“Gov. Michelle Lujan Grisham signed into law this week a bill (SB41) that ensures service providers accused of overbilling or defrauding Medicaid can review and respond to allegations of wrongdoing before state action is taken.” – Tripp Jennings, New Mexico In Depth.
For those of you who don’t know, in 2013, the State of New Mexico, suspended the Medicaid reimbursements of 15 behavioral health care providers based on “credible allegations of fraud.” 42 CFR 455.23. The Attorney General eventually determined that no fraud existed as to ANY of the 15 behavioral health care providers. These providers constituted 87.5% of the behavioral health care providers in New Mexico, which is predominantly Medicaid and has the highest suicide rate of any state, if you consider the Native American population.
There was no due process. The providers were informed of the immediate Medicaid suspension in a group meeting without ever being told what exactly the “fraud” was that they allegedly committed. They were informed by, then assistant Attorney General, Larry Hyeck, that fraud existed and because of the ongoing investigation nothing could be divulged to those accused. Supposedly, the evidence for such “fraud” was based on an independent audit performed by Public Consulting Group (PCG). However, according to testimony from an employee of PCG at the administrative hearing of The Counseling Center (one of the 15 accused behavioral health care providers), PCG was not allowed by the Human Services Department of NM (HSD) to complete its audit. According to this employee’s testimony, it is PCG’s common practice to return to the providers which are the subject of the audit a 2nd or even 3rd time to ensure that all the relevant documents were collected and reviewed. Human error and the sheer amount of medical records involved in behavioral health care suggest that a piece of paper or two can be overlooked, especially because this audit occurred in 2013, before most of the providers had adopted electronic medical record systems. Add in the fact that PCG’s scanners were less than stellar and that the former Governor Susan Martinez, Optum’s CEO, and the HSD Secretary -at the time- had already vetted 5 Arizona companies to overtake the 15 NM behavioral health care companies – even prior to PCG’s determination – and the sum equals a pre-determined accusation of fraud. PCG’s initial report stated that no credible allegations of fraud existed. However, PCG was instructed to remove that sentence.
Almost all the providers were forced out of business. The staff were terminated or told to be employed by the new 5 AZ companies. The Medicaid recipients lost their mental health services. One company remained in business because they paid the State for fraud that they never committed. Another company held on by a very thin thread because of its developmental disability services. But the former-CEO became taxed and stepped down and many more left or were let go. The 13 other providers were financially ruined, including the largest behavioral health care provider in NM, which serviced over 700 Medicaid recipients and employed hundreds of clinical staff. It had been servicing NM’s poor and those in need of mental health services for over 30 years. Another company had been in business over 40 years (with the same CEO). The careers and live’s work were crumbled in one day and by one accusation that was eventually proven to be wrong.
No one ever foresaw this amount of abuse of discretion to occur by government agents.
Now, today, in 2019, the new Governor of NM, Gov. Michelle Lujan Grisham, signed a law introduced by Senator Mary Kay Papen, a long proponent and advocate that the 15 behavioral health care providers were unjustly accused and forced out of business, that will protect Medicaid providers in NM from ever being subjected to the unjust and arbitrary suspension of Medicaid funds and unfounded allegations of Medicaid fraud.
Even though 42 C.F.R. 455.23 requires a state to suspend Medicaid funding upon “credible allegations of fraud,” NM has taken the first step toward instituting a safeguard for Medicaid providers. Already too few health care providers accept Medicaid – and who can blame them? The low reimbursement rates are nothing compared to the regulatory scrutiny that they undergo merely for accepting Medicaid.
NM SB41 contradicts the harsh language of 42 CFR 455.23, which mandates that a State “must” suspend payments upon a credible allegation of fraud. NM SB41 provides due process for Medicaid providers accused of fraud. Which begs the question – why hasn’t anyone brought a declaratory action to determine that 42 CFR 455.23 violates due process, which happens to be a constitutional right?
Part of the due process enacted by New Mexico is that a suspension of Medicaid reimbursements should be released upon a post of a surety bond and that the posting of a surety bond shall be deemed good cause to not suspend payments during the investigation. Although the new law also states that the Medicaid reimbursement suspension must be released within 10 days of the posting of the surety bond “in the amount of the suspended payment.” After 4 administrative hearings in New Mexico, I can assure you that the provider and HSD will have two disparate views of the “amount of the suspended payment.” And by disparate, I mean REALLY disparate.
Regardless, I view this new law as a giant leap in the direction of the Constitution, which was actually enacted in 1789. So is it apropos that 230 years later NM is forced to enact a law that upholds a legal right that was written and enacted into law 230 years ago?
Thank you, Gov. Michelle Lujan Grisham, Senator Papen, Patsy Romero, and Shawn Mathis for your amazing effort on getting this legislation passed.
And – look forward to my webcast on RACMonitor on Monday, April 8, 2019, detailing how courts across the country are revising their views and granting federal injunctions stopping premature recoupments when a Medicare/caid provider is accused of an overpayment. Due process is on a come-back.
There are a lot of concerns related to “incident-to“ billing. However, for physician practices, “incident-to” billing is a money maker, which, in the world, of sub-par Medicare reimbursement rates is a minute ray of sunshine in an otherwise eclipsed land. Auditors argue that there are fraud and abuse concerns because practices ignore or are confused about the rules and bill everything “incident-to“regardless of the conditions being met. This can result in a nasty audit, as well as substantial fines, penalties, and attorneys’ fees. If you bill “incident-to,” just follow the rules…unless those rules are eliminated. Until possible elimination, keep up with the rules, which can differ depending on the auditor in the region.
Recently, people have been pushing for Medicare reform to include disallowing nurse practitioners (NPs) and physician assistants (PAs) from billing “incident-to.” Proponents of the suggested amendment claims that the recommendation would save the Medicare program money — approximately $50 to $250 million annually and just under $1 billion over 5 years.
The number of NPs who bill Medicare has more than doubled, from 52,000 to 130,000 from 2010 to 2017
What is “incident-to” billing?
In colloquialism, “incident-to” billing allows non-physician providers (NPPs) to report services “as if” they were performed by a physician. The NPP stands in the shoes of the physician. The advantage is that, under Medicare rules, covered services provided by NPPs typically are reimbursed at 85% of the fee schedule amount; whereas, services properly reported “incident-to” are reimbursed at the full fee schedule value.
In legalize, “incident-to” services under §1861(s)(2)(A) of the Social Security Act are provided by NPPs as a part of the services provided directly by the physician, but billed as if they were in fact performed by the physician. Several, legal, threshold requirements must be satisfied before billing eligibility for these services is established.
Billing using “incident-to” can be a huge money-maker for providers. If billed incorrectly, it can also be a provider’s financial downfall.
“Incident-to” billing can only apply to established patients. Not new patients. Not consults. The other non-negotiable factor is that the physician who is supervising must be on-site. Not a phone call away. Not grabbing a burger at a local eatery. On-site. Although with hospitals, the cafeteria is a viable option. I foresee, in the future, telehealth and Skype may change this on-site requirement. The incident-to rules also require that the services be part of a patient’s normal course of treatment. The rules require that the physician remains actively involved in the patient’s course of treatment. There must be direct supervision. Direct supervision = on-site. The following services cannot be billed as “incident-to:”
- new patient visits
- visits in which an established patient is seen for a new problem
- visits in which the treatment provided or prescribed is not a part of the treatment plan established by a physician
- services provided in the hospital or ambulatory surgery center.
Do not confuse “incident-to” with Medicare patients versus Medicaid patients. MediCAID’s regulations for the coverage of MD services vary significantly than Medicare’s rules and requires direct contact with the patient with exceptions.
Here is a question that I often get: “When billing “incident-to,” do you bill “incident to” the physician who is physically on-site that day or the physician who is overseeing that patient’s care? Both physicians are in the same group and it is billed under the Group NPI, but not sure which physician to reference for “incident-to.”
Answer: Bill under the MD who is on-site. This was addressed by the Center for Medicare and Medicaid Services (CMS) in the 2016 Physician Fee Schedule Final Rule.
The Medicare Benefit Policy Manual addresses the “incident-to” rules for each provider type and in any scenario:
- Section 60 contains policies for services furnished incident to physicians’ services in the physician’s office.
- Chapter 6, section 20.5 enumerates the policies for therapeutic services furnished “incident-to” physicians’ services in the hospital outpatient setting.
- Section 80 states the policies for diagnostic tests in the physician’s office
- Chapter 6, section 20.4 lists the policies for diagnostic tests furnished in the hospital outpatient setting.
Drug Administration under “incident-to”
“The Medicare program provides limited benefits for outpatient prescription drugs. The program covers drugs that are furnished “incident to” a physician’s service provided that the drugs are not usually self-administered by the patients who take them.” Medicare Benefit Policy Manual, 50.2. Injectable drugs, including intravenously administered drugs, are typically eligible for inclusion under the “incident-to” benefit.
The Medicare Administrative Contracts (MACs) (or – auditors) must fully explain the process they will use to determine whether a drug is usually self-administered and thus does not meet the “incident-to” benefit category. The MACs must publish a list of the injectable drugs that are subject to the self-administered exclusion. If there is discrepancy amongst the MACs, a lawsuit could help.
In order to meet all the general requirements for coverage under the “incident-to” provision, an FDA approved drug or biological must:
- Be of a form that is not usually self-administered;
- Must be furnished by a physician; and
- Must be administered by the physician, or by auxiliary personnel employed by the physician and under the physician’s personal supervision
The charge, if any, for the drug or biological must be included in the physician’s bill, and the cost of the drug or biological must represent an expense to the physician.
“Incident-to” billing is subject to elimination. The difference in billing “incident-to” is a 100% reimbursement rate versus an 85% reimbursement rate. That 15% difference cannot be passed onto the Medicare recipients.
While “incident-to” billing continues to be allowed, it is imperative to keep up with the ever changing rules.
What in the health care is going on in Detroit??
Hospitals in Detroit, MI may lose Medicare funding, which would be financially devastating to the hospitals. Is hospital care in Detroit at risk of going defunct? Sometimes, I think, we lose sight of how important our local hospitals are to our communities.
The Center for Medicare and Medicaid Services (CMS) notified DMC Harper University Hospital and Detroit Receiving Hospital that they may lose Medicare funding because they are allegedly not in compliance with “physical environment regulations.”
42 C.F.R. § 483.90 “Physical environment” states “The facility must be designed, constructed, equipped, and maintained to protect the health and safety of residents, personnel and the public.”
CMS will give the hospitals time to submit corrective action plan, but if the plans of correction are not accepted by CMS, Medicare will terminate the hospitals’ participation by April 15, 2019 (tax day – a bad omen?).
The two hospitals failed fire safety and infection control. Section 483.90 instructs providers to ensure fire safety by installing appropriate and required alarm systems. Providers are forbidden to have certain flammable goods in the hallways. It requires sprinkler systems to be installed. It requires emergency generators to be installed on the premises. Could you imagine the liability if Hurricane ABC destroys the area and Provider XYZ loses power, which causes Grandma Moses to stop breathing because her oxygen tube no longer disseminate oxygen? Think of the artwork we would have lost! Ok, that was a bad example because there are no hurricanes in Detroit.
Another important criterion of the physical environment regulations is infection control, which, according to the letters from CMS, is the criterion that the two hospitals allegedly have failed. Each hospital underwent a survey on Oct. 18th when the alleged deficiencies were discovered.
“We have determined that the deficiencies are significant and limit your hospital’s capacity to render adequate care and ensure the health and safety of your patients,” stated the Jan. 15 letters to the hospitals from CMS. CMS informed the hospitals they had until Jan. 25 to submit a plan of correction. It is unclear whether the hospitals submitted these plans. Hopefully, both hospitals have a legal team that did draft and submit the plans of correction.
Michigan is a state in which if Medicare funds are terminated, then Michigan will terminate Medicaid funds automatically. So termination of Medicare funding can be catastrophic. Concurrently, Scott Steiner, chief of Detroit Receiving Hospital, is resigning (shocker).
Detroit must have something in the water when it comes to health care issues in the news because, also in Detroit, a police task force Monday removed 26 fetuses from a Detroit Medical Center (DMC) morgue, all of which were allegedly mishandled by Perry Funeral Home. Twenty of the bodies taken from the DMC cooler had dates-of-birth listed from 1998 and earlier, with six dating to the 1970s. The earliest date of birth of a discovered fetus was Aug. 11, 1971.
State authorities are looking into another case of dozens of infant remains allegedly hidden for years in a DMC hospital. News articles do not mention the DMC hospital’s name, but one cannot help but wonder whether the two incidents – (1) Detroit hospitals failing infection control specifications; and (2) decomposing bodies found in a hospital – are intertwined.
Detroit has to be winning a record here with health care issues – Medicare audit failures in hospitals, possible loss of Medicare contracts, possible suspension of Medicaid reimbursements, and, apparently decomposing fetuses in funeral homes and hospitals.
Don’t we have due process in America? Isn’t due process something that our founding fathers thought important, essential even? Due process is in our Constitution.
The Fourteenth (governing state governments) and the Fifth Amendment (governing federal government) state that no person shall be “deprived of life, liberty, or property without due process of law.”
Yet, apparently, if you accept Medicaid or Medicare, due process is thrown out the window. Bye, Felicia!
How is it possible that criminals (burglars, murderers, rapists) are afforded due process but a health care provider who accepts Medicaid/care does not?
Surely, that is not true! Let’s look at some examples.
In Tulsa, a 61-year-old man was arrested for killing his Lebanese neighbor. He pled not guilty. In news articles, the word “allegedly” is rampant. He allegedly killed his neighbor. Authorities believe that he may have killed his neighbor.
And prior to getting his liberty usurped and getting thrown in jail, a trial ensues. Because before we take a person’s liberty away, we want a fair trial. Doesn’t the same go for life and property?
Example A: I recently received a phone call from a health care provider in New Jersey. She ran a pediatric medical daycare. In 2012, it closed its doors when the State of New Jersey accused it of an overpayment of over $12 million and suspended its funds. With its funds suspended, it could no longer pay staff or render services to its clients.
Now, in 2016, MORE THAN FOUR YEARS LATER, she calls to ask advice on a closing statement for an administrative hearing. This tells me (from my amazing Murdoch Mysteries (my daughter’s favorite show) sense of intuition): (1) she was not provided a trial for FOUR YEARS; (2) the state has withheld her money, kept it, and gained interest on it for over FOUR YEARS; (3) in the beginning, she did have an attorney to file an injunction and a declaratory judgment; and (4) in the end, she could not afford such representation (she was filing her closing argument pro se).
Examples B-P: 15 New Mexico behavioral health care agencies. On June 23, 2013, the State of New Mexico accuses 15 behavioral health care agencies of Medicaid fraud, which comprised 87.5% of the behavioral health care in New Mexico. The state immediately suspends all reimbursements and puts most of the companies out of business. Now, MORE THAN THREE YEARS LATER, 11 of the agencies still have not undergone a “Fair Hearing.” Could you imagine the outrage if an alleged criminal were held in jail for THREE YEARS before a trial?
Example Q: Child psychiatrist in rural area is accused of Medicaid fraud. In reality, he is not guilty. The person he hired as his biller is guilty. But the state immediately suspends all reimbursements. This Example has a happy ending. Child psychiatrist hired us and we obtained an injunction, which lifted the suspension. He did not go out of business.
Example R: A man runs a company that provides non-emergency medical transportation (NEMT). One day, the government comes and seizes all his property and freezes all his bank accounts with no notice. They even seize his fiance’s wedding ring. More than TWO YEARS LATER – He has not stood trial. He has not been able to defend himself. He still has no assets. He cannot pay for a legal defense, much less groceries.
Apparently the right to speedy trial and due process only applies to alleged burglars, rapists, and murderers, not physicians and health care providers who render medically necessary services to our most fragile and vulnerable population. Due process??? Bye, Felicia!
What can you, as a health care provider, do if you are accused of fraud and your reimbursements are immediately suspended?
- Prepare. If you accept Medicare/caid, open an account and contribute to it generously. This is your CYA account. It is for your legal defense. And do not be stupid. If you accept Medicaid/care, it is not a matter of if; it is a matter of when.
- Have your attorney on speed dial. And I am not talking about your brother’s best friend from college who practices general trial law and defends DUIs. I am talking about a Medicaid/care litigation expert.
- File an injunction. Suspension of your reimbursements is a death sentence. The two prongs for an injunction are (a) likelihood of success on the merits; and (b) irreparable harm. Losing your company is irreparable harm. Likelihood of success on the merits is on you. If your documents are good – you are good.
Dr. Isaac Kojo Anakwah Thompson, a Florida primary care physician, was sentenced in July 2016 to 4 years in prison and a subsequent two years of supervised release. Dr. Thompson pled guilty to health care fraud. He was further ordered to pay restitution in the amount of $2,114,332.33. Ouch!! What did he do?
According to the Department of Justice, Dr. Thompson falsely reported that 387 of his clients suffered from ankylosing spondylitis when they did not.
Question: How does faking a patient’s disease make a physician money???
Answer: Hierarchal condition category (HCC) coding. Wait, what?
Basically, Medicare Advantage assigns HCC coding to each patient depending on the severity of their illnesses. Higher HCC scores equals substantially higher monthly capitation payments from Medicare to the managed care organization (MCO). In turn, the MCO will pay physicians more who have more extremely sick patients (higher HCC codes).
Ankylosing spondylitis is a form of arthritis that causes inflammation and damage at the joints; eventually, the inflamed spinal joints can become fused, or joined together so they can’t move independently. It’s a rare disease, affecting 1 in 1000 people. And, importantly, it sports a high HCC code.
In this case, the Office of Inspector General (OIG) found it odd that, between 2006-2010, Dr. Thompson diagnosed 387 Medicare Advantage beneficiaries with ankylosing spondylitis and treated them with such rare disease. To which, I say, if you’re going to defraud the Medicare system, choose common, fabricated diseases (kidding – it’s called sarcasm – I always have to add a disclaimer for people with no humor).
According to the Department of Justice, none or very few of Dr. Thompson’s 387 consumers actually had ankylosing spondylitis.
My issue is as follows: Doesn’t the managed care organization (MCO) share in some of the punishment? Shouldn’t the MCO have to repay the financial benefit it reaped from Dr. Thompson?? Shouldn’t the MCO have a duty to report such oddities?
Let me explain:
In Florida, Humana acted as the MCO. Every dollar that Dr. Thompson received was funneled through Humana. Humana would pay Dr. Thompson a monthly capitation fee from Medicare Advantage based on his patient’s hierarchal condition category (HCC) coding. Increasing even just one patient’s HCC code means more bucks for Dr. Thompson. Remember, according to the DOJ, he increased 387 patients’ HCC codes.
Dr. Thompson reported these diagnoses to Humana, which in turn reported them to Medicare. Consequently, Medicare paid approximately $2.1 million in excess capitation fees to Humana, approximately 80% of which went to Dr. Thompson.
In this case, it is reasonable to expect that Humana had knowledge that Dr. Thompson reported abnormally high HCCs for his patients. For comparison, ankylosing spondylitis has an HCC score of 0.364, which is more than an aortic aneurysm and three times as high as diabetes. Plus, look at the amount of money that the MCO paid Dr. Thompson. Surely, it appeared irregular.
What, if anything, is the MCO’s duty to report physicians with an abnormally high number of high HCC codes? If you have knowledge of someone committing a crime and you do nothing, isn’t that called aiding and abetting?
With the publication of the Yates memo, I expect to see CMS holding MCOs and other state agencies accountable for the actions of its providers. Not to say that the MCOs should actively, independently investigate Medicare/caid fraud, but to notify the Human Services Department (HSD) if abnormalities exist, especially if as blatant as one doctor with 387 patients suffering from ankylosing spondylitis.
Turning Medicare Into a Premium Support System: Frequently Asked Questions — The Henry J. Kaiser Family Foundation
Premium support is a general term used to describe an approach to reform Medicare that aims to reduce the growth in Medicare spending. These FAQs raise and discuss basic questions about the possible effects of a premium support system for Medicare beneficiaries, the federal budget, health care providers, and private health plans.
I have blogged about peeing in a cup before…but we will not be talking about dentists in this blog. Instead we will be discussing pain management physicians and peeing in a cup.
Pain management physicians are under intense scrutiny on the federal and state level due to increased urine testing. But is it the pain management doctors’ fault?
When I was little, my dad and I would play catch with bouncy balls. He would always play a dirty little trick, and I fell for it every time. He would toss one ball high in the air. While I was concentrating on catching that ball, he would hurl another ball straight at me, which, every time, smacked into me – leaving me disoriented as to what was happening. He would laugh and laugh. I was his Charlie Brown, and he was my Lucy. (Yes, I have done this to my child).
The point is that it is difficult to concentrate on more than one thing. When the Affordable Care Act (ACA) came out, it was as if the federal government wielded 500, metaphoric, bouncy balls at every health care provider. You couldn’t comprehend it in its entirety. There were different deadlines for multiple changes, provider requirements, employer requirements, consumer requirements…it was a bloodbath! [If you haven’t seen the brothers who trick their sister into thinking it’s a zombie apocalypse, you have to watch it!!]
A similar “metaphoric ball frenzy” is occurring now with urine testing, and pain management physicians make up the bulk of prescribed urine testing. The urine testing industry has boomed in the past 4-5 years. This could be caused by a number of factors:
- increase use of drugs (especially heroine and opioids),
- the tightening of regulations requiring physicians to monitor whether patients are abusing drugs,
- increase of pain management doctors purchasing mass-spectrometry machines and becoming their own lab,
- simply more people are complaining of pain, and
- the pharmaceutical industry’s direct-to-consumer advertising (DTCA).
Medicare’s spending on 22 high-tech tests for drugs of abuse hit $445 million in 2012, up 1,423% in five years. “In 2012, 259 million prescriptions were written for opioids, which is more than enough to give every American adult their own bottle of pills.” See article.
According to the American Association of Pain Management, pain affects more Americans than diabetes, heart disease and cancer combined. The chart below depicts the number of chronic pain sufferers compared to other major health conditions.
In the world of Medicare and Medicaid, where there is profit being made, the government comes a-knockin’.
But should we blame the pain management doctors if recent years brought more patients due to increase of drug use? The flip side is that we do not want doctors ordering urine tests unnecessarily. But aren’t the doctors supposed to the experts on medical necessity??? How can an auditor, who is not a physician and never seen the patient opine to medical necessity of a urine test?
The metaphoric ball frenzy:
There are so many investigations into urine testing going on right now.
Ball #1: The machine manufacturers. A couple of years ago, Carolina Liquid Chemistries (CLC) was raided by the federal government. See article. One of the allegations was that CLC was misrepresenting their product, a urinalysis machine, which caused doctors to overbill Medicare and Medicaid. According to a source, the federal government is still investigating CLC and all the physicians who purchased the urinalysis machine from CLC.
Ball #2: The federal government. Concurrently, the federal government is investigating urine testing billed to Medicare. In 2015, Millennium Health paid $256 million to resolve alleged violations of the False Claims Act for billing Medicare and Medicaid for medically unnecessary urine drug and genetic testing. I wonder if Millennium bought a urinalysis machine from CLC…
Ball #3: The state governments. Many state governments are investigating urine testing billed to Medicaid. Here are a few examples:
New Jersey: July 12, 2016, a couple and their diagnostic imaging companies were ordered to pay more than $7.75 million for knowingly submitting false claims to Medicare for thousands of falsified diagnostic test reports and the underlying tests.
Oklahoma: July 10, 2016, the Oklahoma attorney general’s office announced that it is investigating a group of laboratories involved in the state’s booming urine testing industry.
Tennessee: April 2016, two lab professionals from Bristol, Tenn., were convicted of health care fraud in a scheme involving urine tests for substance abuse treatments.
If you are a pain management physician, here are a few recommendations to, not necessarily avoid an audit (because that may be impossible), but recommendations on how to “win” an audit:
- Document, document, document. Explain why the urine test is medically necessary in your documents. An auditor is less likely to question something you wrote at the time of the testing, instead of well after the fact.
- Double check the CPT codes. These change often.
- Check your urinalysis machine. Who manufactured it? Is it performing accurately?
- Have an experienced, knowledgeable, health care attorney. Do not wait for the results of the audit to contact an attorney.
And, perhaps, the most important – Do NOT just accept the results of an audit. Especially with allegations involving medical necessity…there are so many legal defenses built into regulations!! You turn around and throw a bouncy ball really high – and then…wallop them!!
Throughout the history of health care, payors and payees of Medicare/caid have existed in separate silos. In fact, the two have combated – the relationship has not always been stellar.
Looking into my crystal ball; however, all will not be as it is now [that’s clear as mud!].
Now, and in the upcoming years, there will be a massive shift to integrate payors and payees under the same roof. Competition drives this movement. So does the uncertainty in the health care market. This means that under one umbrella may be the providers and the paying entities.
Why is this a concern? First – Any healthcare entity that submits claims to the federal government, whether it be a provider or payor, must comply with the fraud and abuse statutes. As such, there is a potential to run afoul of federal and state regulations regulating the business of health care. Payors know their rules; providers know their rules…And those rules are dissimilar; and, at times, conflicting. The opportunity to screw up is endemic.
Second – With the new responsibilities mandated by the Yates Memo, these new relationships could create awkward situations in which the head of the payor department could have knowledge (or should have knowledge) of an [alleged] overpayment, but because of the politics at the company or self-interest in the preservation of his or her career, the head may not want to disclose such overpayment. With the 60-day rule, the head’s hesitation could cost the company.
The Affordable Care Act (ACA) reinvented health care in so many ways. Remember, the ACA is supposed to be self-funding. Taxes were not to increase due to its inception. Instead, health care providers fund the ACA through post payment and prepayment audits, ZPIC audits, CERTs, MFCU, MICs, RACs, and PERMs.
The ACA also made a whole new commercially-insured population subject to the False Claims Act. False statements are now being investigated in connection with Medical Loss Ratios, justifications for rate increases, risk corridor calculations, or risk adjustment submissions.
CMS imposes a duty to detect fraud, waste, and abuse (FWA). But what if you’re looking at your own partners?
The chart above depicts “old school” Medicare payment options for physicians and other health care providers. In our Brave New World, the arrows will be criss-crossed (applesauce), because when the payors and the payees merge, the reimbursements, the billing, and the regulatory supervision will be underneath the same roof. It’ll be the game of “chicken” taken to a whole new level…with prison and financial penalties for the loser.
Since 2011, kickback issues have exponentially grown. The Anti-Kickback Statute makes it a criminal offense for a provider to give “remuneration” to a physician in order to compensate the physician for past referrals or to induce future referrals of patients to the provider for items or services that are reimbursed, in whole or in part, by Medicare or Medicaid.
Imagine when payors and payees are owned by the same entity! Plus, the ACA amended the kickback statutes to eliminate the prong requiring actual knowledge or intent. Now you can be convicted of anti kickback issues without any actual knowledge it was ever occurring!!
Now we have the “one purpose test,” which holds that a payment or offer of remuneration violates the Anti-Kickback Statute so long as part of the purpose of a payment to a physician or other referral source by a provider or supplier is an inducement for past or future referrals. United States v. Borrasi, 2011 WL 1663373 (7th Cir. May 4, 2011).
There are statutory exceptions. But these exceptions differ depending on whether you are a payor or payee – see the potential criss-cross applesauce?
And, BTW, which types of health care services are bound by the anti kickback statutes?
- Clinical laboratory services;
- Physical therapy services;
- Occupation therapy services;
- Radiology services (including MRIs, Ultrasounds, and CAT scans);
- Radiation therapy and supplies;
- Durable medical equipment and supplies;
- Parenteral and enteral nutrients, equipment, and supplies;
- Prosthetics, orthotics, and prosthetic devices and supplies;
- Home health services;
- Outpatient prescription drugs; and
- Inpatient and outpatient hospital services.
Imagine a building. Inside is a primary care physician (PCP), a pediatrician, a home health agency, and a psychiatrist. Can the PCP refer to the home health agency? Can a hospital refer to a home care agency? What if one of the Board of Directors sit on both entities?
The keys to avoiding the anti kickback pitfalls is threefold: (1) fair market value (FMV); (2) arm’s length transactions; and (3) money cannot be germane to referrals.
However, there is no one acceptable way to determine FMV. Hire an objective appraiser. While hiring an objective appraiser does not establish accuracy, it can demonstrate a good faith attempt.
Number One Rule for Merging/Acquiring/Creating New Partnerships in our new Brave New World of health care?