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Archive for October, 2012

Compliance Issues In Mergers and Acquisitions – Compliance Institute 2013

Wednesday, October 31st, 2012

Compliance Issues In Health Care Mergers and Acquisitions
John Fisher to Speak at HCCA National Compliance Institute

Medical Practice Compliance ProgramsThe Health Care Compliance Association (HCCA) has released the program and speakers for its annual Compliance Institute that is being held at Gaylord National National Harbor, MD (DC Metro Area) on April 23 and 24, 2013. John Fisher will be presenting at the national conference on the topic “Compliance Issues in Mergers and Acquisitions.” John is a member of the Ruder Ware Health Care Industry Focus Team. He is certified in Health Care Compliance and in Corporate Compliance and Ethics. John began his practice in representing health care providers in 1985. John has a depth of experience in health care transactions, provider integration and mergers and acquisitions involving health care providers. He has been involved in provider integration since the early 1990s.

HCCA is a national association of health care compliance professionals. HCCA provides the following description of John’s presentation:

Compliance Issues in Mergers and Acquisitions
John Fisher II, Health Care & Compliance Counsel, Ruder Ware, LLSC
– When will you be liable for the liabilities of an entity you are acquiring?
– What is the appropriate role of compliance in the transaction?
– Defining the scope of due diligence and addressing compliance issues

A complete description of the Compliance Institute program is included on the HCCA web site at the following link: HCCA Compliance Institute 2013

Inpatient Prospective Payment Systems Hospitals Long-Term Care Hospital Fiscal Year 2013 Rates

Friday, October 26th, 2012

IPPS Revisions Released By CMS

We are revising the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals to implement changes arising from our continuing experience with these systems. Some of the changes implement certain statutory provisions contained in the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively known as the Affordable Care Act) and other legislation. These changes will be applicable to discharges occurring on or after October 1, 2012, unless otherwise specified in this final rule. We also are updating the rate-of-increase limits for certain hospitals excluded from the IPPS that are paid on a reasonable cost basis subject to these limits. The updated rate-of-increase limits will be effective for cost reporting periods beginning on or after October 1, 2012.

 We are updating the payment policies and the annual payment rates for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long-term care hospitals (LTCHs) and implementing certain statutory changes made by the Affordable Care Act. Generally, these changes will be applicable to discharges occurring on or after October 1, 2012, unless otherwise specified in this final rule.

 In addition, we are implementing changes relating to determining a hospital’s full-time equivalent (FTE) resident cap for the purpose of graduate medical education (GME) and indirect medical education (IME) payments. We are establishing new requirements or revised requirements for quality reporting by specific providers (acute care hospitals, PPS-exempt cancer hospitals, LTCHs, and inpatient psychiatric facilities (IPFs)) that are participating in Medicare. We also are establishing new administrative, data completeness, and extraordinary circumstance waivers or extension requests requirements, as well as a reconsideration process, for quality reporting by ambulatory surgical centers (ASCs) that are participating in Medicare.

We are establishing requirements for the Hospital Value-Based Purchasing (VBP) Program and the Hospital Readmissions Reduction Program.

 DATES: Effective date: This final rule is effective on October 1, 2012.

OIG Advisory Opinion Approves Free Audiometric Testing

Wednesday, October 24th, 2012

The Office of Inspector General has issued a new Advisory Opinion regarding free tests that are provided by a hearing aid supplier. OIG Advisory Opinion 12-13 was requested by a hearing aid supply and service chain which provided a free hearing exam as part of an effort to promote its sales of hearing aids. Free exams encompassed certain portions of tests that were precursors to Medicare reimbursable services. However, the patient was not charge for the pre-initial testing.

The OIG found that the provision of the free test would be unlikely to influence a beneficiary’s decision to select the provider and did not violate the Medicare Anti-kickback Statute. In many cases, the provision of free services can be considered to be remuneration that is intended at least partially to influence referrals for Medicare reimbursable services. Free services can violate the federal Anti-kickback statute which imposes civil monetary penalties and in some cases even criminal penalties when remuneration is intended to induce referrals.

The OIG considered a number of factors in reading the conclusion that the performance of pretesting did not violate the Anti-kickback statute:

1. Free hearing exams were offered to customers without regard to their form of payment or whether the customers agreed to purchase any goods or services from the company.

2. Free tests were not billed to the Medicare program and the free exam did not automatically qualify a patient for Medicare coverages.

3. The provider did not recommend that customers receiving the free hearing exam also undergo Medicare reimbursable audiometric testing.

4. The provider did not attempt to obtain a prescription or order for Medicare reimbursable audiometric testing on behalf of the customer.

No physicians or other employee or other providers were employed to prescribe or order items or services for which a governmental healthcare program could be billed.

The advisory opinion did not go into an in-depth analysis under the Anti-kickback statute but merely focused on whether the arrangement could lead to the imposition of civil monetary penalties. This opinion is an example of a case where free services are offered to Medicare beneficiaries but the arrangement is properly structured and approved by the office of Inspector General. Unfortunately, the advisory opinion process limits enforceability to only the party requests the opinion. It is not binding to protect any other party. However, the Advisory Opinion does provide insight to how the OIG may analyze similar scenarios and is useful in assessing the risk to other providers who may be contemplating similar arrangements.

CMS Opens CRNA Reimbursement Into Pain Management

Wednesday, October 24th, 2012

CRNA Pain Management Services Now Reimbursed If Permitted Under State Law

CMS Pain Managment ReimbursementThe proposed 2013 Medicare Physician Fee Schedule would expand the definition of certified registered nurse anesthetist services to include “medical and surgical services that are related to anesthesia and that a CRNA is legally authorized to perform by the state in which the services are furnished.”  CMS plans to make this change in order to accommodate the laws of several states who are expanding the scope of practice of CRNA’s into areas that are commonly reserved to physicians in the area pain management.

 The new CMS policy would permit CRNAs to be reimbursed for pain management services if those services are within the scope of their practice under the applicable state laws.  The new policy clarifies inconsistent policies among Medicare Administrative Contractors who have been interpreting provisions differently across the country.  CMS cautioned however, that the CRNA is responsible for obtaining appropriate training and education regarding pain management services.

 This area is surfacing as another area of dispute between physician anesthesiologist and CRNA’s.  The American Society of Anesthesiologists has strongly stated its opposition to the CMS rules.  On the other hand the American Nursing Association supports the extension of the law and argue that the accreditation standards for CRNA programs are sufficient to provide CRNA’s with the training necessary to engage in the practice pain management.

 We are likely to see this controversy continue to boil following the finalization of the rule.  The controversy is likely to be taken to the state lawmakers who will be pressured by the Nursing Associations to extend the scope of practice of CRNA’s in individual states.  This may result in a replay of many of the disputes that arose from CMS policies that granted states the ability to grant CRNAs the right to perform anesthesia services without supervision by licensed physicians.

CMS Improvement Standard Case Settlement

Tuesday, October 23rd, 2012

CMS Settles Class Action Reversing Nursing Home Improvement Standard

It is being reported that the Center for Medicare Advocacy, Inc. has settled its class action suit with the Center for Medicare and Medicaid Services regarding the “improvement standard” that CMS has historically required in order to continue Medicare reimbursement for patients in nursing homes. The “improvement standard” resulted in Medicare coverage being denied in cases where a patient’s condition was found to be stable, chronic, not improving, or for “maintenance only.”

The proposed settlement agreement will require CMS to revise relevant portions of its Medicare Benefit Policy Manual to clarify coverage standards for skilled nursing facilities, home health, and outpatient therapy benefits when a patient has not restoration or improvement potential but still needs the services that are provided by those types of providers. CMS is also required to clarify similar coverage standards that are applicable to inpatient rehabilitation facilities.

The settlement agreement provides for input by counsel representing the class into the process of developing new manual provisions that conform with the settlement.

The class action suit has alleged that Medicare routinely denied coverage based on the improvement standard. The settlement will require CMS to clarify that the improvement standard will no longer be applied to deny coverage. The people most affected by this barrier include people living with a range of conditions including multiple sclerosis, Alzheimer’s disease, ALS (Lou Gehrig’s disease), spinal cord injuries, diabetes, Parkinson’s disease, hypertension, arthritis, heart disease, and stroke. Many of these individuals who were not showing progress but still required care, and the institutions that serve them, will not be able to obtain reimbursement for services that they require.

Center for Medicare Advocacy Link

OIG Issues 2013 Annual Work Plan, Outlines Areas of Focus for Fiscal Year Ahead

Wednesday, October 10th, 2012

OIG 2013 Annual Work Plan Summary 

            Medical Practice Compliance Programs  The Office of Inspector General of the Department of Health of Health and Human Services (“OIG”) has published their annual work plan for the 2013 fiscal year (“2013 Work Plan”).  The Work Plan focuses on areas where OIG plans to focus significant resources during the 2013 fiscal year.  The 2013 Work Plan creates opportunities for providers to get a glimpse of what the OIG feels is important and to integrate these areas into their ongoing compliance activities.

              This update will briefly summarize some of the new issues that were added this year.  It is not a comprehensive description of all items that are on the OIG’s radar.  Providers are advised to review the entire 2013 Work Plan plus the work plans from the past several years to get a more complete picture of issues that the OIG feels are important.

Hospital-Related Issues

1.           Expansion of DRG Payment Window.  OIG states its intent is to analyze claims data to determine whether any savings could be achieved by bundling outpatient services that are delivered up to 14 days before a hospital inpatient admission.  Current Medicare policy bundles outpatient services that are delivered three days prior to inpatient admission into the “DRG window.”

2.           Provider-Based Status of Hospital on Physician Practices.  There is currently an incentive for a physician group to bill as a provider-based physician practice where there are ties to a hospital.  The OIG will be reviewing the appropriateness of physician practices who are billing as “provider-based” groups without meeting all of the necessary criteria.

3.           Medicare Transfer Policy.  The OIG will review Medicare payments made to hospitals for beneficiary discharges that should more appropriately have been coded as transfers.  Hospitals that transfer beneficiaries to another facility are not entitled to the full DRG payment that is due when a patient is properly discharged.  This creates an incentive for hospitals to code for a discharge when the patient is actually being transferred to another facility.  The OIG will be reviewing hospital billings to look for inappropriate “discharge” classifications.  Hospitals should audit their discharge and transfer practices to be certain that they are properly coding transfers where applicable.

4.           Payment for Discharges to Swing Beds and Other Hospitals.  Currently, Medicare does not reduce the DRG amount that is paid when a patient transfer is made into a “swing bed,” even when the “swing bed” is located in a separate facility.  The OIG will be reviewing this practice to determine whether any savings can come from reducing DRG payments when the swing bed transfer is made to another facility.

5.           Hospital Payments for Canceled Surgical Procedures.  The OIG will be reviewing payments that are made for canceled surgical procedures which are then followed by a second payment for a rescheduled procedure.  Current Medicare policy does not preclude payments for claims when there is an inpatient stay followed by canceled surgical procedure.  CMS will be reviewing this policy to determine whether savings can be made in this area.

6.           Payments from the Mechanical Ventilation.  CMS will be reviewing Medicare payments for mechanical ventilation.  Patients are required to receive 96 hours of mechanical ventilation in order to be eligible for payments under the DRG system.

7.           Improve An Organization Work With Hospital.  OIG will be reviewing the extent that Quality Improvement Organizations have worked with hospitals to conduct quality improvement projects and to provide technical assistance.

8.           Hospital Acquisition of Ambulatory Surgery Centers.  OIG will be reviewing hospital acquisitions of ambulatory surgery centers to determine whether these centers are being acquired as a method to increase reimbursement.  ASC services that are provided as in an outpatient department of the hospital are reimbursed at higher rates than independently owned an ambulatory surgery centers.

9.           Critical Access Hospital Payments for Swing Bed Services.  Critical access hospitals are able to designate a portion of the 25 bed allotment for use as acute care or swing bed services with CMS’s approval.  There is no limitation on the length of stay that is permitted for swing bed utilization.  The OIG will be reviewing this policy to determine whether reimbursement changes are required in this area.

Long Term Care Issues

1.           Long-Term Care Hospital Interrupted State Payments.  The OIG will be reviewing Medicare payments for interrupted stays in long-term care hospitals for the year 2011.  They will be identifying readmission patterns to determine whether the long-term care hospital’s re-admittance policies are in compliance with rules.

2.           Nursing Home Verification of State Agency Deficiency Corrections.  The OIG will be determining whether state survey agencies properly followed up and verified fulfillment of corrective action plans for deficiencies and identified during nursing home recertification surveys.  The OIG is concerned that state survey agencies may not always be verifying that identified deficiencies were properly corrected.

3.           Nursing Home Use of Atypical Antipsychotic Drugs.  The OIG will be reviewing administration of atypical antipsychotic drugs to nursing home residents.  The OIG will describe characteristics associated with nursing homes that frequently administer atypical antipsychotic drugs.

4.           Nursing Home Minimum Data Set Submissions.  OIG will determine whether CMS and state agencies oversee the accuracy and completion of minimum data sets that are submitted for nursing facilities.

Home Health Care

1.           Home Health Agency Face-To-Face Requirements.  OIG will be reviewing Medicare eligible home health services to be certain that face-to-face encounters are taking place as required under the Patient Protection and Affordable Care Act.  Previous studies indicated that only 30% of beneficiaries had at least one face-to-face visit with the physician who ordered the home health.

2.           Criminal Background Checks By Home Health Agencies.  The OIG will be reviewing home health agencies to determine whether they are complying with state requirements that require criminal background checks to be conducted on home health applicants and employees.  Federal law requires compliance with state and local laws regarding criminal background checks.  In previous OIG reviews, 92% of nursing homes employed at least one individual with criminal convictions.

Medical Equipment Suppliers

1.           Accreditation of Medical Equipment Suppliers.  OIG will be reviewing CMS procedures for conducting validation surveys of medical equipment suppliers.  CMS is required to conduct validation surveys regarding beneficiary safety and quality of care that may place Medicare beneficiaries at risk.

2.           Payments for Power Mobility Devices.  A series of reviews will be conducted relative to power mobility devices.  Reviews will focus on whether Medicare payments made to suppliers were made in accordance with federal regulations and were “reasonable and necessary.”  OIG will also be reviewing payment methods to determine whether savings can be achieved by eliminating the option of a lump sum purchase and requiring leasing of some power mobility devices.

3.           Continuous Positive Airway Pressure Supplies.  CMS will be reviewing whether scheduling of replacement supplies is appropriate and whether changing the scheduling could avoid possible wasteful spending.  There is currently no national requirement for CPAP replacement schedules.

4.           Diabetes Testing Supplies.  There are a number of new areas identified for examination relating to diabetes testing supplies.  Providers involved in these areas should carefully review the new items that relate to diabetes management and testing.

Program Integrity

1.           Onsite Visits for Medical Providers in Supplier Enrollment and Reenrollment.  CMS has the right as it deems necessary to perform onsite inspections of providers who are enrolling in the Medicare program.  CMS is authorized to expand the role of unannounced pre-enrollment visits.  Reviews found that some 33% of medical equipment suppliers in South Florida do not maintain physical facilities.  OIG will be examining these requirements to determine whether additional site visits are appropriate.

2.           Improper Use of Commercial Mailboxes.  Medicare providers are required to establish a physical business location with a permanent visible sign and a specific street addresses.  Mailboxes alone or not permitted.  Recent evidence suggests that individuals attempting to defraud Medicare may be using commercial mailbox addresses for this purpose.  OIG will be reviewing providers and suppliers to determine whether their listed addresses match commercial mailbox addresses.

3.           Provider Subject To Debt Collection.  CMS will be determining whether payment should be rechanneled relative to providers who have been reported to the Department of Treasury for collection of overpayment refunds.

Physician Billing

1.           Payment for Personally Performed Anesthesia Services.  OIG will be reviewing anesthesia claims to determine whether they are supported in accordance with Medicare requirements.  In order for a provider to be reimbursed as a personally performed anesthesia service, proper information must be included on the claim and in the medical chart to verify the claim.  Service modifier “AA” is used in connection with anesthesia services that are personally perform.  QK modifiers are used for medical direction of two, three, four concurrent anesthesia services.  Providers using “AA” modifiers must be able to support the requirement for receiving 100% of the personally performed services.

2.           Questionable Ophthalmological Service Billings for 2011.  OIG will be reviewing claims data to identify questionable billings for ophthalmologic services during 2011.  They will review geographic locations and provider patterns where questionable billings are located.  The types of billing that will be examined were not identified.

3.           Electrodiagnostic Testing.  OIG will be reviewing questionable billing for electrodiagnostic testing and will be attempting to identify Medicare utilization rates and get different rates by provider specialty, diagnosis, and geographic areas.  OIG identifies electrodiagnostic testing as an area of potential inappropriate financial gain posing significant vulnerabilities to the Medicare program.


1.           Location Requirements for Rural Health Clinics.  Rural health clinics are required to meet basic location requirements.  CMS has not promulgated final regulations allowing removal of rural health clinics that did not meet location requirements.  OIG will be reviewing this procedure.

2.           Claims Processing Areas “G” Modifiers.  The OIG will determine the extent to which Medicare improperly paid claims from 2002 to 2011 where certain “G” modifiers were used.  “G” modifiers are used to indicate that Medicare denial is expected by the provider.  It has been identified that some payments were made to providers in spite of the use of these modifier codes.

3.           Analysis of Drug Shortage in Patient Safety Concerns.  The OIG will be examining the recent trend of drug shortages to determine whether there has been an effect on pricing of pharmaceuticals.  Suspicion of industry price manipulation appears to be the motivation behind this system.


              This is a brief summary of some of the areas that were described in the recent 2013 Work Plan.  For a more comprehensive discussion of these items, visit the website for the Office of Inspector General and download the complete fiscal year 2013 annual work plan.  It is highly advisable for compliance officers to examine the document in its entirety to determine what impact, if any, it will have on their compliance efforts for fiscal year 2013.  It is also good practice to review annual work plans for several previous years as part of the risk identification process.

              If there are any questions regarding these requirements or how they impact compliance programs and detailed requirements that are generally described in this document, please do not hesitate to contact John H. Fisher, II, Esq., CCEP, CHC.

OIG 2013 Work Plan Nursing Home Hospice Home Health Provisions

Friday, October 5th, 2012


OIG Work Plan 2013 – Provisions Affecting Nursing Homes, Home Health and Hospices

 Nursing Homes—State Agency Verification of Deficiency Corrections (New)

Nursing Homes—Use of Atypical Antipsychotic Drugs (New)

Nursing Homes—Oversight of the Minimum Data Set Submitted by Long-Term-Care Facilities (New)

Nursing Homes— Adverse Events in Post-Acute Care for Medicare Beneficiaries

Nursing Homes—Medicare Requirements for Quality of Care in Skilled Nursing Facilities

Nursing Homes—Oversight of Poorly Performing Facilities

Nursing Homes—Hospitalizations of Nursing Home Residents

Nursing Homes—Questionable Billing Patterns for Part B Services During Nursing Home Stays



Hospices—Marketing Practices and Financial Relationships with Nursing Facilities

Hospices—General Inpatient Care

 Home Health Services

  HHAs—Home Health Face-to-Face Requirement (New)

 HHAs—Employment of Home Health Aides With Criminal Convictions (New)

 HHAs—States’ Survey and Certification: Timeliness, Outcomes, Followup, and Medicare Oversight

 HHAs—Missing or Incorrect Patient Outcome and Assessment Data

 HHAs—Medicare Administrative Contractors’ Oversight of Claims

 HHAs—Home Health Prospective Payment System Requirements

 HHAs—Trends in Revenues and Expenses

OIG Work Plan New Hospital Issues Added For 2013

Thursday, October 4th, 2012


OIG 2013 Work Plan – Hospital Issues Aded To OIG Work Plan

Hospitals—Inpatient Billing for Medicare Beneficiaries (New)

Hospitals—Diagnosis Related Group Window (New)

Hospitals—Non-Hospital-Owned Physician Practices Using Provider-Based Status (New)

Hospitals—Compliance With Medicare’s Transfer Policy (New)

Hospitals—Payments for Discharges to Swing Beds in Other Hospitals (New)

Hospitals—Payments for Canceled Surgical Procedures (New)

Hospitals—Payments for Mechanical Ventilation (New)

Hospitals—Quality Improvement Organizations’ Work With Hospitals (New)

Hospitals—Acquisitions of Ambulatory Surgical Centers: Impact on Medicare Spending (New)

Critical Access Hospitals—Payments for Swing-Bed Services (New)

Long -Term-Care Hospitals—Payments for Interrupted Stays (New)


Issues That Continue To Be On OIG Radar

Hospitals—Same-Day  Readmissions

Hospitals—Acute-Care Inpatient Transfers to Inpatient Hospice Care

Hospitals—Admissions With Conditions Coded Present on Admission

Hospitals—Inpatient and Outpatient Payments to Acute Care Hospitals

Hospitals—Inpatient Outlier Payments: Trends and Hospital Characteristics

Hospitals—Reconciliations of Outlier Payments

Hospitals—Duplicate Graduate Medical Education Payments

Hospitals—Occupational-Mix Data Used To Calculate Inpatient Hospital Wage Indexes

Hospitals—Inpatient and Outpatient Hospital Claims for the Replacement of Medical Devices

Hospitals—Outpatient Dental Claims

Hospitals—Outpatient Observation Services During Outpatient Visits

Critical Access Hospitals— Variations in Size, Services, and Distance From Other Hospitals

Inpatient Rehabilitation Facilities—Transmission of Patient Assessment Instruments

Inpatient Rehabilitation Facilities—Appropriateness of Admissions and Level of Therapy

OIG Posts 2013 Annual Work Plan

Wednesday, October 3rd, 2012

2013 Work Plan Published By The Office of Inspector General 

Yesterday (October 2, 2012), the  HHS Office of Inspector General (OIG) published its Work Plan for Fiscal Year 2013.  The work Plan is published annually by the OIG and contains brief descriptions of activities that OIG plans to initiate or continue for fiscal year 2013.  The Work Plan has become a source for health care providers to identify potential risk areas within their organization so that thay can tailor their compliance efforts to address the issues that the OIG believes are important.

We are in the process of reviewing the OIG 2013 Work Plan and will post a summary or a series of articles over the upcoming days.

Developing Compliance Programs For Small Providers

Tuesday, October 2nd, 2012

How To Develop A Compliance Program

Medical Practice Compliance ProgramsHealth care and certified compliance attorney John Fisher of Ruder Ware will discuss government fraud enforcement and how to develop a systematic program to deter health care fraud in your organization. John is certified in health care compliance and in corporate compliance and ethics and will provide valuable insights into:

  • What is involved in creating a compliance program
  • How smaller providers can meet their mandatory compliance obligations
  • What policies are normally included within a compliance program
  • Setting up a compliance structure that works for your organization
  • How to budget for your compliance efforts

Visit the following link for further information and to register.  Health Care Practice Management Seminar Series

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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