Health Law Blog - Healthcare Legal Issues

Archive for April, 2014

Referral Requirements – Can Employed Doctors Be Required to Make Referrals?

Tuesday, April 29th, 2014

Referral Requirements Under the Stark Regulations

Referral Requirements Employed PhysiciansThe Stark Law Regulations include a provision that dictates the conditions under which the employer of a physician may mandate referrals for designated health services.  Certain specific conditions must be met if an employer wishes to require and employed physician to make referrals to its designated health services.  The Stark regulations provider that a physician’s compensation from a bona fide employer or under a managed care contract or other contract for personal services may be conditioned on the physician’s referrals to a particular provider, practitioner, or supplier, provided that the compensation arrangement meets several specific conditions.

The conditions that must be met include the following:

–  The physician’s compensation must be set in advance for the term of the agreement.

–  The physician’s compensation must be consistent with fair market value for services performed (that is, the payment may not take into account the volume or value of anticipated or required referrals).

– The arrangement must otherwise comply with an applicable exception under Sec. 411.355 or Sec. 411.357.

–  The arrangement must meet the following conditions: (A) The requirement to make referrals to a particular provider, practitioner, or supplier is set forth in a written agreement signed by the parties. (B) The requirement to make referrals to a particular provider, practitioner, or supplier does not apply if the patient expresses a preference for a different provider, practitioner, or supplier; the patient’s insurer determines the provider, practitioner, or supplier; or the referral is not in the patient’s best medical interests in the physician’s judgment.

– The required referrals relate solely to the physician’s services covered by the scope of the employment or the contract, and the referral requirement is reasonably necessary to effectuate the legitimate business purposes of the compensation arrangement. In no event may the physician be required to make referrals that relate to services that are not provided by the physician under the scope of his or her employment or contract.

Telemedicine Private Reimbursement State Laws Mandate

Tuesday, April 22nd, 2014

Telemedicine Private Reimbursement – More States Look at Private Payment Mandates 

Much of the discussion surrounding telemedicine relates to factors that slow the implementation of its use.  One factor contributing to this is the lack of consistent and comprehensive reimbursement.  There is no systematic private payment across the country.  Many private payors refuse to cover telemedicine services.  Others do so on a limited basis.  The inconsistency makes the burden and costs high for providers who use telemedicine.

Some states have responded to this inconsistency by enacting laws.  As of the current date, 16 states have enacted some type of law mandating payment for health care services that are provided through use of telemedicine technologies.  Three states, Michigan, Maryland, and Vermont, added new laws to their books during 2012 that mandate some level of telemedicine reimbursement.

The American Telemedicine Association has reported that 8 additional states have introduced telemedicine reimbursement laws already in 2013.  Those states include Florida, District of Columbia, Connecticut, Mississippi, Nebraska, Indiana, South Carolina, and New Mexico.  Some of the listed states have introduced general requirements that telehealth be reimbursed without discrimination.  Others have addressed more limited coverage scope such as Indiana, which is considering coverage to home health agencies, federally qualified health centers and rural clinics.

It is uncertain what the final outcome of the recently introduced legislation will be.  It is also probable that more states will consider various forms of private payment requirements for telemedicine services.  We are likely to see more states address this issue over upcoming years as telemedicine gains more traction.

60 Day Repayment Rule Affordable Care Act

Tuesday, April 22nd, 2014

Overpayments and the Affordable Care Act

The Affordable Care Act mandates providers to return overpayments within 60 days after identification.  Failure to return known overpayments within 60 days of identification subjects the provider to possible claims under the False Claims Act.  Proposed regulations implementing the 60 day repayment rule was released in February of 2012 but have not yet been finalized.  Delays in finalizing regulation does not delay the effective date of the statute.

It is suggested that providers adopt policies to operationalize compliance with the repayment rules.  Providers who act in reckless disregard of overpayments can be subject to the draconian penalties imposed by the False Claims Act.  Reasonable compliance processes that are consistently followed provide the best defense if overpayments fall through the cracks.

Comments to the proposed repayment regulations strongly suggest that providers should take reasonable steps to self examine for potential overpayments.  In order to meet its obligations to take reasonable steps to identify overpayments, providers should adopt self audit and risk identification policies.  Those policies should be systematically followed.  Even though it may not be possible to identify every potential overpayment, the systematic adherence to policies and procedures that are reasonably calculated to identify potential problems in systematically identified areas where risk may occur.

For more information on the steps that you should follow to reduce your risk under the False Claims Act and overpayment statute, feel free to contact health care compliance attorney John Fisher.

Hospital Supervision Rules – Billing “Incident To” Physician Services

Tuesday, April 22nd, 2014

Hospital Supervision Rules for “Incident To” Services

hospital supervisions incident to reimbursementPhysician supervision rules in hospital outpatient departments have continually changed over the past five years.  Those who have followed these rules cannot help but wonder whether CMS is somewhat schizophrenic on this issue.  Hospital supervision rules have been like a moving target, making compliance difficult to track and to communicate to front line physicians and staff who must comply with these changing rules.

Services of a therapeutic nature are often performed by physician extenders in a hospital department and are billed “incident to” the physician’s services.  Historically, direct supervision was required to enable the service to be billed as “incident to” the physician’s services.  The direct supervision rule generally requires the physician to be “immediately available” to assist with and direct the service.  This does not necessarily require presence in the same room where the service is being delivered.  The precise requirements that must be complied with in order to meet the “direct supervision” requirement is where CMS has given us a moving target for compliance purposes.

In the 2009 OPPS Rule, CMS provided what it considered to be “clarification” of its rules.  To most providers, the CMS guidance actually amounted to a change of position that required changes in their supervision policies.  Before the 2009 “explanation,” many providers structured their compliance efforts under the assumption that they were not required to have a physician physically present in an outpatient department to meet the direct supervision requirement.  The 2009 “clarification” indicated that physical presence of a supervision provider was required.

The 2009 comments lead to much criticism from the provider community.  This resulted in further changes in the 2010 OPPS Rule that made it sufficient for the supervising physician to be present on the same campus and immediately available rather than requiring physical presence in the department.  Off campus clinics and departments were still required to meet the more restrictive physical presence requirement.  Physical presence of off campus departments required actual physical presence in the space that is designated as the department.  The supervising physician would not meet this standard even if they were located in the same building but not in the departmental office suite.

Although the 2010 rules answered some of the open questions, the rules had a huge negative impact primarily on smaller hospitals and particularly those located in rural areas.  Small hospitals were required to meet the physician “physical presence” requirements even when there was no other activity requiring physician presence.  This necessitated small hospitals to incur costs to meet the “incident to” supervision requirement even when physician presence was not otherwise required.

At least partly to address the “small hospital” issues, the 2011 OPPS Rule made significant changes to the physician supervision requirement.  The “on the same campus” rule was abandoned in favor of a rule that focused more on the general “availability” of the physician.  The 2011 rule eliminated many of the specific physical location requirement but still maintained the more general requirement that the physician be “immediately available to furnish assistance or direction throughout the performance of the procedure.”  The standard requires the physician to be immediately available and interruptible.  The rule also opened the door for the physician to be available by telemedicine to meet “general” supervision requirements.

The 2011 rule also identified certain services for which direct supervision is always required for the initiation of the services.  Services covered by special supervision requirements includes a limited listing of non-surgical and extended duration therapeutic services.  These services include certain injections, infusion and observation services.  Chemotherapy is not included in this listing.  These services are services that can have a longer overall duration and have a low risk of requiring physician involvement after the service is initiated.

The 2011 rule set up a panel to evaluate specific therapeutic services to determine the appropriate level of supervision.  The 2012 OPPS Rule formally designated the panel as the body that reviews and recommends changes in supervision requirements relative to various therapeutic services.  The 2012 rule also took steps to assure that critical access and rural hospitals were represented on the panel.  The panel is authorized to recommend levels of supervision that are lower than “direct supervision” for specific services.  The panel does not have the ability to directly enact regulations or make policy changes.  Its role is limited to that of advising CMS on these issues.

At the present time, the hospital outpatient supervision requirements currently must meet the “general” supervision requirements.  The service must be performed under the overall direction and control of the physician.  The physical presence of the physician is not required during the performance of the “incident to” activity.  In cases where personal (as opposed to general) supervision is required, the actual presence of the physician is required in the room.  Some services only require physical presence at the inception of the service and have been found to not create a risk during the ongoing stages of the procedure.

All hospital outpatient therapeutic services are deemed to be provided “incident to” the services of the physician.  The level of supervision required in the case of these types of services (personal or general) is based upon CMS determinations following review by the panel as indicated above.

So, now that we are all clear on the rules, (insert sarcasm emotion here), can we expect them to change again the future?  Certainly the panel process will be reflected by different rules for specific therapeutic items.  Additionally, given the history of this requirement, no one would be surprised if further changes are in our future.

New Paper On Credentialing of Telemedicine Providers

Monday, April 21st, 2014

I have published a new “Blue Paper” covering credentialing of telemedicine providers.  This issues has emerged over the past several years are telemedicine is growing in usage.  The article covers the relatively new CMS regulations regarding the credentialing process and provides some useful tips to providers who are actively engaging in telemedicine.

You can find the new Blue Paper at the following ling:  Telemedicine Credentialing Article

Distant Site Telemedicine Credentialing Conditions

Thursday, April 17th, 2014

Reliance On Distant-Site Hospital or Telemedicine Entity Credentialing

Reliance On Distant Site for Telemedicine Credentialing

The 2011 CMS regulation modified conditions of the participation for hospitals and critical access hospitals to permit the hospital to have its medical staff rely on the distant-site hospital credentialing decisions when making recommendations on privileges for individual physicians and practitioners providing telemedicine services. However, this process is only permitted when a number of conditions are met:

  • The telemedicine services must be provided pursuant to a written agreement with the Medicare participating distant-site hospital or qualifying distant-site telemedicine entity.
  • The agreement must specify that it is the responsibility of the governing body of the distant-site hospital to meet the existing requirements for credentialing of providers who are providing telemedicine service.
  • The distant-site hospital providing the telemedicine services must be another Medicare participating hospital or a “telemedicine entity.”
  • The distant-site physician or other practitioner must have been privileged at the distant-site hospital providing telemedicine services and the distant-site hospital must provide a current list of telemedicine physicians and practitioners who are privileged there and their current privileges at the distant-site hospital or entity to the hospital or CAH.
  • The distance site practitioner must hold a license that is recognized by the state in which the hospital whose patients are receiving telemedicine services is located
  • The hospital must have evidence of an internal review of the distant-site physician’s or practitioner’s performance under telemedicine privileges and must send this information to the distance site hospital for use in the distant-site hospital’s periodic appraisal of the distant-site physician’s provision of telemedicine services.
  • Information sent for use in the periodic appraisal must at a minimum have included all adverse events that resulted or could have resulted from telemedicine services provided by the distance site provider to the originating hospital’s patients and all complaints received by the originating hospital with respect to the distance site physician or practitioner.

Credentialing Rules for Telemedicine Providers

Thursday, April 17th, 2014

Telemedicine Credentialing CMS Credentialing Rules

Credentialing Telemedicine providersAt the present time, CMS conditions of participation are the primary regulatory source governing the process of credentialing telemedicine providers.  The Joint Commission has revised its requirements to be consistent with CMS rules.  In regulations dated May 5, 2011 (effective July 5, 2011), CMS provided final regulations that somewhat streamline the credentialing process and which comply with the Medicare Conditions of Participation.  CMS regulations give providers some options regarding credentialing of telemedicine including:

  • Retaining complete credentialing of all telemedicine providers using the credentialing process that is applicable to all other medical staff members.  The direct credentialing option is still the safest route for hospital’s to take from a liability standpoint.
  • Rely on the credentialing decision of another Medicare certified hospital when granting telemedicine privileges, subject to certain specific conditions including entering into a written agreement with the other facility.
  • Rely on the credentialing decisions of other “telemedicine entities” when granting telemedicine privileges, subject to certain conditions including entering into a written agreement.

In short, provided that all of the specific requirements contained in CMS regulations are met, a receiving hospital is permitted for purposes of Medicare participation to rely on the credentialing decisions that have been made by the “distant-site” telemedicine provider.  Note, however, that when the other facility is located out of state, the provider will still need to independently verify licensure under Wisconsin law.  The credentialing process conducted in a different state may not be a reliable source of assuring Wisconsin licensure.  In most cases, the distant-site provider will require full Wisconsin licensure to perform and permit billing for the applicable service.

Two Midnight Rule Exceptions CMS Inpatient Only

Thursday, April 17th, 2014

Exceptions to Two Midnight Rule 

exceptions cms two midnight ruleCMS recently updated its frequently asked questions regarding the two midnight rule.  The two midnight rule requires a patient to require hospitalization, including two midnights, in order to qualify for inpatient hospital Medicare reimbursement.  Numerous questions have been raised about details of how the rule is applied.

CMS has recently stated two exceptions to the two midnight rule:

1.         One exception relates to patients who require mechanical ventilation that is initialed during a visit may be admitted even if the inpatient stay is not expected to remain or two midnights.  This exception does not apply as a result of anticipated intubations during minor surgery or other treatments.

2.         Procedures that are listed on the “inpatient only” list may be reimbursed even though the stay is not anticipated to meet the two midnight rule.

Providers should review the transcripts from the January 21, 2014, open door call for more details regarding the application of the two midnight rule.  The call clarified several issues of how to apply the rule.  For example:

  • Providers can assume that a patient will survive, even in cases where it is reasonably likely that the patient may not survive following admission.
  • CMS is still working on details of how to apply the role where patient transfer takes place.  Transfer cases will not be reviewed at least for the initial audits (through March 31, 2014).

CMS is requiring a 0.2% reduction to IPPS payments as part of the Final Fiscal Year 2014 IPPS rules.  Hospitals who wish to challenge the reduction amount should preserve their appeal rights by indentifying the reduced amount as being protested on their cost report.  The protest should be indicated commencing October 1, 2013, the effective date of the two midnight rules.

Stark Law Self Disclosures Through 2013

Thursday, April 17th, 2014

Self Disclosure Under Stark Law – Disclosures Made and Settled Through 2013

self disclosure protocols 2013 update oigCMS issued its Stark Law self-disclosure protocols in 2010.  Through the end of 2013, there have been a total of 37 self-disclosure settlement with CMS using this process.  Some of the areas covered by self disclosures have included the following:

  • Failure to comply with the personal service exception in connection with electrocardiogram interpretations;
  • Emergency department “on-call” arrangements that did not comply with an exception;
  • Arrangement with physicians to provide utilization review services;
  • Medical director services, medical coding and consulting services, and office space lease;
  • Psychiatric services;
  • Office space rental and support services;
  • Failure to comply with the in-office ancillary services exception;
  • Case management physician advisor services;
  • EKG interpretation, medical director services, and hospital services;
  • Medical director services;
  • Supervision of cardiac stress tests;
  • Emergency call services at an adjacent walk-in clinic;
  • Space rental agreement;
  • Residency program services, electronic health records expert services, medical director services, leadership services;
  • Emergency cardiology call services;
  • Office space rental agreement;
  • Ownership interests in a rehabilitation hospital;
  • Physician recruitment exception;
  • Professional service agreements;
  • Fair market value compensation issue;
  • On-call payment arrangement;
  • Physician recruitment exception;
  • Dental services;
  • Equipment rental;
  • Non-monetary compensation violation;
  • Personal service agreement;
  • DME supply arrangement;
  • On-site overnight coverage violations.

Voluntary Self Disclosure Decisions Can Be Complicated

Tuesday, April 8th, 2014

Provider Self Disclosure Decisions – Voluntary Disclosure Process

OIG Self Disclosure DecisionsThe decision whether or not to voluntarily disclose to the government can be very difficult.  Not every case is clear.

Clearly not every situation where there has been a billing error amounts to fraud or wrongdoing requiring use of the self-disclosure protocol.  Many over-payments that are identified through audit can be dealt with at the intermediary level.  Where investigation raises questions about whether incorrect bills are “knowingly” submitted, the self disclosure process may provide some mitigation of potential loss.  Situations where the provider perhaps “should have known” raise more difficult issues of analysis.

The situation is also complicated because a potential whistle-blower may view a situation much differently than a provider who finds what it believes to be an innocent mistake through the audit process.  A provider may sincerely believe that there was no “wrongdoing” and that a simple mistake has been identified.  Finding such a mistake may actually be evidence that the provider’s compliance efforts are working.  On the other hand, there is a whole legal profession out there now that is advertising for people to come forward with these types of mistakes.  With potential recover under the False Claims Act of 3 times the over-payment plus $11,000 per claim, these lawyers have strong incentive to attempt to turn what the provider believes to be an innocent mistake into a false claim.  This presents risk, even in the more innocent cases involving billing errors.

Generally speaking, when errors are discovered, the providers best bet is to be forthright and deal with the matter “head on.”  A complete internal investigation should be conducted to determine the precise nature of the issues and to identify the extent of wrongdoing.  Based on the outcome of the investigation, the provider can determine whether a simple repayment can be used or whether there may be reason to go through the formal self disclosure process.

Anyone who has worked with reimbursement rules will realize that payment policies, rules and regulations are not always clear.  At times it is difficult to determine whether there is even a violation of applicable rules.  Legal ambiguities further complicate the self disclosure decision.  The precise nature of any legal ambiguities involved in the specific case need to be completely documented.  If a decision is made that there has been no wrongdoing, the legal analysis should be laid out in writing and in detail and a reasonable judgment should be made regarding the interpretation of applicable legal standards.  If self disclosure is made in situations involving legal ambiguities, those ambiguities should be explained in detail as part of the self disclosure.

In the end, a provider facing potential self disclosure must follow a reasonable process to make a reasoned decision.  All elements forming the basis for the reasonable determination must be documented.  In cases of apparent wrongdoing, the provider can expect that its decision will be questioned at some point in the future.  Every step should be taken under that assumption.

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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