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Archive for February, 2012

Reassignment of Physician Claims – OIG Special Alert

Tuesday, February 21st, 2012

OIG Alert On Reassignment of Claims By Physicians 

The OIG recently issued and advisory alert to physicians cautioning them to exercise caution before reassigning their right to bill the Medicare program and receive Medicare payments.  Physicians may be liable for false claims submitted by entities to which they reassigned their Medicare benefits.  The OIG statements encourages physicians to use heightened scrutiny of entities prior to reassigning their Medicare payments.   The OIG alert described recent cases where physicians have been entangled in cases that were caused by third parties who improperly use reassignment authority.

OIG recently reached settlements with eight physicians who violated the Civil Monetary Penalties Law by causing the submission of false claims to Medicare from physical medicine companies. The physicians reassigned their Medicare payments to various physical medicine companies in exchange for Medical Directorship positions. While serving as Medical Directors, the physicians did not personally render or directly supervise any services. There was evidence that the services the physical medicine companies claimed the physicians performed were not actually performed or were not performed as billed.

 Other physical medicine companies falsely billed Medicare using the physicians’ reassigned provider numbers as if the physicians personally rendered the services or directly supervised a “technician” rendering the services. Many of the owners and operators of the physical medicine companies were criminally prosecuted. OIG determined that the physicians were an integral part of the scheme and pursued their liability under the Civil Monetary Penalties Law.

 As described in the OIG alert, physicians need to exercise due diligence whenever they reassign their ability to obtain reimbursement.  Physicians have the right to access billing information of the provider t0 whom reassignment is made concerning the services the physician is alleged to have performed and for which the entity billed Medicare. Physicians have unrestricted access to claims submitted by an entity for services that the entity billed using the physicians’ reassigned provider numbers.  Physicians should exercise this authority provide added assurances that the services for which the entity billed Medicare were, in fact, performed and were performed as billed.

Failure to provide this type of due diligence can expose the physician to possible penalties in the event that the reassigned provider misuses the physician’s billing rights.

View the OIG Special Alert

HHS To Delay ICD-10 Compliance Date

Thursday, February 16th, 2012

HHS announces intent to delay ICD-10 compliance date

HHS Press release February 16, 2012 – Announcing delay in ICD-10 Compliance Date.


As part of President Obama’s commitment to reducing regulatory burden, Health and Human Services Secretary Kathleen G. Sebelius today announced that HHS will initiate a process to postpone the date by which certain health care entities have to comply with International Classification of Diseases, 10th Edition diagnosis and procedure codes (ICD-10). 

The final rule adopting ICD-10 as a standard was published in January 2009 and set a compliance date of October 1, 2013 – a delay of two years from the compliance date initially specified in the 2008 proposed rule.  HHS will announce a new compliance date moving forward.

“ICD-10 codes are important to many positive improvements in our health care system,” said HHS Secretary Kathleen Sebelius.  “We have heard from many in the provider community who have concerns about the administrative burdens they face in the years ahead.  We are committing to work with the provider community to reexamine the pace at which HHS and the nation implement these important improvements to our health care system.”

ICD-10 codes provide more robust and specific data that will help improve patient care and enable the exchange of our health care data with that of the rest of the world that has long been using ICD-10.  Entities covered under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) will be required to use the ICD-10 diagnostic and procedure codes.

Self Disclosures Settlements Under Stark Law

Thursday, February 16th, 2012

New Stark Law Self Disclosure Settlement Announced

CMS routinely posts settlements that it reaches with providers under its Stark Law Sefl-Disclosure protocol program.  Four new cases recently appeared on the CMS website that reports these settlements.  These cases involve providers who detect violations of the Stark Law and voluntarily disclose those violations to CMS.  Two of the settlements involved relatively small payment amounts that related to exceeding the yearly cap on the payment of non-monetary compensation to physicians.  The other two settlements were a bit more costly for the providers and involved more serious violations of the hospitals’ failure to comply with the personal service and management agreement Stark Law exceptions.

The Self Referral Disclosure Protocol can be used by providers to disclose violations of the Stark Law that they may discover.  Although not guaranteed, the protocols allow the government to settle on self disclosures for less than the amount that may be assessed for the reported violation.

CMS Proposed Rules On Overpayment Self Disclosure

Thursday, February 16th, 2012

CMS To Publish Self Disclosure Proposed Rules Today

Just one day before Valentines Day, CMS released a long awaited proposed rule defining provider obligations to report Medicare and Medicaid overpayments within 60 days.  Section 6402 of the Patient and Program Protection Act created possible False Claims Act liability and possible program exclusion for the knowing concealment or avoidance of a repayment obligation.  The new proposed rule is intended to add definition to the general obligation that was included in the initial statutory provisions.  Section 6402 of PPACA requires providers to report and return over-payments within 60 days of identification.  The original statute broadly defined the provider obligations but did not provide specifics on several topics such as when an overpayment is deemed to be “identified” or how long providers were obligated to look back when identifying potential over-payments.

The Proposed Rule created an extremely onerous lookback period of ten years.  This menas that providers will be obligated to report overpayment obligations that they discover which date back as far as ten years from th date of discovery.  The actual disclosure rules are somewhat less oppresive than the self disclosure rules that were already in place with regard to the Anti-kickback Statute and the Stark Law.  Nevertheless, many aspects of the proposed regulations, and in particular the ten year lookback rule, are likely to generate comments from affected parties. The proposes rule should be officially published sometime today.

Health care attorneys and compliance officers should pay close attention to this one an consider responding to the proposed rules during the comment period.  Check the published rule for the comment deadline.  Contact me if you need any assistance.

About The Author

Health care attorneys health law

John Fisher, JD, CHC  is a seasoned health care attorney and is certified in Health Care Compliance by the Health Care Compliance Association.  Mr. Fisher is available to assist physician groups and other health care providers nationwide in the development and operation of Compliance Programs.

Mr. Fisher has significant experience in the various legal and regulatory matters that are faced by physicians including the Stark Law, Anti-Kickback Statute and Safe Harbors, Medicare and Medicaid reimbursement rules, HIPAA, False Claims Act, antitrust laws, employment laws, contract matters, business ventures and laws governing financial relationships between physicians, and others.

Mr. Fisher practices with the Ruder Ware law firm in Wausau, Wisconsin.  His practice on compliance and Federal Law issues is nationwide.

Physician Compensation – Stark Law – Covenant Healthcare Settlement

Wednesday, February 15th, 2012

Physician Compensation – A Look In Time At The Covenant Healthcare

Waterloo, Iowa.  Population 70,000 (give or take).  Who would expect that this town would be the focal point of one of the biggest physician compensation/Stark Law settlements in history.

In 2009, Covenant Medical Center in Waterloo agreed to pay the Federal government $4.5 million to settle charges that it had overpaid five doctors.  The Stark Law is violated if a physician is paid in excess of fair market value for services or if the compensation is not commercially reasonable.

The Affordable Care Act made it clear that Stark Law violations can trigger liability under the Federal False Claims Act.  The result is that amounts that are billed under the “cloud” of Stark can lead to treble damages plus up to $11,000 per claim.  If the Stark Law violation involves payment in excess of fair market value to a physician, the basis for assessing damages can be three times the amount of the physician’s billing plus up to $11,000 for each claim.  The application of the False Claims Act to Stark Law violations has placed a renewed focus on physician compensation issues.

In the Covenant care, the government alleged that the five physicians were paid commercially unreasonable compensation, far in excess of fair market value.  The hospital denied any wrongdoing but paid the government $4.5 million plus interest to settle the claims.

 Physician compensation has become a more sensitive issue than it ever was in the past.  The Waterloo, Iowa case demonstrates that smaller towns are not immune from the impact of the Stark Law and False Claims Act.

Responsible Corporate Officers Doctrine – New Focus On Health Care

Tuesday, February 14th, 2012

Responsible Corporate Officer Doctrine – New Focus On Application To Health Care

Recent enforcement actions and public comments by enforcement officials make it clear that parties who are responsible for health care fraud enforcement plan, to focus more on the Responsible Corporate Officer Doctrines (“RCO Doctrine”) as a tool to fight health care fraud.  Comments by Wisconsin Bar Health Law Seminar are just one example of the new focus on the RCO Doctrine.

            The RCO Doctrine was derived from the United States Supreme Court’s decision of U.S. v. Park.  The RCO Doctrine permits corporate officers to be held personally responsible for the criminal acts committed at the corporate level.  The RCO Doctrine is a draconian measure that can hold corporate officers liable as long as they were in a position to prevent a legal violation.  Park permits application of the doctrine even in cases where the corporate officer does not have actual knowledge of, or has not actually participated in, the alleged violation.

            Health care is one area where the RCO Doctrine is being increasingly used as an enforcement tool.  The doctrine is being actively used to pursue corporate officers who are in a position of authority regarding the alleged violation.  Some cases have even upheld the application of the RCO Doctrine against a corporate officer even when the corporation itself is acquitted of the charges.

            The RCO Doctrine can be used against virtually any corporate officer, including the CEO, president, vice president, secretary, treasurer, general counsel or virtually any other management-level functionary.  Health care is particularly susceptible to the use of the RCO Doctrine.  In many cases, enforcement officials do not want to take action that could adversely affect availability of health care services to the community.  This causes officials to focus on individuals in management.  In fact, some officials take the position that where health care fraud occurs, someone must be criminally charged.  This is a growing enforcement trend that makes health care management particularly vulnerable.  In fact, some recent cases have gone so far as to charge legal counsel with criminal violations, raising issues regarding the role of in-house legal counsel in compliance roles.

            The emergence of the RCO Doctrine places a spotlight on the duty of corporate officers to be certain that systems are in place to ensure that legal violations do not occur.  Systems should also focus on promptly remedying compliance concerns before they spin out of control.

            Health care organizations are actively using compliance programs to minimize compliance risk.  These programs should be a continued focus of health care organizations as a method to reduce legal risk.  The programs should be flexible to address areas of risk that apply to the specific organization.  Policy changes, training and actions should be taken where areas of risk are identified.

            The Affordable Care Act creates mandatory compliance program obligations on most health care organizations.  Organizations that receive $5 million or more of Medicaid revenues must adopt most elements of a compliance program.  Nursing homes will need to certify that they have compliance programs in place by 2013, with other provider types following thereafter.  Many institutions have already implemented compliance policies, but should take the opportunity to audit their programs for effectiveness.  Smaller providers such as physician practices will need to adopt compliance programs for the first time in response to the Affordable Care Act.

            A well-designed, effective compliance program may be your best defense to the possible application of the RCO Doctrine, in view of the increased focus on that doctrine by law enforcement.  When it comes to the RCO Doctrine, it is what you do not know that can hurt you.  For this reason, it is critical to develop compliance systems to ferret out possible problems and solve them before they grow into larger problems.

Excluded Party Screening – Compliance Program Key Element

Tuesday, February 14th, 2012

Screening For Excluded Providers
Key Elements Of Your Compliance Program

Most hospitals and larger healthcare organizations have gone through the process of developing compliance programs and are aware of the prohibitions against entering relationships with parties who have been excluded from a federal health care program.  Smaller organizations may not be aware of their responsibilities to screen all employees, vendors and contracting parties for exclusion.

Providers, such hospitals, medical groups, ambulatory surgery centers and home health agencies are subject to civil monetary penalties for submitting claims for healthcare items or services that are provided by excluded individuals or companies.  Fines can reach as high as $10,000 per item or service.  The fines can be astronomical if goods or services are regularly provided by the excluded party.

For this reason, compliance programs will generally include policies and procedures that require screening prior to contracting or employment.  Regular periodic screening is also highly recommended.  Smaller organizations and physician practices are at the most risk of violating these provisions.  These organizations have generally not yet faced the creation of formal compliance programs; although compliance programs will be mandatory in upcoming years.

 All health care providers must establish policies and procedures to be certain that they do not contract with excluded parties.

Mandatory Compliance Plan Requirements – Operationalizing Compliance

Thursday, February 9th, 2012

Mandatory Compliance Programs – Is Your Practice Ready?

The Office of Inspector General has encouraged health care providers to adopt compliance programs since the late 1990s.  Most larger organizations have implemented compliance programs as a way to detect and mitigate risk of non-compliance and to reduce penalties if a problem is detected.  However, many smaller providers, such as physician practices, have not adopted any type of formal compliance program.  The Patient Protection and Affordable Care Act (the “PPACA”) makes compliance programs mandatory for the first time  for all suppliers and healthcare providers enrolled in federal healthcare programs. Providers of all sizes will be required to certify that they have an effective compliance program in place as a condition of participation of federal healthcare programs.

The Office of Inspector General is charged with issuing regulations that define the core elements that providers must implement in order to certify compliance with the mandatory compliance program requirement.  The first set of regulations have been issued relative to nursing home who must certify their compliance programs as of 2013.  Regulations addressed at other provider types have not yet been issues but are expected soon. We can expect that the regulations will be similar to the guidance that has been provide by the OIG covering various industry sectors over the years.

Requirements for nursing home compliance plans have been released.  The nursing home regulations require the following:

  • The adoptions of formal written compliance policies, standards and procedures that are effective at reducing the risk of compliance violations.
  • The assignment of compliance responsibility to a Specific individual within the organization.  The individual should be a high ranking member of the management team and should report directly to the governing body.
  • The compliance program must be adequately funded to assure its proper operations.
  • Systems must be put in place to assure that authority is not delegated to individuals who may show a propensity to commit compliance violations.  For example, a program should be put in place to screen employees, staff members, vendors and others against OIG and GSA exclusions lists.
  • The program elements and the ability to report compliance violations must be stressed and an atmosphere of compliance should be created.
  • A strong system of anti-retaliation for individuals reporting compliance concerns must be maintained and communicated throughout the organization.
  • Effective communication of the standards and procedures to all employees and required participation in training programs.
  • Systems of monitoring and auditing should be put in place to help detect potential practices that could lead to compliance violations.
  • Disciplinary processes must be maintained in order to enforce the compliance program.  Discipline should be coordinated with existing policies and procedures regarding employee discipline.
  • The compliance program should “learn from itself.”  In other words, systems of corrective actions should be put in place that includes revisions of policies and procedures based on compliance concerns that are detected or reported.
  • Continued review of the effectiveness of the compliance program should be undertaken.  Simply having a compliance program in place is not sufficient.  The organization must assure that the program is effective by continually reassessing and testing the program.

The exact date that compliance programs will become mandatory is not yet certain.  Nevertheless, enforcement activity is on a rise.  Prudent providers will take proactive efforts to reduce their compliance risks.  This includes that creation of an effective compliance program that is specifically tailored to the compliance risks associated with the specific provider.  Many smaller providers have never contemplated creating such a program in the past.  Mandatory requirements, increased enforcement activities and penalties, are all factors forcing providers to take proactive steps to reduce their exposure.  This creates a disproportionate burden on smaller providers such as small group practices.  At the same time, the OIG has in the past recognized that smaller organizations do not need to go to the same extremes as larger systems to meet their compliance obligations.  In other words, compliance programs are permitted to have a degree of scalability and allow for the size and resources of the organization.  It is critical for small providers to know where to place their compliance resources.  A “shotgun” approach will provide very little benefit.  Creating an overbroad plan that can never be operationalized does nothing more than create a roadmap leading authorities to the actions that your organization is not taking.

It is most prudent for providers of all sizes to have some level of compliance plan in place sooner rather than later.  A well focused plan scaled to your biggest risk areas is much better than a robust plan that you can never operationalize.  The point is to start with your compliance efforts and build upon them as time passes and new risk areas are identified.  Your plan should be structured to operationalize the identification of risk areas and address them as they arise in your practice.

Incident To Billing – Physician Office Setting

Tuesday, February 7th, 2012

Billing of “Incident To” Services In Physician’s Office

Physician offices will generally bill for certain services performed by non-physician personnel as “incident to” the services of a physician.  “Incident to” services generally means services or supplies that are furnished as an integral, although incidental, part of the personal professional services of the physician.

The determination of whether a service is provided “incident to” a physician’s services can also have physician compensation implications.  The Stark law permits a group practice physician to be compensate based on personal production and “incident to” services.  Services that cannot be billed “incident to, such as diagnostic imaging services, cannot be credited directly to the physician when determining compensation within the group, a number of requirements must be met in order to bill a service as “incident to” the physician’s service performed in a physician’s office (as opposed to an outpatient department of a hospital).  The “incident to” billing requirements are summarized by the Center for Medicare and Medicaid Services in Chapter 15 of the Medicare Benefit Policy Manual.

Services and supplies commonly furnished in physicians’ offices are covered under the incident to provision. Where supplies are clearly of a type a physician is not expected to have on hand in his/her office or where services are of a type not considered medically appropriate to provide in the office setting, they would not be covered under the incident to provision.  Supplies usually furnished by the physician in the course of performing his/her services, e.g. bandages, and oxygen,  are also covered.

To be covered supplies, including drugs and biological, must represent an expense to the physician or legal entity billing fir he services or supplies. For example, where a patient purchases a drug and the physician administers it, the cost of the drug is not covered.  However, the administration of the drug, regardless of the source, is a service that represents an expense to the physician. Therefore, administration of the drug is payable if the drug would have been covered if the physician purchased it.

The physician must directly supervise the personnel performing the applicable service.  Direct supervision in the office setting does not mean that the physician must be present in the same room with his or her aide.  However, the physician must be present in the office suite and immediately available to provide assistance and direction throughout the time the aide is performing services.  The availability of the physician by telephone and the presence of the physician somewhere in the institution does not constitute direct supervision.  The physical presence of the physician is required in order to bill the service “incident to” the physician’s service.  In a group practice setting, other group members can supervise services that are ordered or directed by another physician member of the group.  However, a physician group members must be available in the office suite in order to bill the service on an “incident to” basis.  If there are no physicians in the office at the time that the service is rendered to a patient, the service cannot be billed. Even if the provider has the ability to provide the applicable service independently, physician supervision must be present if the service is billed “incident to” the service of a physician.  There must also be a primary physician professional service furnished to initiate a course of treatment.  The physician must provide the initial service and the non physician practitioner’s service must be related to the initial service in order to be billed “incident to.”

 The personnel providing the services must have  legal relationship to the entity that is billing the service as “incident to” the service of the physician.  In most cases this will not raise a problem because an employee of the practice will be billing the services.  However, this issue can raise a problem in cases where an outside provider supplies personnel to operate the technical component of medical equipment.  Inappropriate billings for “incident to” services present a significant compliance area for physician practices.  Policies should be put in place to direct staff on the appropriate rules to assure that a service is correctly billed.

OIG Videos on Effective Compliance Program Development

Friday, February 3rd, 2012


OIG Video Series – Effective Compliance Program Development

The Office of Inspector General (“OIG”) has released a series of videos relating to compliance issues.  Recent videos cover compliance program/type and basic elements of compliance programs.  Access OIG Compliance Videos

Recent OIG advice includes:

  • Foster a culture of compliance
  • Devote adequate resources to compliance
  • Create useful policies and procedures
  • Train your staff
    • Offer training often
    • Be creative with training to foster interest
    • Stay current on compliance issues
    • Promote communication
      • Be visible within your organization
      • Communicate the hotline
      • Communicate and reinforce non-retaliation for making complaints
      • Take appropriate corrective action
  • Team approach to investigations
    • Investigate to resolution
    • Create appropriate corrective action
    • Use results to improve compliance process
  • Conduct regular audits
  • Determine risk areas
    • Coding
    • Contracts
    • Quality of care
    • Review compliance program regularly

 Access OIG Compliance Videos

John H. Fisher

Health Care Counsel
Ruder Ware, L.L.S.C.
500 First Street, Suite 8000
P.O. Box 8050
Wausau, WI 54402-8050

Tel 715.845.4336
Fax 715.845.2718

Ruder Ware is a member of Meritas Law Firms Worldwide

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