The Officer of Inspector General (OIG) issued an advisory opinion addressing an existing and proposed contractual arrangement between a durable medical equipment (DME) supplier and independent diagnostic testing facilities (IDTFs). The unfavorable opinion concluded that the arrangements could potentially generate prohibited remuneration under the Anti-Kickback Statute (AKS), which would trigger sanctions if the requisite intent was present.
The following facts were presented with regard to the DME supplier’s existing and proposed arrangements:
The Medicare-enrolled DME supplier (the Requestor) sold continuous positive airway pressure (CPAP) blower units, masks, and supplies. A CPAP is prescribed for patients with obstructive sleep apnea who have undergone a sleep study, often performed at an IDTF. Once prescribed by a physician, the patient chooses a DME suppler.
Under the existing arrangement, the Requestor entered into contracts with IDTFs, some of which have physician investors. Each of these contracts is in writing, for a term of at least one year, and is non-exclusive. The IDTF may terminate the contract at any time, but the Requestor may only terminate for breach or cause. Federal health care program beneficiaries are excluded from the Existing Arrangement. In exchange for providing services (e.g., preparing the CPAP and educating the patient on its use) to non-federally insured patients, the Requestor pays the IDTF a per-patient fee that reflects fair market value.
The proposed arrangement was similar to the existing arrangement except: (1) federal health care beneficiaries would be included; (2) the IDTF would be paid a flat monthly/annual fee, which the Requestor could not certify as fair market value; and (3) the Requestor would have the right to terminate the contract if it was not satisfied with the number of patients receiving services.
The OIG concluded that the specific circumstances surrounding the arrangements could create more than a minimal risk of fraud and abuse. The OIG’s analysis focused on the following issues:
- The carve out of federal business was not dispositive of whether the AKS could apply. The OIG noted its concern with arrangements that carve out federal health care program beneficiaries. Although the existing arrangement excluded federal health care program beneficiaries, the OIG found that the participating IDTFs could still influence referrals of federal health care program beneficiaries to the Requestor.
- The arrangements do not meet the personal services and management contracts safe harbor. The OIG found that the arrangements do not qualify for safe harbor protection because they do not meet all of the safe harbor’s required conditions. However, the OIG noted that the lack of safe harbor protection is not fatal, but the arrangements must undergo a case-by-case evaluation.
- Direct payments to IDTFs and aggressive marketing are problematic. The OIG concluded that direct payments to IDTFs may be problematic where IDTF staff may be in a position to influence federal health care beneficiary selection of the Requestor’s products. Direct payments would be particularly problematic when physicians with financial interests in IDTFs are prescribing the DME products. The arrangements also allow the Requestor to obtain in-person contacts with patients through health care professionals who are in a position of trust. When these contacts occur prior to the patient’s selection of a DME supplier, the OIG is concerned that the IDTF staff – and, potentially, physicians with a financial interest in the IDTF – could inappropriately influence the beneficiary’s choice of supplier.
- Part of the fee, the consignment component poses fraud and abuse risks. Despite the Requestor’s certification that it would not make separate payments for rental of space and consignment services, the OIG concluded that the consignment component is part of the total package of services and thus comprises at least some portion of the fees paid to the IDTF.
You may access the OIG’s opinion (11-08) here.
The Centers for Medicare & Medicaid Services (CMS) announced today that it will begin using predictive modeling technology to identify and fight Medicare fraud.
Northrop Grumman, through a partnership with National Government Services and Federal Network Systems (a Verizon company), will develop the predictive modeling technology. The technology will use algorithms and an analytical process to look at CMS claims – by beneficiary, provider, service origin, or other patterns – in order to identify potential problems and assign “alerts” to problematic claims. CMS staff will conduct further review of alerts to prioritize claims and assess the need for investigation or enforcement actions.
CMS will begin using the new technology on July 1.
The Centers for Medicare & Medicaid Services (CMS) today issued a proposed rule that would establish, for the first time, conditions of participation (CoPs) that Community Mental Health Centers (CMHCs) would have to meet in order to participate in the Medicare program.
CMS reports that the proposed CoPs would focus on patient care, establish requirements for staff and provider operations, and encourage patients to participate in their own care plans and treatment with a focus on a short term, patient-centered, outcome-oriented process. The six new CoPs in the proposed rule address the following:
- Personnel qualifications for CMHC employees and contractors;
- Client rights and notification requirements;
- Focus on comprehensive assessment in determining appropriate treatment (admission, initial evaluation, and discharge or transfer of the client) and meeting desired outcomes;
- Client-centered interdisciplinary team approach with regard to the active treatment plan and coordination of services;
- Creation of quality assessment and performance improvement programs (QAPI) for each CMHC; and
- Governance structures (including organization, administration of services, and partial hospitalization services) that emphasize coordination of services.
The new CoPs would also allow CMS to survey CMHCs for compliance with health and safety requirements. However, the proposed rule does not grant deeming authority for CMHCs to accrediting organizations.
The new CoPs would go into effect twelve months following publication of a final rule in order to give CMHCs time to develop QAPI programs, educate staff, and implement the CoP requirements.
CMS is accepting comments on the proposed rule until August 16.
The proposed rule is available via the federal register (Rule CMS-3202-P).
Just a reminder, comments to CMS’ 2011 Inpatient Prospective Payment System Proposed Rule are due by June 20, 2011. Several notable provisions in the Proposed Rule include:
- Policies for several hospital quality initiatives, including policies related to the Hospital Readmissions Reduction Program and the Hospital Value-Based Purchasing Program.
- The addition of contrast-induced acute kidney injury as a hospital acquired condition.
- The removal of excisional debridement cases from the current MS-DRG and assignment of them to three new MS-DRGs that would provide more accurate, but lower, payment.
- The creation of two new MS-DRGS for autologous bone marrow transplants. One MS-DRG would apply to such transplants with complications or comorbidities, while another MS-DRG would apply to such transplants without any complication or comorbidity.
- Revisions to the rules for determining pension costs for Medicare cost-finding and wage index purposes.
- Clarification that Medicare’s 3-day/1-day payment window policy applies to both preadmission diagnostic and non-diagnostic services furnished at a physician practice wholly owned or wholly operated by the admitting hospital.
- The exclusion of patient days and bed days for inpatient hospice services from the Medicare disproportionate share adjustment and indirect medical education adjustment.
- Clarification of CMS’ “under arrangements” requirements.
You may access the Proposed Rule here.
A summary of the Proposed Rule is available from CMS here.
The Wisconsin Department of Health Services (DHS) Division of Quality Assurance (DQA) issued a memo on June 6 regarding electronic signatures on health care documents. The DQA memo addresses two questions: (1) whether a patient or resident must sign a hard copy release for electronic health care records and (2) whether the entity must retain the hard copy after incorporating the release into the electronic record.
The DQA notes that a hard copy release is not required. A scanned, electronic copy may be considered the original copy for retention purposes. The DQA supports its position with Wisconsin Statute Section 137.15, which recognizes the legal effect and enforceability of electronic signatures. However, a backup – either electronic or hard copy – is required and represents best practice. In addition, HIPAA requirements for authentication and integrity of electronically stored health information must still be followed.
DQA Memo 11-017 is available here.
The American Hospital Association (AHA) submitted its comments regarding CMS’ ACO proposed rule requesting “substantial changes” to “restore balance to the risk versus reward equation.” The AHA’s suggestions, outlined in a June 1 letter to CMS, were accompanied by a second letter to CMS and OIG regarding the ACO fraud and abuse waivers and a third letter to the DOJ, FTC, and HHS regarding antitrust enforcement policy.
ACO Rule – Citing “continued barriers to clinical integration,” the AHA suggested changes regarding shared savings, quality measures, and operational flexibility. The AHA urged CMS to allow all ACOs to share in first-dollar savings, reduce the number of initial quality measures, and assign beneficiaries prospectively.
Fraud and Abuse Waivers – In its letter to CMS and OIG regarding fraud and abuse waivers, the AHA wrote that the proposal “will provide little practical value” to potential applicants. According to the AHA, the Stark regime, premised on keeping providers at arm’s length, does not fit the ACO program, which is premised on integration and occasional in-kind contributions from participants. As such, the AHA stated that the Stark exceptions do not contemplate the exchange of value of ACO collaboration. Instead, the AHA suggested creation of a waiver covering ACO activities from formation through end of participation in the ACO program.
Antitrust Enforcement Policy – Calling the regulations applicable to the antitrust laws “deeply disappointing” and lacking in “actual guidance to aid the hospital field in moving forward with clinically integrated organizations,” the AHA outlined its concerns. The AHA commented that CMS lacks authority to issue antitrust regulations or delegate to the DOJ or FTC the authority to block certain ACOs. The AHA wrote that the proposed rule “transforms antitrust enforcement into a regulatory scheme.” The AHA also cited the burdensome cost and time commitment required to conduct the sophisticated ACO antitrust analysis and suggested that the mandatory review threshold is too low. Instead, the AHA suggested that antitrust regulations should be restored to its role of “creat[ing] or maintain[ing] the conditions of a competitive marketplace.”
The letters are available via the AHA website.
The Centers for Medicare and Medicaid Services (CMS) today released a proposed rule regarding the release and use of Medicare claims data to measure and produce public reports on physicians, hospitals, and other health care providers. CMS explains that these reports will combine private sector claims data with Medicare claims data to identify which hospitals and doctors provide the highest quality, cost-effective care.
The rule allows qualified entities to receive standardized extracts of claims data under Medicare Parts A, B, and D. A qualified entity is defined as a public or private entity that: (1) is qualified, as determined by HHS, to use claims data to evaluate the performance of providers of services and suppliers on measures of quality, efficiency, effectiveness, and resource use; and (2) agrees to meet the requirements of certain eligibility requirements detailed in the proposed rule.
Under the proposed rule, CMS will evaluate an organization’s qualifications across three areas:
- Organizational and governance capabilities
- Addition of claims data from other sources
- Data privacy and security
Organizations will be evaluated individually, and the number of qualified entities would not be limited. Any entity that meets the eligibility criteria would be able to become a qualified entity. CMS suggests that a successful applicant should have an established track record of profiling providers of services and suppliers as well as demonstrated expertise in handling claims data and calculating performance measures for a period of at least three years. In addition, a successful applicant must have thoroughly documented data privacy and security practices, including enforcement mechanisms.
Applicants should submit the following information as part of their application for qualified entity status:
- The measures the applicant intends to use, including the methods of creating and disseminating reports;
- The report review process the applicant would use to afford providers of services and suppliers with reports confidentially prior to public release, including addressing requests for data and error correction; and
- A prototype for the required reports, including any narrative language, and dissemination plans for providing reports to the public.
The proposed rule is scheduled for publication in the Federal Register on June 8th. CMS seeks public comment on this proposed rule.
On June 1, 2011 the Centers for Medicare and Medicaid Services (CMS) issued a final rule prohibiting Medicaid payments to providers for conditions that are reasonably preventable. These provider-preventable conditions (PPCs) are based on the Medicare nonpayment policy for preventable conditions and include two distinct categories of conditions:
- Health care acquired-conditions (HCACs) apply to all inpatient hospital settings and include the full list of Medicare’s hospital acquired conditions (HACs)
- Other provider-preventable conditions (OPPCs) apply broadly to inpatient and outpatient settings and include, at a minimum, three Medicare National Coverage Determinations: surgery on the wrong patient, wrong surgery on a patient, and wrong site surgery.
Although Medicare requirements are the minimum under the rule, states are permitted and encouraged to identify additional OPPCs, which may be approved by CMS.
The final rule mandates that Medicaid State Plans require providers to identify and report PPCs that are associated with claims for Medicaid payment or with courses of treatment furnished to Medicaid patients for which Medicaid payment would otherwise be available.
The rule implements provisions of the health care reform legislation, which require the Secretary of Health and Human Services to identify current state practices that prohibit payments for HCACs and incorporate appropriate practices into the Medicaid regulations. The final rule outlines this research, noting that 21 states currently have nonpayment policies for HCACs that use Medicare’s HACs, and at least half of these states exceeded Medicare’s HAC requirements. CMS analyzed the variation between the states and concluded that the use of evidence-based measures and the push for quality are appropriate as a foundation for the regulation, leaving room for state flexibility to design individual HCAC policies.
The final rule is effective July 1, 2011, but CMS intends to delay enforcement of the rule until July 1, 2012. In order to comply with the regulations, states must update Medicaid State Plans and amend any managed care contracts no later than July 1, 2012.
The press release is available via the CMS website.
The Centers for Medicare & Medicaid Services (CMS) is accepting public comments on the proposed rules for Accountable Care Organizations until 5:00 pm on June 6, 2011.
Comments may be submitted to CMS electronically via this link; by regular, express, or overnight mail; or by hand or courier.
The proposed regulations are available here (pdf).
