Category: Office of Inspector General
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For what may be the first time, the Office of Inspector General (OIG) at the Department of Health & Human Services (HHS) recently announced a new project to review Medicare payments for telehealth services. Accordingly, providers who bill the Medicare program for telehealth services may expect to have those claims reviewed to confirm the patient was at an eligible originating site and that the statutory conditions for coverage were met. The audit is a new project added as a supplement to the OIG’s 2017 Work Plan.
OIG Work Plan
Historically, at the beginning of each new fiscal year, the OIG issued its Work Plan, setting forth the compliance and enforcement projects and priorities OIG intends to pursue in the coming year. Beginning in June 2017, OIG will update the annual Work Plan on a monthly basis. The Work Plan contains dozens of projects affecting Medicare and Medicaid providers, suppliers and payors, as well as public health reviews and Department-specific reviews.
The Work Plan reflects (in large part) two aspects of the work of OIG:
1) Projects originating within the Office of Audit Services (OAS), which conducts financial, billing, and performance audits of HHS programs; and
2) Projects originating within the Office of Evaluations and Inspections (OEI), which provides management reviews and evaluations of HHS program operations.
Except by providing general statistics, the Work Plan itself does not detail the work of the Office of Investigations or the Office of Counsel to the Inspector General in investigating and enforcing matters involving specific individual providers and suppliers. The new telehealth project will be run by the OAS.
Review of Medicare Payments for Telehealth Services
OIG describes its new telehealth review project as follows:
“Medicare Part B covers expenses for telehealth services on the telehealth list when those services are delivered via an interactive telecommunications system, provided certain conditions are met (42 CFR § 410.78(b)). To support rural access to care, Medicare pays for telehealth services provided through live, interactive videoconferencing between a beneficiary located at a rural originating site and a practitioner located at a distant site. An eligible originating site must be the practitioner’s office or a specified medical facility, not a beneficiary’s home or office. We will review Medicare claims paid for telehealth services provided at distant sites that do not have corresponding claims from originating sites to determine whether those services met Medicare requirements.”
The expected issue date of the OIG report is 2017, so presumably the review will commence shortly (although OIG Work Plan projects are sometimes continued or extended from year-to-year).
Medicare 2014 Telehealth Claims Data
The new OIG project is not the first time Medicare claims data has identified a potential mismatch regarding the conditions for coverage for telehealth services. A July 2016, Medicare Payment Advisory Commission (MEDPAC) Report to Congress: Medicare and the Health Care Delivery System contained a detailed chapter on telehealth services and the Medicare program. In it, MEDPAC analyzed Medicare claims data from 2014 for preliminary qualitative assessments on the state of telehealth services under Medicare. The report included a paragraph on telehealth distant site claims without a corresponding originating site claim, stating:
“Among the 175,000 telehealth claims from distant sites, 95,000 (55 percent) were without an originating site claim. This discrepancy could be due to providers not bothering to bill for the $25 facility fee, or it could be that some services inappropriately originated from a patient’s home, as other research has suggested (Gilman and Stensland 2013). Among the distant site telehealth claims without an originating site claim, 56 percent (53,000 visits) were associated with rural beneficiaries and 44 percent (41,000 visits) were associated with urban beneficiaries. Both claims groups suggest that beneficiaries could be inappropriately receiving telehealth services from home or another unapproved location that did not file an originating site claim. The urban claims are also potentially problematic because they could be occurring in urban originating sites, which is inconsistent with Medicare statute.”
Medicare Coverage of Telehealth Services
Current coverage of telehealth services under Medicare is limited, with the coverage restrictions established via statute under the Social Security Act. Any notable expansion of telehealth coverage under Medicare would require legislation by Congress. There are several bills pending in Congress to remove these limitations, but until such time, there are five main conditions for coverage for telehealth services under Medicare.
- The beneficiary is located in a qualifying rural area (providers can check if the originating site is in a qualifying rural area by using the Medicare Telehealth Payment Eligibility Analyzer);
- The beneficiary is located at one of eight qualifying originating sites (i.e., the offices of physicians or practitioners; Hospitals; Critical Access Hospitals; Rural Health Clinics; Federally Qualified Health Centers; Hospital-based or CAH-based Renal Dialysis Centers (including satellites); Skilled Nursing Facilities; and Community Mental Health Centers);
- The services are provided by one of ten distant site practitioners eligible to furnish and receive Medicare payment for telehealth services (i.e., physicians; nurse practitioners;™physician assistants;™nurse-midwives;™ clinical nurse specialists;™ certified registered nurse anesthetists; clinical psychologists; clinical social workers; registered dietitians; and nutrition professionals);
- The beneficiary and distant site practitioner communicate via an interactive audio and video telecommunications system that permits real-time communication between them (store and forward is covered in Alaska and Hawaii under demonstration programs); and
- The CPT/HCPCS (Current Procedural Terminology/Healthcare Common Procedure Coding System) code for the service itself is named on the CY 2017 (or current year) list of covered Medicare telehealth services.
In order to bill Medicare for telehealth services, the distant site practitioner must fully comply with each of these requirements. If the service does not meet each of these above requirements, the Medicare program will not pay for the service. If, however, the conditions of coverage are met, the use of an interactive telecommunications system substitutes for an in-person encounter (i.e., it satisfies the “face-to-face” element of a service).
Providers ought not fear the new OIG project, or see it as a reason not to offer telehealth services to their patients. Indeed, the project and its eventual report can help shed light on those areas of compliance which the OIG believes important. In the interim, providers should continue to ensure their telehealth programs and claims comply with Medicare requirements, including coverage, coding, and documentation rules.
For more information on telemedicine, telehealth, and virtual care innovations, including the team, publications, and other materials, visit Foley’s Telemedicine Practice.
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The Centers for Medicare and Medicaid Services (CMS) has demonstrated that it will not hesitate to use one of its most crippling administrative enforcement tools—the revocation of Medicare billing privileges—against one of its largest suppliers, as is evident in its case against Arriva Medical, LLC. Medicare billing privileges may be revoked for any one (or more) of several grounds laid out in the regulations at 42 C.F.R. § 424.535. In this case, CMS relied upon 42 C.F.R. § 424.535(a)(8), “abuse of billing privileges,” and specifically subsection (i)(A), regarding the submission of a claim for an item or service that could not have been furnished to a specific individual on the date of service because the beneficiary was deceased.
A revocation of billing privileges precludes payment for any claims submitted after the effective date of the revocation, and is accompanied by a ban on re-enrollment. A revocation has much the same impact as an exclusion imposed by the Department of Health and Human Services (HHS) Office of Inspector General (OIG), i.e., no Medicare payment, and in some cases revocations have been imposed after OIG declined to exclude an individual or entity.1 A Medicare revocation can also result in similar actions under Medicaid.
Arriva provides diabetic testing supplies under Medicare’s competitive bidding program, and describes itself as the nation’s largest supplier of home-delivered diabetic testing supplies.2 In October 2016, Arriva was notified by CMS that its billing privileges would be revoked, effective November 4, 2016, with a three year ban on reenrollment, due to the submission of Medicare claims for deceased beneficiaries. On December 6, 2016, Arriva was notified that its competitive bidding contract would be terminated effective January 20, 2017, based upon its lack of Medicare billing privileges.
Arriva filed for administrative review of the revocation of its billing privileges, an appeal that as of this writing is pending with the Departmental Appeals Board (DAB), and filed for a temporary restraining order and injunctive relief in light of the upcoming deadline for termination of its competitive bid contract. In its filing, Arriva alleged that the revocation was based upon 211 claims (0.003%) for supplies shipped to beneficiaries after they had died, out of approximately 5.8 million claims over a five-year period.3 Arriva further noted that CMS found concerns with the supporting claims documentation for 47 of those 211 beneficiaries. However, Arriva argued that any errors in billing for these claims after the beneficiary died were primarily the result of Medicare system flaws, and the revocation itself was related to the backlog of claims appeals before the Office of Medicare Hearings and Appeals.
Defendants (HHS) responded by filing an Opposition to Plaintiff’s First Application for Temporary Restraining Order (TRO) and Preliminary Injunction and Motion to Dismiss Plaintiff’s Complaint (Defendants’ Opposition), in which it was reported that CMS had advised Arriva that CMS was willing to defer the termination of the competitive bidding contract until such time as the DAB rendered the final agency decision on the revocation. Defendants’ Opposition notes that several courts have addressed revocation actions imposed by CMS, including allegations of imminent and irreparable harm, and have dismissed the complaints for lack of jurisdiction. Here, HHS again argued that administrative exhaustion is required before revocation disputes can be heard by a court. Moreover, HHS argued that a post-deprivation avenue for appeal did not violate the supplier’s due process rights, with a lengthy discussion of case law on this issue. Defendants’ Opposition also includes a lengthy discussion of Defendants’ view on the standard for granting a TRO, including arguments that the case law does not support a finding of “irreparable harm” for health care entities even against allegations that they might have to shut down as a result of the challenged action.
By minute order entered on January 4, 2017, the request for a TRO was denied, with the court setting a schedule for plaintiff to file a renewed motion for preliminary injunction and for defendant to file an opposition to that motion as well as a motion to dismiss. The hearing on both motions is currently scheduled for February 8, 2017.
This case should be closely watched for its evaluation of CMS’ revocation authorities.
Originally, this post was an alert sent to the American Health Lawyers Association’s (AHLA) Regulation, Accreditation, and Payment Practice Group Members. It appears here with permission. For more information, visit AHLA’s website.
1 For a discussion of the difference between exclusions and revocations, see Desfosses v. Noridian Healthcare Solutions, LLC, 2015 WL 1196018 (Mar. 16, 2015).
2 Complaint for Declaratory and Injunctive Relief, Arriva Medical, LLC v United States Department of Health and Human Services, Case No. 1:16-cv-02521-JEB (D.D.C.).
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HRSA Announces Final Rule on Civil Monetary Penalties for Drug Manufacturers that Overcharge 340B Covered Entities
A new regulation issued by the Health Resources and Services Administration (“HRSA”) sets forth a process by which civil monetary penalties may be imposed on drug manufacturers that knowingly and intentionally charge 340B covered entities for covered outpatient drugs more than the statutory ceiling price. The regulation addresses the ceiling price calculation for drugs purchased pursuant to the 340B Drug Pricing Program (“340B Program”), and provides that drug manufacturers may be subject to a civil monetary penalty of up to $5,000 for each instance of overcharging. The regulation finalizes a proposal dating back to June 2015. The regulation will be enforced beginning on April 1, 2017.
The civil monetary penalties would not be calculated and imposed by HRSA’s Office of Pharmacy Affairs, but by the Office of Inspector General (“OIG”). The civil monetary penalties would be in addition to any refunds to covered entities that may be required by the 340B Program. The final rule does not provide a mechanism for covered entities to file a complaint against a drug manufacturer for overcharging for 340B drugs. Once HRSA’s 340B administrative dispute resolution rules are finalized and the appropriate system has been established, a covered entity could submit a claim against a manufacturer for an instance of overcharging for administrative dispute resolution.
The new regulation requires drug manufacturers to calculate the 340B ceiling price for each covered outpatient drug, by National Drug Code (NDC), on a quarterly basis. The 340B ceiling price is based on the Average Manufacturer Price (AMP) for the prior quarter, minus a Unit Rebate Amount. For new drugs, manufacturers will need to estimate the 340B ceiling price and then calculate the actual 340B ceiling price once the appropriate data is available. If an overcharge has a occurred as a result of this estimation, drug manufacturers must refund or credit a covered entity the difference between the estimated and actual 340B ceiling price within one hundred and twenty days. Overcharges may also occur if a drug manufacture does not credit or refund a covered entity after subsequent recalculations of the ceiling price by the Centers for Medicare and Medicaid Service (“CMS”). Overcharges are determined on an NDC code basis, and may not be offset by other discounts the manufacturer provides on any other NDC. Drug manufacturers are also required to ensure that 340B discounts are provided through distribution arrangements made by the manufacturer.
The new regulation is based upon a requirement set forth in the Affordable Care Act, and comes at a time when drug prices and the 340B Program are receiving heightened scrutiny by the incoming Congress and administration. We will continue to report on modifications to the 340B Program as they develop.
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