Ways and Means Committee to Markup Medicare Fraud, Competitive Bidding, and other Medicare Policy Bills

On February 26, 2015, the House Ways and Means Committee is scheduled to vote on the following bills:

  • H.R. 1021, “Protecting the Integrity of Medicare Act of 2015” – a sweeping bill to promote Medicare program integrity and efficiency. Among many other things, the bill would: eliminate civil money penalties for inducements to physicians to limit services that are not medically necessary; create a Part D drug management program for beneficiaries at risk of prescription drug abuse; require MACs to establish improper payment outreach and education programs for providers; expand the Senior Medicare Patrol program; require the HHS Secretary to issue guidance on the application of the “Common Rule” protecting individuals involved in research; and require the Secretary to issue a report on how to establish a permanent physician-hospital gainsharing program.
  • H.R. 284, “Medicare DMEPOS Competitive Bidding Improvement Act of 2015” -- which would require Medicare suppliers that bid under a durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program to submit binding bids or risk forfeiture of a surety bond.
  • H.R. 876, “NOTICE Act” – which would require hospitals to provide certain notifications to individuals classified as being under observation status rather than admitted as inpatients.
  • H.R. 887, “Electronic Health Fairness Act of 2015” -- which addresses the treatment of patient encounters in ambulatory surgical centers in determining meaningful electronic health record use.

OIG Announces Plans for Health Reform Oversight Activities

On February 24, 2015, the HHS Office of Inspector General (OIG) released its “Health Reform Oversight Plan” for FY 2015, which describes the OIG’s current and planned efforts to oversee the implementation and management of HHS programs under the ACA. The plan outlines the OIG’s key tactical considerations (e.g., assessing relative risks; monitoring emerging issues and trends, conducting reviews, and addressing allegations of fraud); identifies primary focus areas, both in the health insurance Marketplaces and in other ACA-related HHS programs; and sets forth target timeframes for issuing reports on reviews related to the Marketplaces. While the report focuses on audits and evaluations, the OIG notes that it is prepared for and engaged in law enforcement operations related to ACA programs.

CMS Needs More Time to Finalize ACA Rule on Return of Medicare Overpayments

CMS warns requirement to report/return overpayments is in effect even without regulations

The Centers for Medicare & Medicaid Services (CMS) needs more time to finalize its February 16, 2012 proposed rule on reporting and returning of Medicare overpayments, according to a CMS notice to be published on February 17, 2015. The 2012 rule would provide details on implementation of an Affordable Care Act (ACA) provision requiring enrolled providers and suppliers (and certain other enrollees) receiving Medicare funds to report and return Medicare overpayments by the later of 60 days after the date on which the overpayment was identified or, if applicable, the date any corresponding cost report is due. Although the requirement to refund an overpayment already exists in federal law, the proposed rule would clarify what constitutes “identification” of an overpayment, the mechanics of when and how an overpayment must be returned, and the period of time subject to repayment. CMS had received a large number of comments from providers and suppliers and their industry associations that the proposed rule’s refund reporting policies and procedures would impose significant administrative burdens.

The Social Security Act requires public notice if an agency will take more than three years to finalize a proposed rule. CMS states that “the complexity of the rule and scope of comments warrants the extension of the timeline for publication” for an additional year (until February 16, 2016). Specifically, CMS has “determined that there are significant policy and operational issues that need to be resolved in order to address all of the issues raised by comments to the proposed rule and to ensure appropriate coordination with other government agencies.” The agency warns stakeholders, however, that “even without a final regulation they are subject to the statutory requirements found in section 1128J(d) of the Act and could face potential False Claims Act liability, Civil Monetary Penalties Law liability, and exclusion from Federal health care programs for failure to report and return an overpayment.”

GAO Highlights Medicare Program Risks and Recommends Program Integrity Actions

The Government Accountability Office (GAO) has released its latest update to its “High-Risk Series” reports, which again lists Medicare as a high-risk program, in part because of the program’s substantial size and scope, and its wide-ranging effects on beneficiaries, the health care industry, and the U.S. economy. The latest report highlights five areas of particular concern to the GAO: 

  1. Payments and provider incentives in original Medicare (specifically referencing physician feedback reports, physician self-referral policy, high-expenditure Part B drugs, end stage renal disease (ESRD) bundled payments, and low-volume payment adjustments for dialysis facilities);
  2. Medicare Advantage (MA) and other Medicare health plans (including concerns about MA plan payment adjustments and excess payments to Special Needs Plans);
  3. Program design effects on beneficiaries (addressing coordination for dual-eligible beneficiaries, dual-eligible special needs plans, and access to preventive services);
  4. Program management (including implementation of durable medical equipment competitive bidding and oversight of Centers for Medicare & Medicaid Services (CMS) contracts); and
  5. Oversight of patient care and safety (including the use of clinical data registries and oversight of vulnerable Medicare beneficiaries in nursing homes and long-term care hospitals (LTCHs)).

The GAO makes a series of recommendations to Congress and CMS to address program risks. Specifically, GAO recommends that Congress consider directing the HHS Secretary to require providers who self-refer intensity-modulated radiation therapy services to disclose to their patients that they have a financial interest in the service. The GAO also recommends that Congress better align Medicare beneficiary cost-sharing requirements with U.S. Preventive Task Force recommendations.

Specific recommendations for CMS include:

  • Disseminating physician performance feedback reports more frequently;
  • Improving the timeliness and efficacy of CMS’s monitoring of the accuracy of ESRD low volume payment adjustments;
  • Improving the accuracy of the adjustment made for differences in diagnostic coding practices between MA and Medicare fee-for service (FFS) programs;
  • Establishing specific plans for using MA encounter data to risk adjust payments or for other purposes;
  • Evaluating the extent to which dual-eligible special needs plans have provided appropriate care to the population they serve; and
  • Expanding validation surveys at LTCHs to assess accreditation organization identification of deficiencies.

In addition, the GAO lists the following recommendations for CMS to exercise Affordable Care Act authorities to reduce the risk of improper Medicare payments:  

  • Require a surety bond for certain types of at-risk providers and suppliers;
  • Publish a proposed rule for increased disclosures of prior actions taken against providers and suppliers enrolling or revalidating enrollment in Medicare, such as whether the provider or supplier has been subject to a payment suspension from a federal health care program;
  • Establish core elements of compliance programs for providers and suppliers;
  • Improve automated edits that identify services billed in medically unlikely amounts;
  • Develop performance measures for the Zone Program Integrity Contractors who explicitly link their work to the agency’s Medicare FFS program integrity performance measures and improper payment reduction goals;
  • Reduce differences between contractor postpayment review requirements when possible;
  • Monitor the database used to track Recovery Auditor activities to ensure that all postpayment review contractors are submitting required data and that the data the database contains are accurate and complete;
  • Require Medicare administrative contractors to share information about the underlying policies and savings related to their most effective edits; and
  • Efficiently identify and implement an information technology solution that addresses the removal of Social Security numbers from Medicare beneficiaries’ health insurance cards.

Obama Administration Releases FY 2016 Budget Proposal with Medicare/Medicaid Provisions

On February 2, 2015, the Obama Administration released its proposed federal budget for fiscal year (FY) 2016. The budget would impact all types of health care providers, health plans, and drug manufacturers if adopted as proposed – which is unlikely given Republican control of the House and Senate. Nevertheless, Congress can be expected to consider the Medicare and Medicaid savings proposals (many of which are carry-overs from prior budgets) during expected debate in the coming months on Medicare physician fee schedule (MPFS) reform legislation or during future budget negotiations.

The following is a summary of the major Medicare, Medicaid, and related policy proposals contained in the FY 2016 budget proposal.

Medicare Delivery & Payment Reforms

The proposed FY 2016 budget includes a package of Medicare legislative proposals estimated to save $423.1 billion over 10 years (note that the proposals are scored off an adjusted baseline that assumes a zero percent update to Medicare physician payments). Highlights include the following (all savings estimates are for the 10-year period of FYs 2016-2025):

  • Repeal the Sustainable Growth Rate (SGR) formula used to update MPFS payments, and replace it with reforms contained in recent bipartisan reform legislation (including a period of predictable payments followed by reimbursement tied to alternative payment models and value-based purchasing). The Administration estimates that this would cost $44 billion over 10 years.
  • Reduce Medicare payment for services provided in off-campus hospital outpatient departments under the Outpatient Prospective Payment System to either the MPFS-based rate or the rate for surgical procedures covered under the Ambulatory Surgical Center (ASC) payment system. The provision would be phased in over four years beginning in 2017 ($29.5 billion in savings).
  • Implement bundled payment for post-acute care providers, including long-term care hospitals (LTCHs), inpatient rehabilitation facilities (IRFs), skilled nursing facilities (SNFs), and home health agencies (HHAs) beginning in 2020. Payments would be bundled for at least half of the total payment for post-acute care providers, with rates set to produce a permanent and total cumulative adjustment of -2.85% by 2022, with beneficiary coinsurance equal to current levels ($9.3 billion).
  • Allow the Centers for Medicare & Medicaid Services (CMS) to assign more Medicare fee-for-service (FFS) beneficiaries to Federally Qualified Health Centers and Rural Health Clinics that participate in an Accountable Care Organization (ACO) under the Medicare Shared Savings Program ($80 million), and expand the basis for beneficiary assignment for ACOs to include nurse practitioners, physician assistants, and clinical nurse specialists ($60 million).
  • Implement a budget neutral value-based purchasing program for additional provider types, including SNFs, HHAs, ASCs, hospital outpatient departments, and community mental health centers beginning in 2017. At least 2% of payments must be tied to the quality and efficiency of care in the first two years, rising to at least 5% in 2019 (no budget impact).
  • Eliminate the 190-day lifetime limit on inpatient psychiatric facility services: ($5 billion in costs).
  • Reduce market basket updates for IRFs, LTCHs, and HHAs by 1.1 percentage points each year from 2016 through 2025 (the update could not fall below 0%), and reduce SNF updates by -2.5% in FY 2016, tapering down to a -0.97% update in FY 2023 ($102.1 billion).
  • Increase the minimum Medicare Advantage coding intensity adjustment ($36.2 billion).
  • Reduce Medicare coverage of bad debts from 65% in most cases to 25% over three years starting in 2016 ($31.1 billion).
  • Strengthen the Independent Payment Advisory Board (IPAB) by reducing the target rate of Medicare cost growth from gross domestic product plus one percentage point to plus 0.5 percentage point, which would make it easier to trigger Affordable Care Act (ACA) provisions requiring reductions to Medicare provider reimbursement ($20.9 billion).
  • Reduce Medicare indirect medical education add-on payments ($16.3 billion).
  • Exclude radiation therapy, therapy services, advanced imaging, and anatomic pathology services from the in-office ancillary services exception to the prohibition against physician self-referrals (Stark law), except in cases where a practice is “clinically integrated” and demonstrates cost containment, as defined by the Secretary ($6 billion).
  • Adjust the standard for classifying a facility as an IRF; at least 75% of patient cases admitted would be required to meet one or more of 13 designated conditions beginning in 2016 ($2.2 billion).
  • Reduce critical access hospital (CAH) reimbursement to 100% of costs ($1.7 billion) and limit CAH designation eligibility for hospitals within 10 miles of another hospital ($770 million).
  • Expand the Part B benefits to cover short-term scheduled dialysis at a Medicare-certified End Stage Renal Disease (ESRD) facility for the treatment of acute kidney injury ($200 million).
  • Modify documentation requirement for face-to-face encounters for durable medical equipment (DME), orthotics, prosthetics, and supplies (DMEPOS) to allow certain non-physician practitioners to document the face-to-face encounter (no budget impact).

Medicare, Medicaid, & Other Prescription Drug Provisions

  • Provide Medicaid-level drug rebates for brand name and generic drugs provided to Medicare beneficiaries who receive Part D low-income subsidies, beginning in 2017 ($116.1 billion).
  • Accelerate manufacturer Medicare Part D “coverage gap” discounts from 50% to 75% beginning in plan year 2017 ($9.4 billion).
  • Reduce payment for physician-administered Medicare Part B drugs from 106% to 103% of average sales price (ASP) starting in 2016. If a physician’s cost for purchasing the drug exceeds 103% of ASP, the drug manufacturer would be required to provide a rebate to ensure that the provider’s net cost to acquire the drug equals 103% of ASP minus an overhead fee to be determined by the Secretary. The Secretary would be authorized to pay a portion of the entire amount above ASP as a flat fee rather than a percentage in a budget-neutral manner ($7.4 billion).
  • Extend Medicare Secondary Payer reporting requirements to group health plans offering prescription drug coverage ($480 million).
  • Authorize the Secretary to negotiate Part D prices for biologics and high-cost prescription drugs eligible for placement on a plan’s specialty tier (no budget impact).
  • Authorize the Secretary to require high-risk Medicare beneficiaries to use certain prescribers and/or pharmacies to obtain controlled substance prescriptions under Part D; allow the Secretary to suspend coverage and payment for Part D drugs prescribed by providers who have misprescribed or overprescribed drugs with abuse potential, or that that pose an imminent risk to patients; and allow the Secretary to require additional information on certain Part D prescriptions, such as diagnosis and incident codes, as a condition of coverage (no budget impact).
  • Encourage the use of generic drugs by Part D low-income subsidy beneficiaries by modifying copayments ($8.9 billion).
  • Increase the availability of generic drugs and biologics by authorizing the Federal Trade Commission (FTC) to stop companies from entering into “pay for delay” agreements ($10.1 billion) and modifying the length of exclusivity on brand name biologics ($4.4 billion).
  • Lower Medicaid drug costs by clarifying the definition of brand drugs, collecting an additional rebate for generic drugs when prices grow faster than inflation, and including certain prenatal vitamins and fluorides in the rebate program. The plan also would make a technical correction to the ACA alternative rebate for new drug formulations; limit to 12 quarters the timeframe for which manufacturers can dispute drug rebate amounts; exclude authorized generic drugs from average manufacturer price calculations for determining rebate obligations for brand drugs; calculate Medicaid federal upper limits based only on generic drug prices; and exempt emergency drug supply programs from the Medicaid rebate calculations. ($6.3 billion.)
  • Require manufacturers to pay Medicaid rebate equal to the entire amount that the state has paid for the drugs in cases where the state improperly reported non-drug products as covered outpatient drugs, or where the state improperly reported drugs that the Food and Drug Administration (FDA) has found to be less than effective. The budget also would allow more regular audits and surveys of manufacturers to ensure compliance with Medicaid drug rebate agreement requirements; require drugs to be electronically listed with the FDA to receive Medicaid coverage; and increase penalties for reporting false information for the calculation of Medicaid rebates. ($10 million.)
  • Fully fund a nationwide retail pharmacy survey incorporating prices paid by cash-paying, third-party insured, and Medicaid insured consumers. The funding also permits collection of actual invoice prices from retail community pharmacies to enable states to set reasonable payment rates to pharmacies. CMS would be authorized to collect wholesale acquisition costs for all Medicaid covered drugs. ($30 million in costs.)
  • Requires states to track high prescribers and utilizers of Medicaid prescription drugs ($710 million).

Major Program Integrity Provisions

  • Expand funding for the Health Care Fraud and Abuse Control (HCFAC) program, the Medicaid Integrity Program, and Medicaid Fraud Control Units, and other HHS program integrity efforts.
  • Expand the current authority to exclude individuals and entities from federal health programs if they are affiliated with a sanctioned entity by closing a “loophole” that allows an officer, managing employee, or owner of a sanctioned entity to avoid exclusion by resigning his or her position or divesting his or her ownership; and extending the exclusion authority to entities affiliated with a sanctioned entity ($70 million).
  • Authorize civil monetary penalties for providers who do not update enrollment records ($29 million).
  • Establish a registration process for clearinghouses and billing agents that act on behalf of Medicare providers and suppliers (no budget impact).
  • Expand CMS’s authority to require prior authorization for all Medicare FFS items, and mandate prior authorization of advance imaging services and power mobility devices ($90 million).
  • Increase the minimum amount of the HHA surety bond to $50,000 (no budget impact).
  • Authorize Medicaid Fraud Control Units to investigate and prosecute allegations of abuse or neglect of Medicaid beneficiaries in non-institutional settings (no budget impact).
  • The budget includes several provisions to reform the Medicare appeals process, including allowing Department of Health and Human Services (HHS) to retain a portion of Recovery Audit Contractor recoveries to fund related appeals; increasing the minimum amount in controversy required for Administrative Law Judge adjudication; allowing the Office of Medicare Hearings and Appeals (OMHA) to use attorney adjudicators for certain claims; establishing expedited OMHA procedures for claims with no material fact in dispute; remanding an appeal to the first level of review when new documentary evidence is submitted into the administrative record at the second level of appeal or above; and authorizing the Secretary to adjudicate appeals through the use of sampling and extrapolation techniques

Other Medicare & Medicare Reforms

  • Revise beneficiary cost-sharing requirements, including increased income-related premiums under Parts B and D ($66.4 billion).
  • Increase Part B deductible for new enrollees ($3.7 billion), and increase premiums for beneficiaries with Medigap policies with particularly low cost-sharing requirements ($4 billion).
  • Establish a new home health copayment ($830 million).
  • Base Medicaid rates for DME on Medicare rates ($4.3 billion).
  • Rebase future Medicaid Disproportionate Share Hospital allotments to account for levels of uncompensated care under ACA coverage expansion ($3.3 billion).

Precision Medicine Initiative

The President proposes a high-profile “Precision Medicine Initiative,” which would provide $215 million to focus on developing treatments, diagnostics, and prevention strategies tailored to the individual genetic characteristics of each patient. This effort includes $200 million for the National Institutes of Health to launch a national research cohort of a million or more Americans who volunteer to share their genetic information, expand current cancer genomics research, and initiate new studies on how a tumor’s DNA can inform prognosis and treatment choices. The budget provides $10 million for the FDA to modernize its regulatory framework to support the development and use of molecular diagnostics in precision medicine, and it provides the HHS Office of the National Coordinator for Health Information Technology (ONC) with $5 million to define standards to enable the exchange of genomic data. The Office for Civil Rights will also work with the participating agencies to ensure that privacy protections are in place.

Note that the budget proposal includes numerous other proposals impacting programs and operations throughout the HHS agencies.

CMS Announces New 6-Month Extension of Moratoria on Enrollment of HHAs, Ambulance Suppliers in Designated Areas

CMS is extending -- for another 6 months -- its current enrollment moratoria for new ground ambulance suppliers and home health agencies (HHAs) in designated metropolitan areas. The moratoria, which affect enrollment in Medicare, Medicaid, and the Children’s Health Insurance Program, apply to new ground ambulances in the Houston and Philadelphia metropolitan areas and new HHAs in the metropolitan areas of Fort Lauderdale, Miami, Chicago, Detroit, Dallas, and Houston. CMS discusses its rationale for extending the enrollment moratoria, including the factors suggesting a high risk of fraud, waste, or abuse, in a notice to be published on February 2, 2015. The extension is effective January 29, 2015. CMS may lift the moratoria before the end of the 6-month period or announce additional extensions.

CMS Announces DMEPOS/Home Health/Hospice RAC, Improvements to RAC Process

CMS has announced that it has awarded the Region 5 Recovery Audit contract to Connolly, LLC (although the General Accounting Office subsequently reported that a bid protest has been filed regarding this award). The purpose of this contract will be to identify improper Medicare payments for durable medical equipment (DME), orthotics, prosthetics, and supplies and home health/hospice (HH/H) claims and work with CMS and the DME and HH/H MACs to adjust claims to recoup overpayments and pay underpayments. CMS observes that this award marks the beginning of the new Recovery Audit contracts, and it is the first contract to incorporate a series of changes intended to reduce the provider burden and increase program transparency (e.g., ADR limits, RAC accuracy threshold).

Annual OIG Solicitation of Anti-Kickback Safe Harbor, Fraud-Alert Topic Proposals

Today the HHS Officeof Inspector General (OIG) published its annual solicitation of recommendations for new or modified safe harbor provisions under the federal anti-kickback statute, as well as potential topics for new OIG Special Fraud Alerts. Comments will be accepted until March 2, 2015. 

In a separate report, the OIG discusses three safe harbor proposals received in response to its 2013 solicitation:

  • A new safe harbor protecting free continuing medical education programs offered by hospitals to physicians – The OIG is not adopting this suggestion, stating that the concept of free programs could vary greatly and should be addressed on a case-by-case basis, such as under the advisory opinion process.
  • A new safe harbor that would permit health care providers and suppliers in certain circumstances to compensate individuals in clinical trials and to provide services related to the clinical trials at no cost, including the waiver of cost-sharing obligations – The OIG is considering the adoption of a safe harbor that would protect the waiver of cost-sharing obligations and possibly other incentives to participants in clinical trials sponsored by certain federal government entities.
  • A new safe harbor protecting clinically integrated networks’ entry into contracts with commercial third party payors for value-based payments, including pay-for-performance bonuses and shared savings awards for high quality and cost-effective health care – The OIG believes the issues raised in the proposal require further study.

Congressional Panels Seek Input on Medicare Fraud & Abuse, LDT, GME Legislation

In preparation for legislative activity early next year, various lawmakers have issued open requests for feedback on several health policy initiatives. For instance:

  • The House Ways and Means Health Subcommittee chairman and ranking member have released a bipartisan bill including a variety of Medicare fraud/abuse provisions, covering such issues as recovery audit contractors, prevention of Medicare Part D prescription drug abuse, elimination of civil monetary penalties for inducements to physicians to limit services that are not medically necessary, and others.
  • The House Energy and Commerce Committee is seeking feedback on the regulation of in vitro diagnostic test kits and laboratory developed tests (LTDs); comments are due by January 5, 2015.
  • The Energy and Commerce Committee also is requesting comments on graduate medical education (GME) financing, federal program governance and structure, and how it might be improved or restructured. Feedback is due by January 16.

OIG Issues Fall 2014 Semiannual Report to Congress

The OIG has issued its Semiannual Report to Congress for the period of April 1 – September 30, 2014, in which it highlights significant investigation, audit, and enforcement activities and achievements across HHS programs during the six-month period and for all of FY 2014. The OIG reports expected recoveries exceeding $4.9 billion during FY 2014, consisting of almost $834.7 million in audit receivables and about $4.1 billion in investigative receivables (including about $1.1 billion in non-HHS investigative receivables, such as states’ shares of Medicaid restitution). In FY 2014, the OIG also reported: exclusions of 4,017 individuals and entities from participation in federal health care programs; 971 criminal actions against individuals or entities; and 533 civil actions (including false claims and unjust-enrichment lawsuits filed in federal district court, CMP settlements, and administrative recoveries related to provider self-disclosure matters). In addition to discussing legal and investigative activities, the report recaps various reports issued by the OIG over the 6–month period. It also responds to public suggestions for new anti-kickback safe harbors related to hospital continuing medical education programs, clinical trial participant compensation, and contracts between clinically integrated networks (CINs) and commercial third party payors for value-based payments.

OIG Faults Medicare Payment for HIV Drugs after Beneficiaries' Death

Based on a review of Prescription Drug Event (PDE) records for human immunodeficiency virus (HIV) drugs and other beneficiary records, the OIG determined that Medicare Part D paid for HIV drugs for over 150 deceased beneficiaries in 2012, most of which were dispensed by retail pharmacies. The OIG identified shortcomings in CMS claims edits that reject PDE records for drugs with dates of service more than 32 days after death that allowed payment for drugs that do not meet Medicare Part D coverage requirements. The OIG recommends that CMS eliminate or, if necessary for administrative processing, shorten the window in which it accepts PDE records for drugs dispensed after a beneficiary's death; CMS concurred. The OIG also observes that while its report focuses on HIV drugs, the issues raised are relevant to all Part D drugs.

CMS Finalizes Rule to Strengthen Medicare Provider Enrollment Regulations and Permit Revocations for Patterns/Practices of Improper Claims Submissions; Defers Expanded Awards for Medicare Fraud Tipsters

This post was authored by Elizabeth Carder-Thompson and Debra McCurdy.

On December 5, 2014, the Centers for Medicare & Medicaid Services (CMS) published a final rule that expands the circumstances under which it may deny or revoke the Medicare enrollment of entities and individuals on program integrity grounds, effective February 3, 2015.  

  • Allows CMS to deny the new enrollment of providers, suppliers, and owners that previously were affiliated with an entity with unpaid Medicare debt that existed when the entity’s enrollment was voluntarily terminated, involuntarily terminated, or revoked. This provision applies when (1) the owner left the provider or supplier that had the Medicare debt within one year of that provider or supplier’s voluntary termination, involuntary termination, or revocation; (2) the Medicare debt has not been fully repaid; and (3) CMS determines that the uncollected debt poses an undue risk of fraud, waste, or abuse (based on factors set forth is the final rule). A denial under this provision can be averted if the enrolling provider, supplier, or owner (1) satisfies the criteria set forth in 42 CFR § 401.607 and agrees to a CMS-approved extended repayment schedule for the entire outstanding Medicare debt; or (2) repays the debt in full.
  • Provides that a managing employee’s felony conviction can serve as a basis for denial or revocation of a provider or supplier's enrollment. Specifically, CMS could deny enrollment or revoke Medicare billing privileges if, within the preceding 10 years, the provider or supplier, or any owner or managing employee thereof, was convicted of a federal or state felony offense (including those enumerated in the rule) that CMS determines to be detrimental to the best interests of the Medicare program and its beneficiaries.
  • Enables CMS to revoke Medicare billing privileges if it determines that the provider or supplier has a “pattern or practice” of submitting claims for services that fail to meet Medicare requirements. CMS enumerates the following five factors as ones it will consider prior to imposing a revocation under this authority: (1) the percentage of claims denied; (2) the reasons for the claims denials; (3) a history of final adverse actions; (4) the length of time the pattern has continued; and (5) the length of time the provider or supplier has been enrolled in Medicare. CMS also may consider any other information regarding the provider or supplier’s specific circumstances the agency deems relevant. Importantly, CMS clarifies that its contractors (e.g., Medicare Administrative Contractor, Recovery Audit Contractors) will not be authorized to make determinations under this authority; only CMS itself will make such a determination.
  • Limits the ability of ambulance suppliers to “backbill” for services performed prior to enrollment.
  • Requires all providers and suppliers subject to revocations to submit all of their remaining claims within 60 days after the effective date of such revocation, except that with regard to home health agencies (HHAs), this date will be 60 days after the later of: (1) the effective date of the revocation; or (2) the date that the HHA’s last payable episode ends.
  • Limits the ability of revoked providers and suppliers to submit a corrective action plan (CAP) to situations in which the revocation was based on 42 CFR § 424.535(a)(1), which states in part that a provider or supplier’s billing privileges may be revoked if the provider or supplier is determined not to be in compliance with enrollment requirements. CMS notes that it believes “providers and suppliers generally should not be exonerated from failing to fully comply with Medicare enrollment requirements simply by furnishing a CAP.” Nevertheless, there are situations in which revocations under § 424.535(a)(1) could result when a provider or supplier “had only minimally failed to comply with our enrollment requirements,” and revoking billing privileges “when the problem can be quickly and easily corrected via a CAP could in some instances lead to unfair results.”

Notably, CMS is not finalizing its proposal that would have dramatically increased the potential reward to an individual who provides a tip leading to the recovery of Medicare funds under the Medicare Incentive Reward Program due to the complexity of the operational aspects of the proposed changes,” but CMS may finalize the proposal in future rulemaking.

CMS to Conduct Hyperbaric Oxygen Prior Authorization Pilot Program

CMS intends to conduct a three-year Medicare prior authorization model for non-emergent hyperbaric oxygen therapy services in Illinois, Michigan, and New Jersey, where CMS contends there have been high rates of improper payments for these services. Under this model, CMS will require that all relevant clinical or medical documentation requirements are met before services are rendered to beneficiaries and before claims are submitted for payment; no new clinical documentation requirements will be created. The model is scheduled to begin on March 1, 2015.  CMS also recently announced a similar prior authorization model for repetitive scheduled nonemergent ambulance transports.

DOJ Tallies FY 2014 Fraud Recoveries

The U.S. Department of Justice (DOJ) has announced a record $5.69 billion in civil False Claims Act settlements and judgments for FY 2014, including almost $3 billion in recoveries related to qui tam lawsuits. The DOJ reports $2.3 billion in health care fraud recoveries in FY 2014, primarily involving the Medicare and Medicaid programs.

OIG Identifies Top HHS Management & Performance Challenges

The OIG has released its compilation of “2014 Top Management & Performance Challenges,” highlighting the following 10 most significant management and performance challenges now facing HHS:

  1. Implementing, Operating, and Overseeing the Health Insurance Marketplaces 
  2. Ensuring Appropriate Use of Prescription Drugs in Medicare and Medicaid 
  3. Protecting an Expanding Medicaid Program from Fraud, Waste, and Abuse 
  4. Fighting Waste and Fraud and Promoting Value in Medicare Parts A and B 
  5. Ensuring Quality in Nursing Home, Hospice, and Home- and Community-Based Care 
  6. The Meaningful and Secure Exchange and Use of Electronic Health Information 
  7. Effectively Operating Public Health and Human Services Programs to Best Serve Program Beneficiaries 
  8. Ensuring Effective Financial and Administrative Management 
  9. Protecting HHS Grants and Contract Funds from Fraud, Waste, and Abuse 
  10. Ensuring the Safety of Food, Drugs, and Medical Devices

CMS Announces 3-State Medicare Prior Authorization Model for Repetitive Nonemergent Ambulance Transport

In light of government reports finding high utilization and potential improper Medicare payments associated with repetitive scheduled nonemergent ambulance transports, CMS will test a prior authorization model program for these services in New Jersey, Pennsylvania, and South Carolina. CMS defines repetitive ambulance service as medically necessary ambulance transportation that is furnished in 3 round trips or more times during a 10-day period, or at least once per week for at least 3 weeks. CMS notes that such repetitive ambulance services are often needed by beneficiaries receiving dialysis, wound care, or cancer treatment. The use of prior authorization will not create new clinical documentation requirements for suppliers; instead information that is already required to support Medicare payment will be furnished earlier in the process, prior to rendering services. The prior authorization program is scheduled to begin December 1, 2014 and last three years.

HHS OIG Releases FY 2015 Work Plan

The HHS OIG has posted its FY 2015 Work Plan, which summaries the audit, evaluation, and other legal and investigative initiatives that the OIG intends to conduct in the coming year. The OIG plans numerous reviews of CMS, FDA, and other HHS agency programs, with a particular focus on Medicare and Medicaid reimbursement and program integrity policies. The OIG also forecasts areas that may be the subject of review in future years, including emerging Affordable Care Act marketplace issues, Medicaid expansion, and new Medicare payment and delivery models, among others. The OIG also plans to expand its work on Medicare and Medicaid reimbursement (including Medicaid managed care) and quality of care. The OIG notes that other areas under consideration for new reviews include the integrity of the drug and medical device supply chains; the security of electronic data; the use and exchange of health information technology; and emergency preparedness and response efforts.

OIG Extends Comment Deadline on Permissive Exclusion Criteria

The OIG published a notice today announcing that it is extending the public comment period on its July 11, 2014 notice soliciting recommendations for revising OIG's non-binding criteria for implementing its permissive exclusion authority under Section 1128(b)(7) of the Social Security Act.  The OIG notes that due to a technical problem, the public may have been unable to submit comments during the original comment period. The new comment deadline is December 29, 2014.

CMS Fingerprint-Based Background Checks are Underway - Impacting "High-Risk" Providers and Suppliers

CMS's long-awaited fingerprint-based background check screening process is underway for certain “high-risk” providers and suppliers participating in federal health care programs (specifically, Medicare, Medicaid, and the Children’s Health Insurance Program). Under CMS regulations, individuals who maintain a 5 percent or greater direct or indirect ownership interest in a provider or supplier in the high risk category -- including newly-enrolling home health agencies (HHAs) and newly-enrolling durable medical equipment, orthotics, prosthetics, and supplies (DMEPOS) suppliers -- are subject to a fingerprint-based criminal history report check of the Federal Bureau of Investigations (FBI) Integrated Automated Fingerprint Identification System.

This week CMS announced that the fingerprint-based background check process was launched on August 6, 2014. CMS confirmed that not all providers and suppliers in the “high” screening category will be included in the first phase of the background checks. Fingerprint-based background checks eventually will be required, however, “for all individuals with a 5 percent or greater ownership interest in a provider or supplier that falls into the high risk category and is currently enrolled in Medicare or has submitted an initial enrollment application.”

Medicare Administrative Contractors will send letters to the applicable providers or suppliers listing all 5 percent or greater owners who are required to be fingerprinted, and applicable individuals will have 30 days from the date of the notification letter to be fingerprinted at one of at least three specified locations. Fingerprints will be forwarded to the FBI, which will compile the background history and share results with the Fingerprint-based Background Check (FBBC) contractor (Accurate Biometrics). The FBBC will provide CMS with a "fitness recommendation" for the individual indicating whether the criminal history record information contains enrollment violations or otherwise fails to meet CMS enrollment requirements; CMS will then make the final determination about the provider or supplier.

CMS Again Extends Moratoria on Enrollment of HHAs, Ambulance Suppliers in Designated Areas

CMS has announced that it is extending for an additional 6 months its current enrollment moratoria for new ground ambulance suppliers and home health agencies (HHAs)within designated metropolitan areas. The moratoria, which affect enrollment in Medicare, Medicaid, and the Children’s Health Insurance Program, apply to new ground ambulances in the Houston and Philadelphia metropolitan areas and new HHAs in the metropolitan areas of Chicago, Fort Lauderdale, Detroit, Dallas, Houston, and Miami. CMS discusses its rationale for extending the enrollment moratoria, including the qualitative and quantitative factors suggesting a high risk of fraud, waste, or abuse, in an August 1, 2014 notice.  The extension is effective July 30, 2014.  CMS may lift the moratoria before the end of the 6-month period or announce extensions in the Federal Register notice. 

Older Entries

August 12, 2014 — OIG Self-Disclosure Program for Federal Contractors

August 12, 2014 — OIG Identifies Questionable Utilization of HIV Drugs under Medicare Part D

August 12, 2014 — Ways and Means Committee Seeks Comments on Medicare Program Integrity Bill

July 25, 2014 — Questionable Billing for Medicare Clinical Lab Claims

July 25, 2014 — Senate Aging Committee Calls for Medicare Audit, Local Coverage Policy Reforms

June 25, 2014 — OIG Issues Special Fraud Alert on Lab Payments to Referring Physicians

June 25, 2014 — Congressional Hearings Examine Medicare Fraud, ACA, Digital Health, MedPAC Report, Brain Injuries

June 6, 2014 — Is anybody home? Medicare contractors on the prowl for DMEPOS supplier violations of posted business hours and other physical facility standards.

June 2, 2014 — Congressional Health Policy Hearings

May 27, 2014 — OIG Releases Spring Semiannual Report Highlighting Major Program Integrity Efforts

May 22, 2014 — CMS Proposes Medicare Prior Authorization Process for DMEPOS Subject to "Unnecessary Utilization"

May 20, 2014 — OIG Proposed Rule Would Expand Civil Monetary Penalty Authority

May 16, 2014 — HHS OIG Proposes Expansion of Exclusion Authorities

May 16, 2014 — Another OIG Fraud Rule in the Pipeline: Anti-kickback Safe Harbors, CMPs for Beneficiary Inducements, Gainsharing

May 14, 2014 — OIG Proposes Rules to Expand Exclusion, CMP Authorities

April 28, 2014 — FY 2013 Medicaid Integrity Program Report

April 28, 2014 — Congressional Hearings this Week to Focus on Medicare Fraud, Telehealth

April 16, 2014 — CMS to Implement Fingerprint-Based Background Checks for High-Risk Providers and Suppliers in 2014

April 10, 2014 — Will Physician Payment Sunshine Act Data Usher in a New Era of False Claims Act Litigation?

April 8, 2014 — HHS OIG Identifies "Top 25" Priorities

April 8, 2014 — RACs Correct $2.4 Billion in Medicare Claims in FY 2012

April 8, 2014 — OIG Report: Questionable Billing for Medicare Electrodiagnostic Tests

March 24, 2014 — March Congressional Health Policy Hearings

March 20, 2014 — OIG Issues Annual Report on Medicaid Fraud Control Unit (MFCU) Activities

March 20, 2014 — OIG Highlights Diabetic Test Strip Cost, Compliance Concerns

March 19, 2014 — DME MACs Warn Doctors About DMEPOS Supplier "Marketing Schemes"

March 17, 2014 — D.C. District Court Rules Internal Compliance Investigations Are Not Privileged

March 5, 2014 — Obama Administration Proposes FY 2015 Budget with Medicare, Medicaid Savings Provisions

March 4, 2014 — Obama Administration Cites Record-Breaking Health Fraud Recoveries under Joint DOJ-HHS Program

February 18, 2014 — CMS Extends and Expands Moratoria on Enrollment of Home Health Agency, Ambulance Suppliers in Designated Areas

February 17, 2014 — DOJ Announces Additional Health Care Fraud Recovery Statistics

February 13, 2014 — OIG Releases FY 2014 Work Plan

January 30, 2014 — Omnibus Government Spending Signed to Fund HHS, Other Departments

January 30, 2014 — OIG Finds Medicare Contractors Lax on Medicare Vulnerabilities Associated with EHR Use

January 8, 2014 — CMS Proposes Updates to Medicare Advantage/Part D Policies for 2015

January 7, 2014 — CMS Steps Up Efforts Aimed at "Recalcitrant" Medicare Providers and Suppliers

January 7, 2014 — DOJ Touts $3.8 Billion in FY 2013 False Claims Act Recoveries

January 7, 2014 — OIG Identifies Top HHS Management Challenges

January 7, 2014 — OIG Issues Fall 2013 Semiannual Report

January 7, 2014 — OIG Calls for Greater Scrutiny of Clinicians with High Cumulative Medicare Payments

January 7, 2014 — GAO Examines Effectiveness of ZPIC Program Integrity Efforts

September 16, 2013 — OIG Seeks Improvements to RAC Program, Enhanced CMS Efforts to Stop Improper Medicare Payments

September 16, 2013 — GAO Examines Self-Referral of Anatomic Pathology, IMRT Services

August 15, 2013 — China Life Sciences Regulatory Crackdown Spreads to Medical Device Sector

July 29, 2013 — CMS Announces First Temporary Moratoria on HHA, Ambulance Supplier Enrollment in High-Risk Areas under ACA Authority

July 29, 2013 — OIG Self-Disclosure Protocol Submissions

June 28, 2013 — CMS Delays DME Face-to-Face Requirement until Oct. 1, 2013

June 27, 2013 — CMS Redesigns Medicare Summary Notices

June 11, 2013 — OIG Final Rule on Data Mining by State Medicaid Fraud Control Units

June 11, 2013 — OIG Issues Semiannual Report for First Half of FY 2013

June 11, 2013 — OIG Identifies Vulnerabilities with Part B Claims with "G" Modifiers

June 11, 2013 — OIG Highlights Inaccuracy in Medicare Enrollment Databases

May 14, 2013 — Updated OIG Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs

May 13, 2013 — OIG Publishes Updated Provider Self-Disclosure Protocol

April 25, 2013 — Proposed Rule Would Reward Medicare Fraud Tipsters up to $9.9 Million, Revise Medicare Provider Enrollment Regulations

April 16, 2013 — OIG Calls Medicare Supplier Surety Bonds "Underutilized" CMS Tool

April 15, 2013 — OIG Releases FY 2012 Medicaid Integrity Report

April 10, 2013 — Obama Administration's Proposed FY 2014 Budget Includes $401 Billion in Health Program Savings

March 27, 2013 — OIG Special Fraud Alert Deems Physician-Owned Distributors (PODs) As "Inherently Suspect" Under Anti-Kickback Statute

March 12, 2013 — Congressional Hearings

February 18, 2013 — CMS Releases FY 2011 RAC Report, RAC "Myths" Document

February 18, 2013 — Finance Committee Compilation of Public Recommendations to Address Health Care Fraud and Abuse

February 18, 2013 — FY 2012 Health Care Fraud and Abuse Control Program Report

January 30, 2013 — OIG Continues to Fault Efforts to Prevent Medicare Fraud in Community Mental Health Centers

January 30, 2013 — OIG Calls for Improvements to Medicare Parts C & D Benefit Integrity Activities

January 14, 2013 — Obama Administration's Regulatory Agenda Points to Busy 2013 for HHS

January 14, 2013 — OIG Assesses Medicare Oversight of Home Health Agencies

December 19, 2012 — Justice Department Reports Nearly $5 Billion in False Claims Act Recoveries for FY 2012

December 19, 2012 — GAO Calls for Improvements in Use of Medicare Prepayment Edits

December 19, 2012 — GAO Reviews Effectiveness of Medicaid Program Integrity Efforts

December 17, 2012 — OIG Releases 2012 Compendium of Unimplemented Recommendations

November 29, 2012 — CMS Announces 8.5% Medicare Error Rate in 2012; Majority of Medicare DME Claims in Error.

November 29, 2012 — OIG Outlines Top HHS Management Challenges

November 29, 2012 — OIG "Portfolio Report" on Personal Care Services

November 29, 2012 — GAO Assesses CMS Fraud Prevention System Implementation

November 28, 2012 — OIG Reports Almost $7 Billion in Audit/Investigation Recoveries for FY 2012

November 14, 2012 — OIG Examines Inappropriate Medicare Payments to SNFs

November 12, 2012 — Affordable Care Act and the Post-Election Implications for Radiology

October 16, 2012 — GAO Spotlights Top Provider Types for Criminal/Civil Health Fraud

October 16, 2012 — OIG Issues FY 2013 Work Plan

October 15, 2012 — OIG Compliance Roundtable: "The Next Generation of Corporate Integrity Agreements"

October 15, 2012 — OIG Faults CMS Failure to Implement HHA Surety Bond Rule

October 11, 2012 — OIG to Host "Outlook 2013" Webcast (Oct. 24)

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September 27, 2012 — Congressional Health Policy Hearings

September 27, 2012 — OIG Finds Lax CMS Healthcare Integrity and Protection Data Bank Reporting

September 5, 2012 — OIG Identifies Questionable Community Mental Health Center Billing

September 5, 2012 — OIG Offers Web Course on Safeguarding Medical Identity.

August 31, 2012 — U.S. District Court Decides Whistleblower Cannot Rely on Stolen Patient Records

August 20, 2012 — Fifth Circuit Upholds Ability of Government Employee Fraud Investigators to Bring Qui Tam False Claims Actions

August 17, 2012 — CMS Recovery Audit Prepayment Review Demonstration to Launch Aug. 27, 2012 (Covering One Initial MS-DRG)

August 17, 2012 — Sept. 1, 2012 Start Date for Power Mobility Device Demonstration

August 17, 2012 — CMS Posts "Provider Compliance Interactive Map"

August 17, 2012 — OIG Reports on Questionable Medicare HHA Billing

August 8, 2012 — Putting Contractors on Notice: The New Public-Private Partnership Joins DOJ, HHS, and Private Sector Partners to Combat Health Care Fraud

August 4, 2012 — CMS Announces August 27, 2012 Start Date for Recovery Audit Prepayment Review Demonstration; Provider Call Scheduled for Aug. 9

July 31, 2012 — Obama Administration Public-Private Partnership Targets Health Care Fraud Prevention

July 19, 2012 — OIG Highlights Potential ZPIC Conflicts of Interest

June 26, 2012 — CMS Officially Announces Potential Inherent Reasonableness Payment Adjustment for Medicare Retail Diabetic Testing Supplies; Meeting Set for July 23

June 18, 2012 — OIG Considering Revisions to Provider Self-Disclosure Protocol