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Following on the heels of its plans to review Medicare payments for telehealth services, the federal Office of Inspector General (OIG) at the Department of Health & Human Services (HHS) just announced a new project to review state Medicaid payments for telemedicine and other remote services. Accordingly, providers who bill state Medicaid programs for telemedicine, telehealth, or remote patient monitoring services may expect to have those claims reviewed to confirm payment was correctly made in accordance with the conditions for coverage. The project will be added to the OIG’s 2017 Work Plan.
How Does OIG Define Projects Contained on their 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 this past June, OIG began updating 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:
- Projects originating within the Office of Audit Services (OAS), which conducts financial, billing, and performance audits of HHS programs; and
- 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 Medicaid telemedicine project will be run by the OAS.
Review of Medicaid Services Delivered Using Telecommunication Systems
OIG describes its new telemedicine review project as follows:
“Medicaid pays for telemedicine, telehealth, and telemonitoring services delivered through a range of interactive video, audio or data transmission (telecommunications). Medicaid programs are seeing a significant increase in claims for these services and expect this trend to continue. We will determine whether selected States’ Medicaid payments for services delivered using telecommunication systems were allowable in accord with Medicaid requirements.”
The expected issue date of the OIG report is 2019, and this is understandable given the sweeping scope of the project and the significant variances in coverage rules across different state Medicaid programs.
As with the OIG’s Medicare review, telemedicine 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 state Medicaid 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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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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Two recent announcements reflect that the U.S. Government is taking aggressive steps to address opioid abuse by identifying and targeting the involvement of medical professionals in facilitating opioid abuse involving Federal health care program beneficiaries. The U.S. Department of Justice announced on July 13, 2017 fraud charges involving 412 defendants in 41 federal districts across the country, including 115 doctors, nurses, and licensed professionals. In what the DOJ asserted was the “largest ever health care fraud enforcement action by the Medicare Fraud Strike Force,” DOJ alleged $1.3 billion in false billings were involved, and the enforcement action had a particular focus on medical professionals involved in the unlawful prescription and distribution of opioids. On a related matter, the Department of Health and Human Services (HHS) initiated payment suspension actions against 295 providers.
Attorney General Sessions attributed the action to tips from people in the affected communities and sophisticated computer programs utilized to identify outliers (i.e., datamining).
Data Brief Issued on Questionable Opioid Prescribing
Nearly simultaneously, the HHS Office of the Inspector General (OIG) issued a data brief entitled Opioids in Medicare Part D: Concerns About Extreme Use and Questionable Prescribing. The data brief, likely reflecting the computer programs that identify outliers referred to by Attorney General Sessions, recited data on opioid use and overuse in the Medicare Part D population.
The data brief noted that one in three Medicare Part D enrollees, or approximately 14.4 million beneficiaries, received at least one prescription opioid in 2016,* and one-tenth of the Part D beneficiaries received opioids on a regular basis. The data also showed that over 500,000 beneficiaries, excluding those in hospice care, received high doses of opioids, consisting of more than 120 mg/day over three months, which is in excess of the maximum daily level recommended by the Centers for Disease Control.
The OIG identified nearly 90,000 Medicare beneficiaries who are at serious risk of opioid abuse, because they either received extreme dosages of an opioid (more than 240 mg daily for 12 months, which is more than two and a half times the dose the CDC recommends) or appeared to be doctor shopping (received high amounts and had four or more prescribers and four or more pharmacies). The OIG also reported data showed beneficiaries receiving opioids from as many as 46 different prescribers from 20 different pharmacies in multiple states.
According to the OIG, such high use shows not only that the beneficiary may be addicted to opioids, but also there is a risk of diversion for resale.
Prescription patterns of various prescribers to the Medicare D population were also reported. OIG identified over 400 prescribers with “questionable prescribing patterns”; that is where they ordered opioids for those at high risk for abuse because of their extreme use or because of their apparent doctor shopping. OIG also identified that it has information on a smaller subset of prescribers with a high number of beneficiaries who received extreme amounts of opioids or who appeared to be doctor shopping.
OIG Continues to Focus on Opioid Abuse
OIG is focused on the issue of opioid abuse, and that, through information available as reflected in the data brief, it can readily identify Part D beneficiaries and their prescribers who have high or extreme usage of opioids or appear to be prescriber shopping. OIG indicates that, armed with this data, it will work with its law enforcement partners and CMS to follow up with identified prescribers. The DOJ enforcement action may well reflect this cooperation. In the report OIG specifically calls on “Part D sponsors to work with OIG and CMS to better combat opioid abuse in Medicare.”
A clear warning has been given to those prescribing or involved with heavy use of opioids through this data brief. Improved datamining makes prescribing patterns of individual practitioners relatively transparent, at least with respect to Federal healthcare beneficiaries. Combined with the DOJ reported enforcement action, it likely shows that medical professionals who are significant outliers in prescribing opioids to the Medicare population are likely to be viewed as potential targets for enforcement and that the Federal government is serious about pursuing whatever leads it has.
* The most commonly prescribed opioids were tramadol, hydrocodone and oxycodone.
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On Jan. 12, 2017, the Office of Inspector General of the U.S. Department of Health and Human Services issued the third and final installment of its recent three-part rulemaking effort — a final rule updating its exclusion regulations, 82 Fed. Reg. 4100 (Jan. 12, 2017). This final rule follows two others that were published in December updating the OIG’s civil monetary penalty (CMP) regulations, 81 Fed. Reg. 88,334 (Dec. 7, 2016), and safe harbors under the anti-kickback statute and beneficiary inducement prohibitions, 81 Fed. Reg. 88,368 (Dec. 7, 2016).
The final rule codifies the OIG’s expanded authority to impose exclusions under the Affordable Care Act and the Medicare Prescription Drug, Improvement and Modernization Act of 2003, including discretionary exclusions for obstructing an audit and for making false statements, omissions, or misrepresentations in an enrollment or similar application to participate in a Federal health care program.
The final rule notices an effective date of Feb. 13, 2017. However, on Jan. 20, 2017, the new administration postponed for 60 days the effective date of all federal regulations that have not yet taken effect. Although agencies may propose additional rulemaking, for regulations that “raise no substantial questions of law or policy,” agencies are not required to take any additional action. Thus, this rule will likely take effect following the 60-day freeze, which ends on March 21, 2017.
The effect of exclusion is far-reaching. Until an individual or entity that has been excluded is reinstated into the federal health care programs, no payment will be made by Medicare, including Medicare Advantage and Prescription Drug Plans, Medicaid or any other federal health care program for any item or service furnished, on or after the effective date. Additionally, private payers frequently refuse to contract with excluded persons.
Although the majority of exclusion are derivative of other actions (such as convictions or licensure actions), exclusions can be pursued affirmatively and initiated by the OIG, often by the OIG’s recently established (2015) administrative litigation team.
Like the two rules before it, this final rule provides important guidance on the OIG’s administrative enforcement authorities and expands and clarifies existing provisions, including aggravating and mitigating factors used to determine the length of exclusions.
Refresher on Exclusions
Before discussing the new provisions, the following is a brief overview of the OIG’s exclusion authorities. The majority of the OIG’s exclusion authorities are set forth in Section 1128 of the Social Security Act, 42 U.S.C. 1320a–7, and are implemented by regulations at 42 C.F.R. part 1001.
Mandatory Exclusions: There are four mandatory authorities and nearly 20 permissive exclusion authorities. As the name suggests, mandatory exclusions must be imposed by the OIG when individuals or entities (persons) are convicted of crimes related to certain conduct, namely: (1) misdemeanor or felony convictions related to the federal health care programs; (2) misdemeanor or felony convictions relating to patient abuse in connection with the delivery of a health care item or service; (3) felony convictions relating to health care fraud (i.e., relating to fraud, theft, embezzlement, breach of fiduciary responsibility or other financial misconduct); and (4) felony conviction relating to the unlawful manufacture, distribution, prescription or dispensing of a controlled substance.
Permissive Exclusions: Sixteen permissive exclusions are listed in Section 1128 and a handful of others can be found in other sections of the Social Security Act. The OIG has discretion as to whether to pursue an exclusion under its permissive authorities.
Convictions and Enforcement Actions Lead to Derivative Exclusions: Even when it is not required to do so, the OIG is likely to exclude a person who has been convicted of a crime or when another government agency, such as a state medical board, has taken action. These derivative exclusion actions are easy for the OIG to impose and defend, making them an efficient way to protect the programs.
Definition of a Conviction: Because a large number of derivative exclusions, whether mandatory or permissive, are based on convictions, it is worth noting that the term “conviction” is broadly defined in the statute at 1128(i), 42 U.S.C. 1320a–7(i). The term includes convictions where conviction or other records have been expunged, pleas of nolo contendere, findings of guilt by a court, and participation in deferred adjudication and similar arrangements where judgment of conviction has been withheld.
Length of Exclusion: Base exclusion periods for the most frequently used exclusion authorities, including those based on convictions or licensure actions, are set forth in the exclusion statute at 1128(c)(3), 42 U.S.C. 1320a–7(c)(3). Mandatory exclusions must be, at a minimum, five years. Permissive exclusions based on convictions have a base period of three years. Permissive exclusions based on licensure or state actions are coterminous with the underlying state sanction. The OIG uses aggravating and mitigating factors to adjust the period of exclusion, but not below five years for mandatory exclusions.
Major Provisions in the Final Rule
In the final rule, the OIG adopted the majority of the provisions included in its proposed rule, 79 Fed. Reg. 26,810 (May 9, 2014), but revised some of its proposals, generally in response to public comment. Like the OIG’s other recent rulemakings, this final rule offers insight into how the OIG may use its exclusion authorities as key components of its administrative enforcement efforts.
The final rule:
- Expands permissive exclusion authority, pursuant to the ACA, for convictions related to obstructing an investigation to include “audits,” a term the OIG interprets broadly.
- Adds permissive exclusion authority from the ACA for making false statements, omissions or misrepresentations in an enrollment or similar application to participate in the federal health care programs, including Medicare Advantage organizations, Medicare prescription drug plan sponsors, Medicaid-managed organizations, and entities that apply to participate as providers or suppliers in organizations or plans.
- Expands the OIG’s authority to exclude a person for failing to supply (or allow the examination of) payment information by the secretary or a state health care program to apply not only to persons who furnishing services, but also to those referring or certifying the need for items or services.
- Expands the OIG’s authority to grant waivers of certain exclusions that are requested by the administrator of a federal health care program.
- Adds a process for requesting early reinstatement when a health care license has been lost and not reinstated.
- Adds a 10-year statute of limitations for exclusion actions.
Enrollment Exclusions Merit Oral Argument: For the newly added exclusion authority for false statements in an enrollment application, the OIG finalized its proposal to allow the presentation of oral argument to an OIG official before the exclusion is imposed, which is consistent with its practice in exclusion actions brought under Section 1001.701 or Section 1001.801, two other exclusions that also are not based on a conviction or other official action and go into effect within 20 days if not contested and prior to an administrative law judge hearing.
Early Reinstatement for License Revocations: The OIG also finalized its proposed process for early reinstatement, which, when certain conditions are met, is available to those that have been excluded based on the loss of a health care license that has not been reinstated. Normally, a person who is excluded due to a loss of license may not be considered for reinstatement until the person has regained the license in the state where it was originally revoked. Historically, that requirement has led to much longer periods of exclusion for persons subject to licensure actions than those who have been convicted of a crime, including convictions mandating exclusion. However, the OIG decided to prohibit persons who lost their licenses for reasons related to abuse or neglect from applying for early reinstatement.
Changes From the Proposed Rule in the Final Rule
Aggravating Factors: In keeping with changes made in its two final rules issued in December, the OIG raised the dollar amount for the aggravating factors related to financial loss from $5,000 and $1,500 to $50,000. The OIG initially proposed to raise the threshold only to $15,000. This change to $50,000 keeps the financial loss aggravating factors consistent among the OIG’s various authorities with one important exception. For exclusions under Section 1128(b)(6) of the act, 42 U.S.C. 1320a–7(b)(6), the OIG retained its proposed $15,000 threshold because those exclusions are based on unnecessary or substandard care, not convictions.
Statute of Limitations: The OIG scrapped its proposal to implement its position that there is no time limitation to exclusions imposed under Section 1128(b)(7) of the act. Many commenters objected to the OIG’s interpretation that no statute of limitations exists for such exclusions. Some argued that even when a statute is silent on periods of limitations, courts often apply some period of limitation. Other commenters noted the administrative burden this would place on providers because they would be required to retain documentation relevant to OIG authorities indefinitely. In the final rule, the OIG adopted a 10-year period, which it notes is grounded in the False Claims Act’s period of limitations, and which it believes will provide certainty to the industry while preserving the OIG’s ability to protect federal health care programs and beneficiaries from untrustworthy persons identified in FCA cases or otherwise.
Convictions Related to Controlled Substances: The OIG also decided against a proposed limit on its exclusion authority for convictions related to controlled substances. The OIG had proposed to limit the exclusion to those who were convicted for conduct that occurred during a time when they were employed in the health care industry. The OIG was persuaded to make the change based on comments noting that the proposal would not protect beneficiaries from those who leave the health care industry before committing a crime but then re-enter the industry shortly thereafter. The OIG also decided not to remove aggravating and mitigating factors associated with the exclusion authority or the exclusion authority related to exclusion from a state health care program.
Ownership and Control Interest in Sanctioned Entities: Several commenters complained that the proposed rule’s language for the exclusion of individuals with ownership or control interest in sanctioned entities exceeded the OIG’s statutory authority. The OIG modified the regulatory text to clarify that in cases where the sanctioned entity has been excluded, the individual’s exclusion will remain in effect for as long as the term of the entity’s exclusion. 82 Fed. Reg. at 4106.
Key Points for Future Exclusion Enforcement
This final rule shows that the OIG continues to evaluate and update its enforcement authorities with an eye toward increased affirmative enforcement actions but that it is also willing to make practical changes to its enforcement policies.
- New early reinstatement process is available for those who have been excluded for loss of license, if certain conditions are met, so long as the loss of license was not due to patient abuse or neglect.
- The OIG has updated several aggravating factors in the exclusions regulations.
- Despite proposing to codify its interpretation that 1128(b)(7) exclusions do not have a statute of limitations, the OIG was receptive to comments that there should be some statute of limitations, and in the final rule adopted a 10-year statute of limitations.
- In line with the December updates to the CMP regulations, the OIG included provisions in this rule that highlight the importance it places on protecting beneficiaries. It increased most financial loss aggravating factors to $50,000, except for exclusions based on unnecessary or substandard care, which were increased to a $15,000 threshold. The OIG also finalized a prohibition in its early reinstatement process providing that those who lost a license for reasons related to abuse or neglect are not eligible for early reinstatement.
The final rule, and the underlying exclusion regulations, should be reviewed closely by any individuals or entities that are facing enforcement actions that, depending upon characterization of the underlying conduct, may give rise to mandatory or permissive exclusions. The “Health Care Fraud and Abuse Control Program Annual Report” for fiscal year 2016 (released in January 2017) reports 3,635 exclusions, indicating that OIG is actively applying its exclusion authorities.
Judith A. Waltz is a partner and health lawyer with Foley & Lardner LLP in San Francisco in the firm’s health care practice. Jill S. Wright is a special counsel and health care lawyer with Foley & Lardner in Washington, D.C., in the firm’s health care practice.
Click here for the original article which appeared in Law360.
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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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Just in time for the New Year, the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services issued final regulations (Final Regulations) that revised two existing Anti-Kickback Statute safe harbors, added two regulatory safe harbors to complement existing statutory safe harbors, and created an entirely new safe harbor regarding local transportation services. These regulations, which became effective on January 6, 2017, finalized the proposed regulations that OIG released on October 3, 2014. OIG received comments from 88 distinct commenters in response to the proposed regulations and made several changes to the proposed regulations in response to the comments received.
In addition to addressing the Anti-Kickback Statute safe harbors, the Final Regulations also amended several aspects of civil monetary penalty regulations (42 C.F.R. part 1003).
The Final Regulations addressed the following Anti-Kickback Statute safe harbors:
Referral Services Safe Harbor (42 C.F.R. § 1001.952(f)(2))
The Final Regulations clarified that the referral services safe harbor precludes protection for payments from participants to referral services that are based on the volume or value of referrals to, or business otherwise generated by, “either party for the other party.” According to OIG, this language was intended to be in the safe harbor but was inadvertently changed to “or business otherwise generated by either party for the referral service” during prior regulatory changes. 81 Fed. Reg. 88368, 88371 (Dec. 7, 2016). Also of interest, OIG noted in the regulatory preamble that this safe harbor does not exclude the use of online tools, which is an increasingly common method for health care referrals.
Cost-Sharing Waiver Safe Harbor (42 C.F.R. § 1001.952(k))
OIG made several changes to the Anti-Kickback Statute cost-sharing waiver under Section 1001.952(k). First, OIG expanded the reach of the cost-sharing waiver safe harbor to cover all federal health care programs, not just Medicare and state health programs.
Second, OIG added cost-sharing waiver protection for amounts owed to a pharmacy. Under this new cost-sharing waiver, cost-sharing amounts may be reduced or waived if (1) the waiver or reduction is not offered as part of an advertisement or solicitation, and (2) except for waivers or reductions offered to subsidy-eligible individuals, the pharmacy does not “routinely” waive or reduce cost-sharing amounts, and the pharmacy waives the cost-sharing amounts only after determining in good faith that the individual is in financial need or after failing to collect the cost-sharing amounts after making reasonable collection efforts.
In response to comments, OIG confirmed that federally qualified health centers (FQHCs) may advertise sliding scale discount programs without such communications constituting an “advertisement” under the safe harbor. OIG also declined to define what constitutes a “routine” waiver or endorse a particular method for determining what constitutes “financial need,” noting that both determinations are fact-specific. With respect to determinations of financial need, OIG noted that the adoption of a written policy describing the standards and procedures used for determining financial need, along with evidence that the policy was followed, would help document that the pharmacy had met the safe harbor requirement.
Third, OIG added safe harbor protection for waivers or reductions of cost-sharing amounts that are owed to an ambulance provider or supplier for emergency ambulance services for which a federal health care program pays under a fee-for-service payment system. To meet this safe harbor, the ambulance provider or supplier must (1) be owned and operated by a state, political subdivision of the state, or tribal health care program; (2) be engaged in “emergency response”; (3) offer the reduction or waiver on a uniform basis to all of its residents or (if applicable) tribal members, or to all individuals transported; and (4) not later claim the amount reduced or waived as bad debt for payment purposes under a federal health care program or otherwise shift the burden of the reduction onto a federal health care program, other payers, or individuals.
FQHCs and Medicare Advantage Organizations Safe Harbor (42 C.F.R. § 1001.952(z))
The Final Regulations added a regulatory safe harbor to complement the existing statutory exception for remuneration between an FQHC and a Medicare Advantage organization. The safe harbor, which tracks the statutory exception located at 42 U.S.C. § 1320a-7b(b)(3)(h), states that “‘remuneration’ does not include any remuneration between a federally qualified health center (or an entity controlled by such a health center) and a Medicare Advantage organization pursuant to a written agreement described in Section 1853(a)(4) of the Social Security Act [which addresses agreements between Medicare Advantage organizations and FQHCs].”
Medicare Coverage Gap Discount Program Safe Harbor (42 C.F.R. § 1001.952(aa))
This new safe harbor for the Medicare Coverage Gap Discount Program complements the existing statutory exception located at 42 U.S.C. § 1320a-7b(b)(3)(j), which was added by the Affordable Care Act. It provides that remuneration does not include a discount in the price of a drug when the discount is furnished to a beneficiary under the Medicare Coverage Gap Discount Program, as long as (1) the discounted drug meets the definition of “applicable drug” under the Medicare Coverage Gap Discount Program; (2) the beneficiary receiving the discount meets the definition of “applicable beneficiary” under the Medicare Coverage Gap Discount Program; and (3) the manufacturer of the drug participates in, and is in compliance with, the requirements of the Medicare Coverage Gap Discount Program.
Several commenters indicated that the safe harbor was unnecessary because the existing statutory exception was sufficient. OIG responded that “for the sake of completeness, we generally incorporate and interpret statutory exceptions in our safe harbor regulations.” 81 Fed. Reg. at 88378.
Local Transportation Safe Harbor (42 C.F.R. § 1001.952(bb))
One of the most noteworthy aspects of the Final Regulations is the addition of a safe harbor for local transportation and shuttle services. OIG had addressed issues of free transportation in OIG Advisory Opinions 00-7 and 16-10, and in a published letter from 2002 from the Chief of the Industry Guidance Branch.
The safe harbor for local transportation provides that an “eligible entity” may provide free or discounted local transportation to federal health care program beneficiaries if several conditions are met. OIG defines “eligible entity” as any individual or entity, except for individuals or entities that primarily supply health care items (e.g., medical supplies).
To qualify for this safe harbor, the following requirements must be met: (1) the availability of the free or discounted local transportation services must be set forth in a policy, which is applied uniformly and consistently, and is not determined in a manner related to the past or anticipated volume of federal health care program business; (2) the transportation services are not air, luxury, or ambulance level transportation; (3) the transportation services are not advertised or publicly marketed, no marketing of health care items and services occurs during the course of the transportation or at any time by drivers who provide the transportation, and drivers cannot be paid on a per-beneficiary-transported basis.
In addition, the free or discounted transportation services can only be provided to an “established patient,” which is defined as a person who has selected and initiated contact to schedule an appointment with a provider or supplier, or who has previously attended an appointment with the provider or supplier. This is a broader definition than what was proposed, which was limited to patients who had selected a provider or supplier and initiated contact to schedule an appointment. The transportation services must be provided within 25 miles of the provider or supplier or within 50 miles if in a “rural area” (as defined in the regulations). This distance limitation is also more permissive than the 25 mile limitation in the proposed regulations. The transportation services must be provided for purposes of obtaining medically necessary items and services.
As with certain other safe harbors, the eligible entity must bear the costs of the transportation and may not shift the costs to federal health care programs, other payers, or individuals.
The safe harbor also protects free “shuttle services,” which are defined as vehicles that run on a set route and schedule. The requirements applicable to shuttle services are generally similar to those outlined above for free or discounted transportation, except that, among other things, the shuttle services need not be provided to an “established patient,” a policy is not required, and the shuttle service route and schedule details may be posted. Thus, the shuttle services can be provided to anyone, but the shuttles must run on a set route and cannot tailor their routes to accommodate individual patients.
The Final Regulations address a wide variety of financial arrangements in the health care industry. Providers and suppliers should consider whether any existing arrangements require modification (or new policies) given these safe harbors, and also whether potential new business opportunities and patient services may exist in light of these safe harbors.
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More than two years after first proposing regulations, the Office of Inspector General of the U.S. Department of Health and Human Services issued two final rules updating its (1) civil monetary penalty (CMP) regulations, 81 Fed. Reg. 88,334 (Dec. 7, 2016), and (2) safe harbors under the anti-kickback statute (AKS) and beneficiary inducement prohibitions, 81 Fed. Reg. 88,368 (Dec. 7, 2016). While the latter rule has received more media attention, the CMP final rule includes important guidance on the OIG’s administrative enforcement authorities, including implementing new CMP authorities and clarifying the approach to aggravating and mitigating factors, and is the focus of this article.
For context, the OIG’s CMP regulations, found at 42 C.F.R. part 1003, codify and provide guidance for enforcement of the OIG’s authority under the CMP statute (CMPL), which contains multiple distinct authorities that the OIG uses against a wide range of program violations. The CMP authorities allow the OIG to punish violations that include false claims; contracting with an excluded individual; beneficiary inducements; AKS misconduct; “knowing” Stark Law violations; and violations of the Emergency Medical Treatment and Labor Act (EMTALA), to name just a few. CMPs are imposed as part of a settlement when a provider or supplier follows the OIG’s self-disclosure protocol. In some cases, CMPs are pursued affirmatively and initiated by the OIG, often by the OIG’s new (2015) administrative litigation team.
The CMP final rule updates these regulations with the OIG’s expanded authority under the Affordable Care Act, including a new CMP for violations of the 60-day overpayment refund rule, to impose CMPs and exclusions on providers and suppliers. The CMP final rule also reorganizes part 1003 by subject matter to improve clarity and to provide updated guidance on the aggravating and mitigating factors that the OIG considers when determining the amount of a CMP or whether to impose an exclusion. In the CMP final rule, the OIG adopted the majority of the provisions in its proposed rule, 79 Fed. Reg. 27,080 (May 12, 2014), but revised some of its proposals, generally in response to public comment.
The CMP final rule offers insight into how the OIG may use its newly codified CMP and exclusion authorities as key components of its administrative enforcement efforts.
Major Provisions in the CMP Final Rule
- Provided regulations for five new CMP authorities, which the ACA added to the CMPL:
- Failing to grant the OIG timely access to records, upon reasonable request (up to $15,000 per day, or $16,312, after inflation adjustment);
- Ordering or prescribing while excluded from participation in federal health care programs (up to $10,000 per violation, or $10,874 after inflation adjustment);
- Making false statements, omissions or misrepresentations in an enrollment or similar application to participate in federal health care programs (up to $50,000 for each false statement, omission or misrepresentation, or $54,372 after inflation adjustment);
- Failing to report and return an identified overpayment in accordance with the 60-day refund rule established by the ACA (up to $10,000 for each item or service, or $10,874 after inflation adjustment). The OIG dropped its proposal to interpret the CMP for this authority as a per day penalty rather than the default penalty amount in the CMPL (up to $10,000 for each item or service, before inflation adjustment); and
- Making or using a false record or statement that is material to a false or fraudulent claim (up to $50,000 for each false record or statement, or $54,372 after inflation adjustment).
- Included a cross-reference to penalty amount increases, which can be significant for some CMPs, because older penalties are calculated with a “catch up” adjustment. See Inflation Adjustments Final Rule, 81 Fed. Reg. 61538 (Sept. 6, 2016). Violations occurring on or before Nov. 2, 2015, continue to be subject to the CMP amounts in existing regulations (or statute if not in regulation).
- Clarifies guidelines for enforcement under other OIG authorities related to managed care organizations, Medicare Advantage and Part D contracting organizations; sellers of Medicare supplemental policies; Section 1140 violations (conduct involving electronic mail, internet and telemarketing solicitations); drug manufacturers’ drug price reporting obligations; adverse action reporting and disclosure; select agent program violations; beneficiary inducements; and notifying a skilled nursing facility, nursing facility, home health agency or community care setting of an upcoming survey.
Changes from the Proposed Rule in the CMP Final Rule
The CMP regulations set forth base penalty amounts for the various authorities, but those amounts may be adjusted by aggravating factors. For example, the CMP final rule extends the OIG’s existing aggravating factor of actual knowledge to all cases in which the scienter standard to prove a violation is lower than actual knowledge. The OIG had proposed adding an aggravating factor based on a person’s level of intent, but commenters expressed concern that proving, and distinguishing between, different degrees of mental states would be subjective. Commenters were also concerned that physicians and other health care providers might not fully comprehend the changes proposed by the rule and might be disadvantaged when trying to respond. The adoption of the actual knowledge factor should eliminate these uncertainties.
The OIG eliminated its proposal to include a provision that the OIG should exclude an individual or entity from future participation in the federal health care programs where there are aggravating circumstances. Commenters felt the provision suggested that exclusion is mandated when an aggravating factor is present and was superfluous, given the OIG’s authority to exclude even in the absence of aggravating factors. Although the provision would have made it easier for the OIG to establish the bases for exclusions in appeals before administrative law judges, the OIG agreed that the provision was superfluous and reiterated its practice of evaluating conduct on a case-by-case basis.
The OIG had also proposed to limit the mitigating factor of “corrective action” to a self-report of the conduct by submission to the OIG’s self-disclosure protocol. Commenters urged a flexibility for tailored corrective action, but the OIG rejected a more general interpretation of corrective action. The OIG did include submission to the Centers for Medicare and Medicaid Services’ self-referral disclosure protocol as a corrective action in the final rule. It also made a corresponding change to the EMTALA subpart, adding a single mitigating factor of appropriate and timely corrective action, which must include disclosing the violation to CMS prior to CMS’ learning of the violation from a complaint or otherwise.
The OIG dropped its proposed alternate methodology for calculating CMPs and assessments for employing excluded individuals whose services are not directly billed.
Key Points for Future Enforcement Risks
In light of this long-awaited CMP final rule, the enforcement stakes are higher for those who may be facing CMPs.
- Among other things, the financial stakes associated with CMP violations are higher, thanks to catch-up procedures for CMPs that have not previously been adjusted for inflation. In addition to the new ACA authorities discussed above, for violations occurring after Nov. 2, 2015, the CMP amounts for some other common CMPs have been increased as follows:
- $15,000 Stark Law violation CMP is now $23,863.
- $100,000 Stark Law circumvention scheme CMP is now $159,089.
- $50,000 AKS CMP is now $73,588.
- $50,000 EMTALA CMP is now $103,139.
- In addition, the CMP final rule clarifies that Stark Law overpayments are treated differently from other types of overpayments. The CMP for knowing violations of the Stark Law does not follow the 60-day overpayment refund rule as implemented by CMS. Despite acknowledging CMS’ authority to define terms related to overpayments, the OIG declined to update its definition of “timely basis” as used in the CMP authority for failure to return on a timely basis amounts collected in violation of the Stark Law. “Timely basis” is defined as the 60-day period from the time the prohibited amounts are collected by the individual or the entity. The OIG believed that making a change to the definition would be beyond the scope of the rulemaking. It is unclear how the OIG would enforce this CMP given the fact that CMS’ final rule is referenced in the final CMP rule. 81 Fed. Reg. at 88,337.
- The OIG revised aggravating circumstances justifying an increase in the CMP related to patient harm. In the prior rule, the aggravating circumstance for patient harm applied to certain violations relating to false or misleading information when the violation resulted in “harm to the patient, a premature discharge or a need for additional services or subsequent hospital admission.” The aggravating circumstance now applies to more OIG authorities and includes situations where the conduct could have resulted in harm. The EMTALA aggravating circumstances were updated to include situations where patient harm, or risk of patient harm, resulted from the incident.
- The definition of “responsible physician” was updated to clarify that the term includes on-call physicians at any participating hospital subject to EMTALA (hospital where individual initially presented and the hospital with specialized capabilities/facilities that receives a request to accept an appropriate transfer). Responsible physicians face potential CMP and exclusion liability under EMTALA.
Editor’s Note: This article first appeared in Law360 on December 22, 2016.
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