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Tuesday, July 26, 2011
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Decisions and Developments
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July 2011, vol. 26, no. 11
In the July 2011 issue Dennis Barry's Reimbursement Advisor, authors examine the new occupational mix adjustment that will be in place for federal fiscal year 2013, Medicare's finalized value-based purchasing program and time lag between Provider Reimbursement Review Board hearings and decisions.
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Headlines
from Medicare and Medicaid Guide
Court broadens reach of False Claims Act
A whistle-blower suit against sponsors of Medicare managed care
plans must be allowed to proceed on a theory of implied certification
of compliance with the anti-kickback statute, the Third Circuit Court
of Appeals has ruled, reversing the district court decision dismissing
the case.
The plan sponsors
Medicare Advantage (MA) or Medicare Part C, is the managed care
option for Medicare beneficiaries. Part C plan sponsors, which are
insurance companies, are awarded contracts to provide Medicare benefits
through health maintenance organizations or other managed care plans,
in return for capitated payments from Medicare. CMS regulations govern
many aspects of the plans, including marketing to potential beneficiaries
and grievance procedures.
Two former employees of the plan sponsors sued under the False
Claims Act, alleging that the employer paid providers to enroll their
patients in the employer’s MA plans, paid others for leads and
referrals, and made gifts to potential enrollees exceeding the $15
limit. They contended that the employers’ practices violated
both the marketing regulations and the anti-kickback law. Requests
for payment of federal funds usually include a certification of compliance
with federal legal and regulatory requirements.
The relators argued that compliance with legal requirements
is implied in every claim for federal payment. Because the MA organizations
submitted claim for federal funds from CMS while it was engaging in
these unlawful practices, the claims were false claims under the Act.
Defining false claims
The court distinguished between factual falsity and legal falsity;
factual falsity involves statements about the goods or services under
the contract, while legal falsity involves statements of compliance
with the law. When a federal contractor certifies that it has complied
with legal requirements and has not, the claim is legally false. The
complaint alleged that the MA organizations falsely certified that
they were in compliance with federal law and regulations, specifically,
the anti-kickback laws and marketing restrictions.
The trial court dismissed the complaint on the ground that it
contained no allegations of specific false statements made to obtain
payment of specific claims. A false certification of compliance with
federal law could not be the basis for recovery unless the law was
specifically mentioned in the certification and compliance was a requirement
for payment.
In addition, the trial court ruled, neither the violation legal
limits on the marketing practices of MA plan sponsors nor the alleged
kickbacks could be the basis of a False Claims lawsuit because compliance
was not a condition of payment.
The marketing regulations
The Court of Appeals agreed that compliance with the marketing
regulations was not a condition of payment. The regulations include
an enforcement mechanism that usually requires an opportunity for
correction before sanctions may be imposed and condition of participation,
but not a condition of payment provides for further review.
The court reasoned that these provisions reflected an intention
to allow violators to continue to receive payments while the violations
were addressed. Put another way, compliance was not material because
it did not affect the decision whether to pay. On the other hand,
compliance with the anti-kickback law was a condition of payment.
Implied false certification
The court specifically recognized implied false certification
of compliance as a basis for suits under 31 U.S.C. §3729(a)(1),
which does not specifically require an express false statement. Under
an implied false certification theory, the statement is implied from
the statutes, regulations, contracts and other material governing
the parties’ transactions. CMS MA guidelines specify that compliance
with the anti-kickback statute is a condition required for payment.
To plead implied false certification, the relators must allege
only that the other party knowingly: (1) submitted claims for payment
to the federal government, while it (2) violated the anti-kickback
statute. More specificity regarding the claims will be required to
defeat a motion for summary judgment, however.
U.S. ex rel. Wilkins v. United Health Group,
Inc., 3rd Cir., June 30, 2011, 303,816.
Amended complaint is needed for challenge to
outlier rules
A challenge to the validity of Medicare regulations that provide
additional payments for costly hospital care is dismissed in part,
with instructions from the court that an amended complaint be filed.
The complaint filed by twenty-nine organizations that own or operate
hospitals participating in the Medicare program identifies the issue
as the amount of Medicare outlier payments due to them
for services provided under the Medicare program for fiscal years
1998 - 2006.
The issues in the case, however, are not ordinary payment appeals.
The U.S. District Court for the District of Columbia said that the
hospital organizations admitted that, at the heart of the case is
a wide-ranging challenge to the way the Secretary of HHS implemented
the outlier payment system.
The issues to be clarified
Outlier payments are authorized by law to compensate hospitals
for the care of some patients whose hospitalization is extraordinarily
costly or lengthy. Each fiscal year, the Secretary determines a fixed
dollar amount that, when added to the DRG prospective payment, serves
as the cutoff point triggering eligibility for outlier payments.
The court granted a motion to dismiss from the Secretary insofar
as it seeks dismissal of (a) claims under the Medicare Act based upon
allegations challenging the Secretary’s “implementation”
and “enforcement” of the outlier payment system that are
unconnected to any discrete agency action, and (b) a claim under the
Mandamus Act. The motion is otherwise denied.
The complaining organizations are required to file a “notice
of claims” with the court identifying each circumscribed, discrete
agency action that they intend to challenge. This submission must
include references to each iteration of the outlier payment regulations
and fixed loss threshold regulations that are challenged in this action,
with citations to the Code of Federal Regulations or the Federal
Register, as appropriate. In response, the Secretary must
serve and file an answer to the amended complaint.
On or before Wednesday, August 10, 2011, the parties must file
a joint status report with the court proposing a schedule for proceeding
in this action.
Banner Health v. Sebelius, July 15,
2011, ¶303,823.
HHS proposes standards for health insurance
exchanges
HHS has taken a significant step toward the implementation of
the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148)
by proposing requirements for the creation and operation of Affordable
Insurance Exchanges.
Under PPACA, individuals who lack access to affordable minimum
essential coverage will be able to purchase them through the Exchanges,
which will serve as a kind of clearinghouse for information about
the qualified health plans available. Small employers will have the
opportunity to obtain group coverage for their employees through the
small business health options program (SHOP).
Excvanges must be established for every state and territory.
States have the option to establish and set requirements for the Exchanges.
HHS will establish Exchanges in states that choose not to do so.
Formation of the exchanges
A state may combine with one or more other states to establish
a regional Exchange, or it may form one or more subsidiary Exchanges
to operate in geographically distinct areas, as long as one Exchange
operates in every area of the state. The entity administering an Exchange
may be a state agency or a nonprofit organization organized under
and subject to the law of the state.
If it is not an existing state agency, it must have an independent,
clearly defined governing board meeting certain requirements. The
entity must have expertise in health insurance and benefits administration
but may not be an issuer or be treated as an issuer of health insurance.
States that intend to operate an exchange must present an Exchange
plan to HHS for its approval. The insurers also must submit their
proposed QHPs to HHS so that the Secretary may determine whether the
plans meet the requirements for qualified health plans (QHPs). The
Exchanges must receive either full or conditional approval by January
1, 2013, in order to be operational in time to begin the first open
enrollment period October 1, 2013. If a state will not have an operational
Exchange by that date, HHS may create it or hire a contractor to do
so.
Functions of the exchanges
The Exchange in each area would certify the compliance of QHP
issuers with exchange requirements. States could impose taxes or user
fees or other charges to cover the costs of the exchange program,
which must become self-sustaining; the Exchange could receive no federal
funds on or after January 1, 2015.
Additional functions of the Exchange include
determination of individuals’ eligibility to purchase
coverage from a QHP through the exchange; issuance of exemption certificates; oversight of the financial integrity and financial disclosure
requirements applicable to issuers of QHPs; and evaluation of quality improvement strategies and assessment
and ratings of the QHPs’ health quality and outcomes, information
disclosures and data reporting. To help consumers, each Exchange must develop and operate a
toll-free call center to take questions and an internet web site with
detailed information about each QHP available in the state. The site
must include an exchange calculator to allow consumers to determine
costs after the application of any premium tax credits to be paid
in advance. Tools on the site also would allow consumers to compare
QHPs’ benefits, cost sharing, customer satisfaction and medical
loss ratios. States also could receive grant funds to develop a Navigator,
an independent entity with expertise to perform outreach, education
and referrals to help individuals enroll in QHPs and direct their
grievances or complaints to the appropriate officials.
SHOPs
The Exchange plan must provide for the establishment of the
small business health options programs (SHOP). The SHOP may be operated
by a separate entity, although states are encouraged to combine the
exchanges for individual QHPs and the SHOPs in one entity. SHOPs would
determine the eligibility of employers and employees to purchase group
QHP coverage.
Until January 1, 2016, states may limit the availability of
SHOPs to employers with 50 or fewer employees. Thereafter, small employers
will be those with 100 or fewer employees. At a minimum, qualified
employers must make the coverage available to all full-time employees.
Qualified employers would be permitted to seek coverage through
SHOP at any time during the year. Each year, before the employees’
open enrollment period, the employers would have an election period,
during which they could change their contributions or the QHPs they
make available to their employees. The employees’ open enrollment
period would occur after the election period but before the end of
the plan year, the 12-month period during which the plan is effective.
QHP issuers could offer coverage at four levels, referred to
as bronze, silver, gold and platinum. The Proposed rule would require
them to offer at least one plan at the silver level and one at the
gold level as well as child-only policies. Issuers would be required
to make disclosures to the exchange of their claims denial and payment
policies, enrollment and disenrollment data, financial information,
number of claims denied, rating practices and cost sharing.
QHP issuers also would be required to submit justifications
for their proposed rate increases to the exchange and place them prominently
on the issuers’ web site. Rates must remain the same for the
entire benefit year (for individual coverage) or plan year for SHOP
policies. The HIEs also could set requirements for network adequacy.
Submission of comments
CMS must receive any written comments on the Proposed rule by
5:00 p.m. eastern time, September 28, 2011. The Proposed rule is included
as Part 4 of this report.
Proposed rule, 76 FR 41866, July 15,
2011, ¶229,012.
HHS proposes risk-spreading programs for insurance
reform
HHS has proposed a new set of regulations to be added to Title
45 of the federal regulations to establish standards for the establishment
and operation of a transitional reinsurance program, temporary risk
corridors, and a permanent risk adjustment program for private health
insurance plans, as required by the Patient Protection and Affordable
Care Act (PPACA) (P.L. 111-148).
Health insurance reform
Starting in 2014, individuals and small businesses will be able
to purchase private health insurance through state-based competitive
marketplaces called Affordable Insurance Exchanges. The risk-spreading
mechanisms required by the Act, which will be implemented by the Secretary
of HHS and the states, are designed to mitigate the potential impact
of adverse selection and provide stability for health insurance issuers
in the individual and small group markets.
In its Proposed rule, HHS explains that, to reach the goals
of high quality, affordable health insurance coverage, the possible
negative effects of adverse selection need to be minimized. Adverse
selection occurs when each new health insurance purchaser understands
his or her own potential health risk better than health insurance
insurers do, and health insurance issuers are therefore less able
to accurately price their products.
To avoid adverse selection, issuers may set premiums higher
than necessary in order to offset the potential expense of high-cost
enrollees. This uncertainty could also result in an issuer being more
cautious about offering certain plan designs in an Exchange. This
risk will be greatest in the first years of the Exchange, and become
less as the new market matures and issuers learn more about new enrollees.
To minimize the negative effects of adverse selection and foster
a stable marketplace from year one, the Affordable Care Act establishes
transitional reinsurance and temporary risk corridor programs, and
a permanent risk adjustment program to provide payments to health
insurance issuers that cover higher-risk populations and to more evenly
spread the financial risk borne by issuers.
Program oversight for the transitional reinsurance program,
which provides funding to plans that enroll highest cost individuals,
would be provided by the state and HHS would provide oversight for
the temporary risk corridors, which limit issuer loss (and gains).
The state also would provide oversight for the permanent risk adjustment
program, which would transfer funds from the lowest risk plans to
highest risk plans.
Comments
Comments must be received by HHS no later than 5 p.m. Eastern
Standard Time on September 28, 2011.
Proposed rule, 76 FR 41930, July 15,
2011, 220,844.
CMS must ensure implementation of fraud detection
systems
Medicare and Medicaid are high-risk programs, according to the
Government Accountability Office (GAO), because of their susceptibility
to improper payments due to fraud, waste, and abuse and the submission
of duplicate claims. According to the GAO, CMS must extensively implement
the information technology system programs it developed, specifically
the Integrated Data Repository (IDR) and One Program Integrity (One
PI).
CMS plans to gather data from IDR about beneficiaries, providers,
and procedures to find billing aberrancies or outliers. CMS plans
to use the One PI system to provide access to IDR data, analytical
tools, and portal functionality. Although both the IDR and PI are
currently in use, not all IDR data has been incorporated as planned
and extensive implementation of One PI has not been accomplished.
Although CMS has made progress towards creating a centralized
data repository and enhancing analytical capabilities for detecting
improper payments, currently, the use of IDR and One PI does not allow
CMS to identify, measure, and track financial benefits realized from
the reduction of improper payments as a result of the implementation
of either system.
GAO recommends that CMS:
finalize plans and develop schedules for incorporating
additional data into IDR that will identify all resources and activities
needed to complete tasks and identify risks and obstacles to the IDR
program; implement and manage plans for incorporating data in IDR
to meet schedule milestones; establish plans and schedules for training all program
integrity analysts who will use One PI; establish deadlines for program integrity contractors
to complete training and use One PI in their work; define any measurable financial benefits expected from
the implementation of IDR and One PI; and establish measurable, outcome-based performance measures
for IDR and One PI that measure progress toward meeting program goals.
, GAO-11-475 and GAO-11-822T,
June 30, 2011, and July 12, 2011, ¶68,029
and ¶68,030.
Criminal fraud convictions against Medicaid
agency upheld
A federal appeals court upheld the health care fraud and conspiracy
convictions of two employees of a supplier of personal care services
to children with disabilities and a parent whose children were clients
of the supplier. All three falsified documentation of claims for services
that were not provided. The supplier’s employees paid the parent
for certifying the times, dates and services furnished.
The court rejected the parent’s defense that cognitive
disabilities that prevented her from forming the intent to commit
fraud because of expert testimony that she knew right from wrong and
that lying, stealing and pretending to be someone else were wrong,
and because of other evidence that she had a driver’s license,
wrote and cashed checks, and took the tests posing as the employee
and that others who knew her did not suspect she had any cognitive
deficiencies.
The court ruled the trial court improperly admitted testimony
that one of the employees took children to her house and allowed them
to use marijuana and alcohol because these facts were not intrinsic
to the crime of fraudulent Medicaid claims; however, the error was
harmless because it was a small part of the evidence presented and
the court gave an appropriate jury instruction.
The two-level enhancement of the parent’s sentence for
using her minor children to complete the false documents was appropriate
because the children actively participated in the fraud when they
copied the forms with their mother and an employee. The enhancement
for obstruction of the investigation was appropriate because the parent
lied to investigators with the intent to impede the investigation,
notwithstanding that the investigators already had much of the information
they needed.
United States v. Girod, 5th Cir., July
11, 2011, ¶303,817.
Specialist care difficult for Medicaid children
Children whose healthcare is covered by Medicaid or the Children’s
Health Insurance Program (CHIP) have more difficulty obtaining access
to specialists’ services than those with private insurance.
Most primary care physicians (PCP) who treat children accept Medicaid
and CHIP beneficiaries, and PCPs are less likely to exclude or limit
new patients with public benefits. However, 84 percent of the PCPs
who accepted Medicaid and CHIP patients had difficulty referring them
to specialists, with 34 percent reporting great difficulty.
In contrast, 75 percent of physicians experienced no difficulty
referring privately insured children, and less than 1 percent reported
great difficulty.
According to the GAO, nationwide, physicians participating in
Medicaid and CHIP are generally more willing to accept privately insured
children as new patients than children enrolled in Medicaid or CHIP.
About 79 percent of physicians who participate in Medicaid and CHIP
accept all privately insured children as new patients, compared to
about 47 percent for children in Medicaid and CHIP.
Nonparticipating physicians—those not enrolled or not
serving Medicaid and CHIP children—most commonly cite administrative
issues such as low and delayed reimbursement and provider enrollment
requirements as limiting their willingness to serve children in these
programs.
GAO recommended that CMS change its reporting requirements so
that state agencies would track the extent to which the children received
the specialists’ services they needed. HHS, in its reply, clarified
some of the data in the report. It noted that according to GAO’s
figures, 47 percent of physicians are accepting all new Medicaid and
CHIP patients, and 44 percent of physicians say they will accept some new
Medicaid or CHIP patients, leaving only 9 percent who say they will
not accept any new Medicaid patients.
HHS also pointed that in the sample of physicians reported on
in the study, 60 percent had patient loads that were less than 20
percent children.
GAO Report No. GAO-11-624, June 30,
2011, ¶68,028.
Average time for PRRB decisions? 425 days
This story was excerpted from the July 2011 “Dennis
Barry’s Reimbursement Advisor.”
Providers going before the Provider Reimbursement Review Board
(PRRB) are always anxious to receive the Board's decision, and often
ask how long it will take for the Board to issue a decision. As a
very rough rule of thumb, it takes approximately a year for the PRRB
to issue a decision after a hearing has been completed, but there
is substantial variation.
We examined PRRB decisions issued from January 2010 to early
May 2011. Of the 67 decisions analyzed, the average time elapsed between
the original hearing date (or the last day of multiday hearings) and
the date of the PRRB decision was 425 days.
The fastest turnaround time was PRRB Decision Number 2010-D36,
which took 13 days from hearing to decision. The longest turn-around
time was PRRB Decision Number 2011-D7, which took 953 days.
Both ends of the spectrum are very unusual, and the average
is distorted by a few decisions for which there was a very long delay
in their issuance. While we are not aware of the reasons why any particular
decision since January 2010 has been delayed, one reason that the
PRRB may have difficulty in issuing a decision is that a new appointee
is required to break the tie.
Decisions and Developments
CMS Manuals
Influenza virus vaccine
Medicare
Benefit Policy Manual, Pub. 100-02, Transmittal No. 145,
July 8, 2011, ¶159,661.
cellular immunotherapy treatment
of metastatic prostate cancer
Medicare National
Coverage Determinations Manual, Pub. 100-03, Transmittal
No. 133, July 8, 2011, ¶159,662.
Influenza virus vaccine
Medicare
Claims Processing Manual, Pub. 100-04, Transmittal No. 2253,
July 8, 2011, ¶159,663.
Autologous cellular immunotherapy treatment
of metastatic prostate cancer
Medicare Claims
Processing Manual, Pub. 100-04, Transmittal No. 2254, July
8, 2011, ¶159,664.
Notice of new interest rate for Medicare overpayments
and underpayments - 4th notification for FY 2011
Medicare
Financial Management Manual, Pub. 100-06, Transmittal No.
190, July 12, 2011, ¶159,665.
Add physician specialty codes for cardiac
electrophysiology (21) and sports medicine (23) to CROWD Forms F (ParDoc)
and 8 (OptOut)
Medicare Financial Management
Manual, Pub. 100-06, Transmittal No. 191, July 13, 2011, ¶159,666.
Quarterly update to the end-stage renal disease
prospective payment system
Medicare Claims
Processing Manual, Pub. 100-04, Transmittal No. 2255, July
15, 2011, ¶159,667.
Affordable Care Act, Section 3113 - laboratory
demonstration for certain complex diagnostic tests (This CR fully
rescinds and replaces CR 7278)
Demonstrations
Manual, Pub. 100-19, Transmittal No. 74, July 15, 2011, ¶159,668.
Implementing the recompetition award for the
jurisdiction D DME Medicare Administrative Contractor (MAC) workload
One-Time Notification Manual, Pub. 100-20,
Transmittal No. 911, July 15, 2011, ¶159,669.
Durable medical equipment national competitive
bidding: correction to permit payment for certain grandfathered accessories
and supplies
One-Time Notification Manual,
Pub. 100-20, Transmittal No. 912, July 15, 2011, ¶159,670.
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