney, who understands Medicare and Medicaid. Note: You do not need to hire an attorney licensed or located in your State. Administrative Law Courts (where you go for Medicare and Medicaid legal issues) do not require the attorneys to be legally licensed in the State in which they are practicing. At least, most States do not require attorneys to be licensed in the State in which they are practicing. There are a few exceptions.
  4. Meditate. The process is tedious.

Advocates Split on the Benefit of Banning Non-Compete Clauses!

The Federal Trade Commission (“FTC”) unilaterally issued a Proposed Rule to ban non-compete clauses in employment contracts. See blog. The first question is: Does the FTC have the legal authority to ban non-compete clauses? As a member of the American Society of Medical Association Counsel (“ASMAC”), the president, Greg Pepe, sent out an informal questionnaire to solicit comments by health care attorneys and heads of medical societies.

Greg said, “The respondents were split 50%/50% between medical society attorney members and private practice attorneys who are members.  In general, the most common threads were as follows:

  1. The most common comment was that non-compete provisions in physician employment contracts impede the physician/patient relationship.  This comment came up over and over in a number of ways.
  2. A few comments pointed out that rural areas were disproportionately harmed by non-competes, with physicians having to move away to comply.
  3. Hospital-based physician groups need non-competes to protect their arrangements.
  4. Exemptions for non-profits is a loophole that eviscerates the effort.
  5. ASMAC should be mindful of the divergent interests of its members and their client when considering this kind of commentary.

Very few people offered specific examples of the ways non-competes in physician contracts harmed physicians.  If your organization takes steps to comment please keep ASMAC advised.”

I decided that ASMAC’s findings, even if informal, were important enough to post here on my blog. So, thank you, Greg, for heading this up.

I would like to pay particular attention to #4. Because, a week or so ago, I presented on RACMoniter the story about the FTC banning non-compete clauses, but failed to acknowledge the exemptions for non-profits, which is a HUGE exception. There are 6093 hospitals in the U.S. 1228 of the 6093 hospitals are for profit. The vast majority of hospitals are either government run or non-profit. If you notice above, the “anti-banning comment of non-competes” came from hospital-based physician groups (#3). That makes sense.

Most people, when asked, touts that non-compete agreements impede physician-patient relationships. Personally, as an attorney, non-compete agreements represent requiring me not being able to work at another law firm if I decided Practus, LLP, did not work out. Similarly, if I had attended med school and was working at a hospital in Angier, NC, which was in close proximity to my home, and received a better offer at a nearby hospital, why should I be impeded from working? Obviously, families need to have an income, and what if the physician was the sole breadwinner? The non-compete agreement could really adversely affect a family.

Non-compete agreements, also called restrictive covenants, are an increasingly common requirement for employment in many sectors, including health care. Sometimes non-compete agreements appear as a clause within a contract. Other times, they are separate contracts in and of themselves. Though common, the terms of non-compete agreements vary greatly.

Most people, even physicians, when presented with a contract, “fake” review the contract, and sign without digesting – or even reading – the material. Many don’t even know that a non-compete clause exists in their contracts. Until it’s too late.

Will the FTC’s Proposed Rule become permanent? So far, there have been 4.91k comments. One anonymous person posted: “I am completely in favor of forbidding noncompete agreements.” A woman posted: “I am a veterinarian and have worked close to 40 years. I have been an associate and a practice owner. I see no justification for non-competes and in fact feel it harms the entire profession. Non-competes are pervasive and notoriously difficult to fight. For many years now I have worked for corporations and have watched colleagues both attempt to negotiate non-competes and bear the brunt of legal battles if they attempt to challenge the non-compete. Should you really have to move your entire family to acquire a job? How do I harm a company by working for their competitor?”

A guy wrote: “These should’ve been banned a long time ago. Job mobility is important if we “really” believe in our economic system. Ban NDAs.”

A physician wrote: “As a physician I have suffered significant financial and personal hardship relating to a non-compete agreement. As a result of a non-compete I had to move across the country (twice). I suffered significant loss of income as a result of this not withstanding the expense of relocating twice within a year. My self and my family also suffered significant psycho-social ramifications and de-stabilization. I now also face another non-compete agreement that will essentially render me unable to leave my next position without tremendous harm to my life-long earning potential, credibly rendering me an indentured servant. The presence of a non-compete also removes any leverage an employee such as myself might have to negotiate agains unacceptable working or wage conditions.”

Unlike the commenters from ASMAC, which was split 50-50, it appears that many comments support banning non-compete agreements, but, remember, the not-for-profit exception!! The comment period is open through Mar 10, 2023.

340B Drug Pricing Program: Drug Companies Are Concerned!

The federal 340B Drug Pricing Program allows qualifying hospitals and clinics that treat low-income and uninsured patients to buy outpatient prescription drugs at a discount of 25 percent to 50 percent. The program is intended to help safety-net health care providers stretch their financial resources to reach more financially vulnerable patients and deliver comprehensive services.

The 340B Drug Pricing Program has spiked in use. It has become more and more popular over the years.

In 2020, there were 8,100 provider sites (including both hospitals and pharmacies), but that number rose to 50,000 by 2020. New data released in August 2022 by the Health Resources and Services Administration suggest discounted purchases under the 340B program reached $44 billion in 2021, about 16% more than in 2020. Drug companies are concerned.

On November 30, 2022, the 340B Drug Pricing Program; Administrative Dispute Resolution Notice of Proposed Rulemaking (NPRM) was published in the Federal Register. Section 340B(d)(3) of the Public Health Service Act requires the establishment of an Administrative Dispute Resolution (ADR) process for certain disputes under the 340B Program. Under the statute, the ADR process is designed to resolve:

  • Claims by covered entities that they have been overcharged for covered outpatient drugs by manufacturers; and
  • Claims by manufacturers, after the manufacturer has conducted an audit of a covered entity, that a covered entity has violated the prohibition on diversion or duplicate discounts.

This NPRM proposes new requirements and more efficient procedures to make the 340B Program’s ADR process more accessible and efficient, including ensuring that ADR panels hearing disputes are comprised of subject matter experts on the 340B Program, and establishing an independent HRSA reconsideration process. The NPRM will be open for public comment through January 30, 2023. Please refer to the Federal Register (PDF – 315 KB) publication for instructions about how to submit comments.

The question is how does the new proposed rule mesh with the Inflation Reduction Act of 2022? If you recall, the Inflation Reduction Act of 2022 (IRA) allows Medicare to negotiate drug rates. It has been suggested that the following 10 medications will be the first 10 negotiated:

Does the IRA and 340B conflict? How can you negotiate prices of a drug if the drug is already discounted?

Gift Cards Violate AKS? Maybe NOT!!!

Is Giving Gift Cards to Medicaid Consumers Suffering Substance Abuse Issues Who Comply with Weekly Criteria To Promote Wellness Against the Anti-Kickback statute (AKS)?

Yes, but who cares?

OIG does not care and even published an opinion stating that OIG would not penalize the practice.

The AKS is a criminal law that prohibits the knowing and willful payment of “remuneration” to induce or reward patient referrals or the generation of business involving any item or service payable by the Federal health care programs (e.g., drugs, supplies, or health care services for Medicare or Medicaid patients). Remuneration includes anything of value and can take many forms besides cash, such as free rent, expensive hotel stays and meals, and excessive compensation for medical directorships or consultancies. In some industries, it is acceptable to reward those who refer business to you. However, in the Federal health care programs, paying for referrals is a crime. The statute covers the payers of kickbacks-those who offer or pay remuneration- as well as the recipients of kickbacks-those who solicit or receive remuneration. Each party’s intent is a key element of their liability under the AKS.

Criminal penalties and administrative sanctions for violating the AKS include fines, jail terms, and exclusion from participation in the Federal health care programs. Physicians who pay or accept kickbacks also face penalties of up to $50,000 per kickback plus three times the amount of the remuneration.

Safe harbors protect certain payment and business practices that could otherwise implicate the AKS from criminal and civil prosecution. To be protected by a safe harbor, an arrangement must fit squarely in the safe harbor and satisfy all of its requirements. Some safe harbors address personal services and rental agreements, investments in ambulatory surgical centers, and payments to bona fide employees.

However, study after study after study have demonstrated that people with substance abuse issues have a higher likelihood of success with monetary incentives. See article as an example.

OIG obviously understands the efficacy of gift cards. Maybe Congress can back up OIG because, you can be sure that, if the proposed rule is passed, litigation will ensue. People will claim that the FTC does not have the legal authority to issue such a rule in violation of the AKS.

Non-Compete Clauses Banned, According to Proposed Rule

Non-compete clauses have dominated the health care field for years. Generally, noncompete clauses place restrictions on a person’s ability to work in three different ways:

  1. geographical restrictions,
  2. time restrictions, and
  3. line of business restrictions

On January 5, 2023, the Federal Trade Commission (“FTC”) released a notice of proposed rule-making to prohibit employers from imposing noncompete clauses on workers. Noncompete agreements block people from working for competing, potential employers or starting a competing business, after their employment ends.

Data show that non-compete clauses affect about one and five American workers, approximately 30 million people. However, non-compete clauses are predominantly in healthcare. By far, doctors employed by hospitals sign more non-compete agreements than any other profession. The theory behind eliminating non-compete agreements is that non-compete causes prevent employees from accepting better opportunities that offer higher pay or better working conditions.

Non-compete clauses are common and have been a contentious issue for decades. Some theorize that non-competes disrupt the physician-patient relationship and remove physicians who are already in short supply from the workforce.

I say, eliminating noncompete agreements may evolve healthcare.

As written, the federal rule will supersede state laws that currently govern noncompete and would apply retroactively, invalidating existing agreements.

This proposed rule comes with criticism and legal obstacles that will surely be tested. So for all of you who jumped up and down for the new proposed rule, expect litigation because as much as eliminating noncompete clause is awesome for physicians, hospitals will be adversely affected.

Many people have complained that the rule is over broad and vague. Challenges include whether the FTC has the authority to issue the non-compete rule under Section 5 of the FTC Act, the primary section the FTC cites as providing its rulemaking authority. Section 5 gives the FTC authority to police both “unfair methods of competition” and “unfair or deceptive acts or practices” affecting commerce. Although Section 18 of the FTC Act contains an explicit grant of rulemaking authority to the FTC for unfair or deceptive acts or practices, the statutory authority for the FTC’s ability to make rules for unfair methods of competition is less clear. Even if the federal courts conclude that the FTC had the authority to make a rule under the FTC Act, there will be challenges to the legality of the non-compete rule itself. The FTC claims that the non-compete rule is based on a finding that non-compete clauses constitute an “unfair method of competition and therefore violate Section 5 of the Federal Trade Commission Act.”

To address these problems, the FTC’s proposed rule would generally prohibit employers from using noncompete clauses. Specifically, the FTC’s new rule would make it illegal for an employer to: enter into or attempt to enter into a noncompete with a worker; maintain a noncompete with a worker; or represent to a worker, under certain circumstances, that the worker is subject to a noncompete.

The proposed rule would apply to independent contractors and anyone who works for an employer, whether paid or unpaid. It would also require employers to rescind existing noncompetes and actively inform workers that they are no longer in effect.

The agency estimates that the new rule could boost wages by nearly $300 billion a year and expand career opportunities for about 30 million Americans.

The commission invites the public to submit comments. The FTC will review the comments and may make changes, in the final rule, based on the comments and on the FTC’s further analysis of the issue. Comments are due 60 days after the federal register publishes the proposed rule. You have until March 6 to comment.

A Brave New World: No Covenants Not to Compete???

“On January 5, 2023, the Federal Trade Commission released a Notice of Proposed Rulemaking (NPRM) to prohibit employers from imposing noncompete clauses on workers. True to their name, noncompetes block people from working for a competing employer, or starting a competing business, after their employment ends. Evidence shows that noncompete clauses bind about one in five American workers, approximately 30 million people. By preventing workers across the labor force from pursuing better opportunities that offer higher pay or better working conditions, and by preventing employers from hiring qualified workers bound by these contracts, noncompetes hurt workers and harm competition.” Link.

Physician noncompete contracts are a common but sometimes contentious issue, as they have the potential to disrupt the physician-patient relationship and remove physicians — who are already in short supply — from the workforce.

Eliminating noncompete agreements will evolve health care.

The Commission invites the public to submit comments on this proposed rule. The FTC will review the comments and may make changes, in a final rule, based on the comments and on the FTC’s further analysis of this issue. Comments will be due 60 days after the Federal Register publishes the proposed rule. You have until Match 6th to comment.

Don’t Like the Reimbursement Rates? Maybe Litigation Is the Answer!

The Medicare and Medicaid reimbursement rates are a disgrace to health care providers nationwide. The low reimbursement rates are the reason why so many providers refuse to accept Medicare and/or Medicaid patients. Yet, with the pandemic, it is estimated that 100 million people will be on Medicaid by next year. Having a Medicaid card to wave around is useless if providers refuse to accept it.

Hospitals in Nebraska are not putting up with it – and they should not put up with it! Not only can hospitals NOT turn away any person; thus being forced to accept Medicaid and Medicare … and uninsured patients, but the overhead for a hospital is astronomical.

Saying more than half of the state’s hospitals are operating in the red, the Nebraska Hospital Association is calling for a 9.6% increase to Medicaid reimbursement rates this year, and 7.7% next year, after seeing a 2% bump each of the last two years.

The Hospital Association has never demanded this high of a rate increase. Inflation has significantly impacted the costs for Nebraska hospitals. The association says drug costs are up 35%, labor costs are up 20%, supplies are up 15-20%, and food and utilities are up 10%. Overall, it says inflation is up more than 20% per patient compared to the pre-pandemic level. The cost of labor has spiked, especially during the pandemic when emergency room nurses were in such short supply and such demand. Some hospitals were forced to pay nurses $10k a week! Traveling nurses became a “thing,” which allowed nurses to jump around hospitals for the best pay. In no way, I am not campaigning for lower salaries for nurses. Nurses are essential. However, the reimbursement rates are supposed to reflect society’s needs.

The Nebraska Hospital Association is completely in the right to sue for higher reimbursement rates. I commend them. I beseech more association groups to do the same. The dental, pediatric, primary care, home health, long term care facilities, behavioral health care, and other associations across the country should follow suit.

The legal argument is clear. Under §1902(a)(30)(A) of the Social Security Act, State Medicaid programs must ensure that provider payments are “consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers” to provide access to care and services comparable to those generally available. On November 2, 2015, CMS issued a regulation (42 CFR Part 447) under this authority requiring State Medicaid programs to demonstrate that their Medicaid fee-for-service (FFS) non-waiver payment rates ensure sufficient access to care. See blog.

Hospitals lose money on Medicare and Medicaid patients. Considering the legal requirement of reimbursement rates to be consistent with efficiency, economy, and quality of care, I am shocked that MORE associations haven’t litigated this issue. Perhaps the providers within these associations, who pay high yearly memberships, should demand that associations fund this type of litigation.

I have no doubt that the cost of litigation dissuades most associations from making the expensive decision to litigate for better rates. But isn’t litigating for higher reimbursement rates the job of the associations? The cost would be prohibitive for single provider facilities. And, aren’t we always more strong when we band together?

2023 Changes to the Physician Fee Schedule … Starting Now!

Happy 2023 to all my bloggies out there!! Over the New Year’s celebration, thousands gathered in a wet NYC to watch the ball drop. There was a shooting in Mobile, AL, killing one person and injuring 9. About 40 people died in Buffalo over the holidays due to severe cold weather. And a man named Jay Withey rescued 24 people in Buffalo during the blizzard. My friend got COVID and gave it to her mom. I took my 98-year-old grandma out for sushi and played pickleball with my mom and daughter.

Why the word vomit?

Well, it’s a New Year and a new start. I am choosing to have a positive attitude for 2023. Yes, you get audited. Yes, the government blows. Sometimes you do not get rainbows and applesauce every day. But the hard times give you strength. It’s the challenging times that teach you to appreciate the good. I have decided to think about life as school. You may not want to go, but it’s required. Attendance is required.

On the syllabus for today, should you choose to participate, is the 2023 Physicians Fee Schedule (“PFS”). On November 01, 2022, the Centers for Medicare & Medicaid Services (“CMS”) issued a final rule that includes updates and policy changes for Medicare payments under the PFS, and other Medicare Part B issues, effective on or after January 1, 2023. Well, guess what, folks? It is January 2, 2023.

For most services furnished in a physician’s office, Medicare makes payment to physicians and other professionals at a single rate based on the full range of resources involved in furnishing the service. In contrast, PFS rates paid to physicians and other billing practitioners in facility settings, such as a hospital outpatient department (“HOPD”) or an ambulatory surgical center (“ASC”), reflect only the portion of the resources typically incurred by the practitioner in the course of furnishing the service.

Conversion factor

There was a 3% supplemental increase to PFS payments in 2022. That increase expires in 2023. The final 2023 PFS conversion factor is $33.06, a decrease of $1.55 to 2022 PFS conversion factor of $34.61.

What is a conversion factor (“CF”)? It is a convoluted equation that sets Medicare rates that differs depending on whether the health care service is rendered within a facility or out. CF is set by statute.

Evaluation and Management (“E/M”) Visits

For 2023, there are 25 codes that are going away. Here are the codes that are being deleted.

  • Hospital observation services codes 99217—99220, 99224–99226
  • Consultation codes 99241, 99251
  • Nursing facility service 99318
  • Domiciliary, rest home (eg, boarding home), or custodial care services, 99324—99328, 99334-99337, 99339, 99340
  • Home or resident services code 99343
  • Prolonged services codes 99354—99357

There is also a new Section entitled “initial and subsequent services,” which applies to hospital inpatient, observation care and nursing facility codes. It applies to both new and established patient visits. The AMA says,

“For the purpose of distinguishing between initial or subsequent visits, professional services are those face-to-face services rendered by physicians and other qualified health care professionals who may report evaluation and management services. An initial service is when the patient has not received any professional services from the physician or other qualified health care professional or another physician or other qualified health care professional of the exact same specialty and subspecialty who belongs to the same group practice, during the inpatient, observation, or nursing facility admission and stay.”

Admission and Discharge on the Same Day

Lastly, at least for this blog, codes 99234-99236, which are used for hospital inpatient or observation care and include the admission and discharge on the same day. The patient must be in the facility for greater than 8 hours. See the below table for reference:

These are just a few of the PFS 2023 changes. Stay tuned for new Medicare and Medicaid news on this blog by me, Knicole Emanuel.

Medicare Advantage: “Termination At Will” Clauses Legal?

Providers who contract with Medicare Advantage Organizations (“MAO”) need to know that even though the MAO is a private company, because it manages federal Medicare money, the Medicare regulations are applicable – and, possibly, not the contract that you were forced to sign. When any entity accepts the responsibility of getting tax dollars – a firehose of tax dollars, no less – prepaid – then that entity answers to all tax payers for their actions and that entity must follow the Medicare regulations.

Medicare Advantage Plans, sometimes called “Part C” or “MA Plans,” are offered by MAOs that must follow rules set by Medicare. Most Medicare Advantage Plans include drug coverage (Part D). Health care providers can contract to be in the plan’s network. MAOs include BCBS, Humana, Anthem, UnitedHealthcare, Cigna, and Aetna.

Just for an example, I pulled up the provider agreement for BCBS. Section 6.2 allows termination by either party with 60 days notice; this is the “termination at will” clause. Theoretically, BCBS or any MAO could terminate contracts with small providers and decide to contract only with larger providers. Or contract with only African-American providers. Or contract with only female-owned companies. Or contract with the providers that the CEO likes. I disagree with a termination at will clause that allows a company with so much Medicare money at its fingertips the authority to only contract with whom it wants or likes. In fact, I believe a termination at will clause violates the law.

The Courts are split on this issue. See blog.

42 CFR Section 422, et al, outlines the regulations for Medicare Advantage.

According to CMS, in order for a MAO to “Suspend, Terminate, or Not-renew Physician Contracts” specific requirements for an MA organization that operates a coordinated care plan or network MSA plan providing benefits through contracting physicians and that suspends, terminates, or non-renews a physician’s contract are as follows:

  1. The MA organization must give the affected physician written notice of the reasons for the action, including, if relevant, the standards and profiling data used to evaluate the physician and the numbers and mix of physicians needed by the MA organization.
  2. The MA organization must allow the physician to appeal the action, and give the physician written notice of his/her right to a hearing and the process and timing for requesting a hearing.
  3. The MA organization must ensure that the majority of the hearing panel members are peers of the affected physician.

42 CFR 422.202(c) and (d) and preamble of February 17, 1999, rule.

In sum, MAOs are required to provide appeal rights for any Medicare contract that is terminated. But, doesn’t that contradict with a “termination at will” clause?