von Briesen Health Law Blog

May 3, 2012

Senators Seek Input from Health Care Community on Fraud and Abuse Prevention

Filed under: Fraud and Abuse, Legislation Watch, Medicare/Medicaid Compliance — Meghan O'Connor @ 9:00 am

Yesterday six Senators from the Senate Finance Committee released an open letter to the health care community requesting a “fresh perspective” regarding fraud and abuse in Medicare and Medicaid. The letter requests input from a variety of stakeholders in the health care community, including providers, payers, health plans, contractors, non-profit entities, consumers, data analytics entities, governmental partners and patients. With stakeholder input, the Senators hope to “identify innovative solutions that will provide taxpayers with a better return on the investments being made to combat the overpayments in these federal health care programs.”

The letter solicits input from stakeholders regarding “solutions and suggestions for how to better prevent and combat the multi-billion dollar problem of waste, fraud and abuse in the Medicare and Medicaid programs.” Specifically, the Senators request submission of white papers discussing what areas stakeholders see for “improvement in current program integrity efforts” as well as additional “solutions that may have been overlooked or underutilized.”

White papers should focus on the following issues:

Program integrity reforms to protect beneficiaries and prevent fraud and abuse;
Payment integrity reforms to ensure accuracy, efficiency and value; and
Fraud and abuse enforcement reforms to ensure tougher penalties.

The Senate Finance Committee expects to assemble a document outlining key proposals later in 2012. The letter was signed by a group of six members of the Senate Finance Committee: Chairman Max Bacus (D-Mont.), Ranking Member Orrin Hatch (R-Utah), Ron Wyden (D-Ore.), Tom Coburn (R-Okla.), Tom Carper (D-Del.) and Chuck Grassley (R-Iowa).

Stakeholders should submit white papers in PDF or Microsoft Word format to ProgramIntegrityWhitePapers@finance.senate.gov by June 29, 2012. The Senate Finance Committee’s press release on the open letter is available here.

May 1, 2012

HHS Releases Guidance on Medical Loss Ratio Requirements

Filed under: Compensation and Benefits, Legislation Watch — Meghan O'Connor @ 10:38 am

The Department of Health and Human Services (HHS) recently issued technical guidance regarding medical loss ratio (MLR) requirements in the form of a questions and answers bulletin issued by the Office of Oversight.

The MLR requires health insurers to submit reports to the HHS Secretary and spend 80% or 85% of all premium dollars on medical care or activities that improve health care quality or provide rebates to customers. The final rule implementing the MRL requirements was published in December 2011 and codified at 45 CFR Part 158. Our blog post with more information on the final rule is available here.

The bulletin provides guidance on the following concepts:

Applicability of the MLR to certain types of plans: Self-funded, Medicaid managed care, and Medicare Advantage plans are not subject to MLR reporting and rebate requirements. Blanket health insurance policies that meet the definition of group or individual health insurance coverage under the ACA are subject to MLR requirements despite differing state laws.
Employer groups of one: When a sole proprietor and/or spouse-employee are the only enrolled employees, the plan would not be considered a group health plan. However, one non-spouse employee will result in classification of the plan as part of the small group market for MLR purposes.
Counting employees for determining market size: Unless the insurer has information which puts it on notice that the total number of employees would cause the plan to be a large group for MLR purposes, the insurer may determine the number of employees solely based on the number of employees in the state in which the policyholder makes the policy available.
Individual association policies: Insurers should report MLR data for individual or non-group association policies in the state where the individual resides at the time the certificate of coverage is issued and not the state where the insurer, policyholder or association is located.
Offering policyholders a “premium holiday”: Premium holidays are governed by state law, but premium holiday must be provided in a non-discriminatory manner (i.e., offered to every policyholder in a state’s market and not based on product type or the experience of a particular policy).
Reinsurance and reporting: The assuming insurer, not ceding insurer, is responsible for filing the annual MLR report only if both the reinsurance and administrative agreements are effective prior to March 23, 2010, and the assuming entity is responsible for 100% of the financial risk and administration. If the ceding insurer retains responsibility for any administrative functions after the effective date of the reinsurance and administrative agreement, then the ceding insurer remains responsible for MLR reporting and rebates.
Exchange user fees: Should be included in licensing and regulatory fees that are subtracted from premium in MLR calculations.
States with a higher MLR standard: HHS will only apply the higher state MLR standard in states that have implemented the higher standard since March 23, 2010.
“Mini-med” experience – application of the adjustment: Mini-med insurers should add the reported experience for each MLR year together to obtain the numerator and then apply the multiplier (provided in the final rule) for the current reporting year to the aggregated experience.
Form of rebate: Form of rebate may include premium credit, lump-sum check or credit or debit card (if the enrollee paid premium using a credit or debit card). Certain conditions must be met for use of a credit/debit card, including: card requirements (policyholder’s name on card, no expiration date, no fees); entire balance of the card must be convertible to cash at the policyholder’s request; policyholder may opt and request a check instead; issuing institution can be contacted to obtain cash value/balance on card; and easy to understand notice of rights and explanation of terms must be provided.

April 26, 2012

Medicare Board of Trustees Report Trust Exhaustion in 2024

Filed under: Billing and Payment, Legislation Watch — Meghan O'Connor @ 9:23 am

Earlier this week, the Board of Trustees for Medicare and Social Security released its 2012 annual report. The report noted that the Medicare trust fund is not adequately financed over the next ten years, and without changes to current law, the fund will be insolvent as of 2024. The insolvency date did not change from the estimated date reported in the Board’s 2011 annual report due, in part, to cuts in provider payments and lower than anticipated expenditures in 2011.

The report provides a summary of 2011 Medicare statistics as well as its predictions. According to the report, Medicare covered 48.7 million people in 2011 (40.4 million 65 and older and 8.3 million disabled), approximately 25% of which are Medicare Advantage enrollees. Total expenditures in 2011 were $549.1 billion. Expenditures in 2011 were lower than the Board’s estimate, but the Board expects projected levels to grow more quickly than previously estimated due to changes in provider assumptions and the projected faster growth in earnings after 2014.

The report offers short-range predictions, including predictions that the fund is adequately financed over the next ten years due to the fact that Parts B and D premiums and general revenue income are set annually to match expected costs. However, Parts B and D costs have increased, averaging 5.9% and 7.2% annual growth. Under current law, a 31% physician fee reduction is scheduled to go into effect in 2013, which the report predicts will unrealistically constrain the Part B annual growth rate.

The report also offers the Board’s long-range predictions, including an increase in Parts B and D outlays. Part B outlays are expected to increase from 1.5% of GDP in 2011 to 2.5 or 4.5% by 2086. Part D outlays are expected to increase from 0.4% of GDP in 2011 to 1.5% by 2086. The Board projects that, under current law, expenditures will increase at a faster pace than aggregate workers’ earnings or the economy, with estimated increases in expenditures from 3.7% of GDP in 2011 to 6.7% by 2086. However, according to the Board, if Congress continues to override statutory decreases in physician fees, and if reduced fee increases for other Medicare services are not sustained, then Medicare spending will increase to approximately 10.4% of GDP by 2086.

The Board’s report recommends consideration of further reforms in the near future to allow for more flexible and gradual reform implementation and to allow providers and beneficiaries to adjust expectations of the Medicare program.

April 10, 2012

CMS’ Proposed Rule Delays ICD-10 Deadline to October 2014

Filed under: Medicare/Medicaid Compliance, Pharmacy, Records and Technology — Meghan O'Connor @ 8:12 am

Yesterday, the Centers for Medicare & Medicaid Services (CMS) announced a proposed rule that delays the ICD-10 compliance deadline one year, to October 1, 2014. The proposed rule also adopts a standard for a unique health plan identifier (HPID), adopts a data element that would serve as an “other entity” identifier (OEID), and adds a National Provider Identifier (NPI) requirement.

According to CMS, the introduction of the HPID under HIPAA standards for electronic health care transactions will provide increased standardization for providers who currently face improper routing, rejected transactions, difficulty in determining eligibility, and errors in identifying the correct health plan during claims processing. CMS reports that the HPID will allow for a higher level of provider automation without the use of multiple identifiers that differ in length and format.

The proposed rule adopts a data element to serve as the OEID for entities that are not health plans, health care providers, or “individuals” that need to be identified in standard transactions (e.g., third party administrators, transaction vendors, clearinghouses, and other payers). The proposed rule does not require such entities to obtain an OEID, but the entities may obtain and use an OEID in covered transactions. However, once an OEID is obtained, entities would be expected to use the OEID and disclose it upon request when engaged in covered transactions.

The proposed rule also outlines circumstances under which an organization covered health care provider must require noncovered individual health care providers who are prescribers to obtain and disclose a NPI. Organization covered health care providers that have as a member, employ, or contract with, an individual health care provider who is not a covered entity and is a prescriber must require such a prescriber to: (1) obtain an NPI, and (2) to the extent the prescriber writes a prescription while acting within the scope of the prescriber’s relationship with the organization, disclose the NPI upon request to any entity that needs it to identify the prescriber in a standard transaction.

Additional information on the proposed rule is available through CMS’ Fact Sheet and Press Release. Comments on the proposed rule are due May 17.

April 3, 2012

CMS Issues Final Rule Holding Part C and D Sponsors to Quality Standards

Filed under: Medicare/Medicaid Compliance, Pharmacy — Meghan O'Connor @ 10:41 am

Yesterday, the Centers for Medicare and Medicaid Services (CMS) issued a final rule which impacts the Medicare Advantage (Part C) and Prescription Drug (Part D) programs. Beginning in 2015, CMS may use Part C and D plan performance ratings as a measure of the effectiveness of administrative and management arrangements and as a basis for termination or non-renewal of a Medicare contract.

The performance ratings are based on CMS’ five star system, which uses plan performance data to calculate ratings for a variety of measures (e.g., access to care, communication with members, and clinical quality of care). A rating of three stars – an “average” score – is the lowest acceptable rating for Part C and D plan sponsors. Plan sponsors with lower than a three-star rating must make corrective action plans.

Under the final rule, the maintenance of effective administrative and management arrangements is a material term of the Part C and D sponsor contracts, and CMS believes that plan ratings are a direct indicator of the ongoing effectiveness of a contracting organization’s administrative and management arrangements. CMS may terminate the contracts of Part C and D sponsors that fail to achieve at least a three-star rating for three consecutive years. CMS may also deny applications of Part C and D sponsors that performed so poorly that CMS has terminated or declined to renew a contract with the sponsor in the past. Data beginning with the 2013 contract year will be used to make CMS’ termination and non-renewal determinations in 2015.

The final rule also: (1) codifies existing Coverage Gap Discount Program (donut hole) requirements; (2) provides reporting, confidentiality, and penalty requirements for pharmacy benefit manager data reporting; (3) provides physicians with greater flexibility in assisting beneficiaries in drug coverage appeals; (4) provides benefit flexibility for certain dual eligible special needs plans that meet integration and performance standards; (5) establishes a daily cost-sharing rate as part of the Drug Utilization Management and Fraud, Abuse, and Waste Control Program; and (6) requires Part D sponsors to include valid NPIs on prescription drug event records submitted to CMS. More information on these additional provisions is available in CMS’ fact sheet.

March 13, 2012

HHS Releases Final Rule on Affordable Insurance Exchanges

Filed under: Legislation Watch — Scott Thill @ 1:51 pm

The Department of Health and Human Services (HHS) has released a Final Rule (644 pages) to implement Affordable Insurance Exchanges (Exchanges), which must become operational by January 1, 2014. Exchanges will provide marketplaces where individuals and small employers can compare private health insurance options (e.g. based on price and quality). The Final Rule combines proposed rules issued on July 15, 2011 and August 17, 2011 relating to Exchange establishment and eligibility.

As described by HHS, the Final Rule includes:

Minimum standards that states must satisfy if they elect to establish an Exchange (e.g. standards for individual and employer eligibility in an Exchange);
Minimum standards that health insurance issuers must satisfy to participate in an Exchange and offer qualified health plans; and
Standards that employers must satisfy to participate in the Small Business Health Options Program.

A number of the provisions in the Final Rule are interim rules, open to public comment. HHS is accepting comments on interim provisions relating to the following, among others:

The ability of agents and brokers to assist individuals in applying for advance payment of the premium tax credit and cost-sharing reductions for qualified health plans;
Options for conducting eligibility determination;
Eligibility standards for cost-sharing reductions;
Timeliness standards for Exchange eligibility determinations;
Verification for applicants with special circumstances; and
Agreements between agencies administering insurance affordability programs.

March 6, 2012

OIG Releases Materials for Health Care Boards of Directors

Filed under: Governance and Tax Exemption, Medicare/Medicaid Compliance, Patient Care Issues — Meghan O'Connor @ 11:25 am

Yesterday, the Office of Inspector General (“OIG”) published its Compliance 101 website. The website synthesizes OIG resources and offers the OIG’s perspective on a variety of compliance issues. Compliance 101 also offers compliance education materials for Boards of Directors for health care organizations (“Boards”), including a video in which Lou Morris, Chief Counsel to the Inspector General, outlines the role of Boards in overseeing quality and compliance in health care organizations.

According to the OIG, a health care organization’s corporate culture should focus on two goals: (1) promote quality of care and (2) embrace compliance with the law.

The OIG provides the following six suggestions for Boards to promote quality of care:

(1) Create a comprehensive policy and objectives to define your organization’s quality improvement and patient safety program, ensure stakeholders share a common goal of quality, and incorporate objectives into performance evaluations and incentive compensation;

(2) Establish a Board quality committee and make quality of care a standing agenda item;

(3) Ensure you have sufficient clinical expertise on the Board;

(4) Understand medical staff credentialing and stay current on best practices;

(5) Implement a conflict of interest policy to identify and manage financial interests that may influence clinical judgment; and

(6) Use dashboards and benchmarks to measure improved outcomes and patient satisfaction and compare your organization to your peers.

The OIG provides the following six suggestions to enhance Board oversight:

(1) Ask questions that assess the effectiveness of your compliance program;

(2) Protect the compliance officer’s independence by separating this role from legal counsel and senior management. All decisions effecting the compliance officer’s employment or limiting the scope of the compliance program should require prior Board approval;

(3) Learn how quality, patient safety, and compliance information flows to the Board;

(4) Ensure your organization can validate the accuracy of quality data. The Board should understand that federal program reimbursement is tied to quality of care – concealing unfavorable information and failing to investigate sufficient inconsistencies undercuts quality improvement and can lead to civil and criminal liability;

(5) Personal appearances by Board members at staff meetings demonstrate a top-down commitment to quality and compliance and provides time to talk to employees about the culture of compliance; and

(6) Perform regular self-assessments of the Board, including an evaluation of the composition of compliance and quality committees and the Board’s response to systemic failures and lapses in patient care.

February 17, 2012

Congress Passes Ten-Month Extension of Doc-Fix

Filed under: Billing and Payment, Legislation Watch — Meghan O'Connor @ 2:54 pm

Today, Congress passed the Middle Class Tax Relief and Job Creation Act of 2012. The legislation includes a ten-month extension to a Medicare physician pay freeze. Without the extension, the sustainable growth rate formula would have required a 27% cut to Medicare physician pay as of March 1.

The U.S. House of Representatives Ways and Means Committee released a summary of the legislation, noting that the ten-month doc fix will be paid for with a 65% decrease in Medicare bad debt reimbursements to hospitals and skilled nursing facilities beginning in FY 2013 for those providers currently reimbursed at 70% as well as a phase-in of the 65% reduction over the next three years for those providers who are currently reimbursed at 100% of their bad debt (e.g., FQHCs and dialysis centers). In addition to the reduction of bad debt reimbursement, the legislation also reduces clinical laboratory services payment rates by 2% in 2013 and cuts Medicaid disproportionate share hospital (DSH) allotments.

This ten-month extension follows a two-month extension approved by Congress in December 2011. The Medical Group Management Association reports that physicians now face the threat of a 35% Medicare payment reduction in 2013.

February 16, 2012

CMS Issues Proposed Regulations for the 60-Day Rule on Overpayment Refunds

Filed under: Billing and Payment, Fraud and Abuse, Medicare/Medicaid Compliance — Meghan O'Connor @ 4:10 pm

CMS recently issued a proposed rule outlining requirements for refunding overpayments under the 60-Day Rule. The 60-Day Rule, enacted under the Affordable Care Act, requires hospitals and physicians receiving funds under the Medicare program to report and refund overpayments within 60 days from the date the overpayment is identified or the date the corresponding cost report is due.

Identification of Overpayments – Under the proposed rule, a person has “identified” an overpayment if the person has actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment. Further, receipt of information concerning a potential overpayment creates an obligation to make a reasonable inquiry to determine whether an overpayment exists. Failure to make a reasonable inquiry, including failure to conduct the inquiry with all deliberate speed after obtaining the information, could result in knowingly retaining an overpayment.

The proposed rule contains the following non-exhaustive list of examples regarding when an overpayment has been identified:

A provider/supplier reviews billing or payment records and learns that it incorrectly coded certain services, resulting in increased reimbursement.
A provider/supplier learns that services were provided by an unlicensed or excluded individual on its behalf.
A provider/supplier performs an internal audit and discovers that overpayments exist.
A provider/supplier is informed by a government agency of an audit that discovered a potential overpayment and the provider or supplier fails to make a reasonable inquiry.
A provider/supplier experiences a significant increase in Medicare revenue with no apparent reason for the increase, but the provider/supplier fails to make a reasonable inquiry into whether an overpayment exists.

Ten-Year Look-Back – The proposed rule includes a ten-year look-back period for overpayments, i.e., overpayments must be reported and returned only if a person identifies the overpayment with ten years of the date the overpayment was received. The ten-year look-back matches the outer limit of the statute of limitations for the False Claims Act. CMS also proposes to amend the reopening rules to be consistent with the ten-year look-back for the 60-Day Rule.

The proposed rule is scheduled for publication in today’s Federal Register. Stakeholders have sixty days to submit comments to CMS.

February 15, 2012

HHS Releases FY 2011 Fraud and Abuse Program Report

Filed under: Fraud and Abuse — Meghan O'Connor @ 10:28 am

Yesterday the Departments of Health and Human Services (HHS) and Justice released the Health Care Fraud and Abuse Control Program Report for Fiscal Year 2011 (HCFAC Report). The HCFAC Report outlines monetary recoveries, program accomplishments, as well as enforcement and prevention activities of the Departments of HHS and Justice over the last year.

The government’s health care fraud prevention and enforcement in FY 2011 recovered nearly $4.1 billion in taxpayer dollars. HHS reports that this is the largest fraud and abuse amount recovered from individuals and companies in any single year. The Medicare Trust Funds received approximately $2.5 billion from the recovery, and the Department of the Treasury received more than $599.9 million in federal Medicaid money. Also included in the recovery was approximately $2.4 billion won or negotiated under the False Claims Act.

In addition to monetary results, the HCFAC Report summarizes the government’s enforcement actions during FY 2011, including 743 convictions for health care fraud-related crimes, 977 new civil health care fraud matters, and the exclusion of 2,662 individuals and entities by the Office of Inspector General.

More information on the HCFAC Report and fraud prevention accomplishments is available via the HHS press release. We can anticipate seeing continued emphasis on fraud and abuse in federal health care programs. The Affordable Care Act allows for increased funding and coordination of fraud and abuse control efforts with HEAT teams, enhanced screening requirements, expanded overpayment recovery efforts, and greater oversight of private insurers. Additional information on fraud prevention activities under the Affordable Care Act is available here.

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