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 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.
The OIG has posted guidance on its contractor self-disclosure program, which provides a means for contractors to self-disclose potential violations of the False Claims Act and federal criminal laws involving fraud, conflict of interest, bribery, or gratuity. The Federal Acquisition Regulation (FAR) requires federal contractors with contracts valued over $5 million to disclose to the OIG when they have credible evidence of one of these violations. The guidance specifies that such self-disclosures are made with no advance agreement regarding possible OIG resolution and with no promises regarding potential Department of Justice action. The guidance, a disclosure form, and FAQs are available at the OIG web site.
The OIG attributes $32 million in Medicare Part D spending on HIV drugs in 2012 to claims associated with “questionable utilization patterns.” Specifically, nearly 1,600 Part D beneficiaries with HIV drug claims had no indication of HIV in their Medicare histories, received an excessive dose or supply of HIV drugs, received HIV drugs from a high number of pharmacies or prescribers, or received contraindicated drugs. The OIG observes that while some of this utilization may be legitimate, these patterns warrant further scrutiny, since they could indicate that a beneficiary is receiving inappropriate drugs or diverting drugs, a pharmacy is billing for drugs that the beneficiary did not receive, or a beneficiary’s identification number was stolen. The OIG recommend that CMS: expand sponsors’ drug utilization review programs and use of beneficiary-specific controls; expand the Overutilization Monitoring System to additional drugs; restrict certain beneficiaries to a limited number of pharmacies or prescribers and limit their ability to switch plans; increase monitoring of beneficiaries’ utilization patterns; and follow up on questionable utilization patterns.
The Chairman of the House Ways and Means Subcommittee on Health is seeking comments on a draft bill, the Protecting Integrity in Medicare Act of 2014, that is “aimed at combating fraud, waste and abuse in the Medicare program.” The bill covers a range of Medicare and Medicaid policies, from establishing new alternative sanctions for technical physician self-referral violations to providing more flexibility in meeting durable medical equipment (DME) documentation requirements. Among other things, the bill would:
- Establish an alternative fixed financial penalty for individuals and entities that voluntarily disclose a technical Stark violation (e.g., an arrangement that is not in writing or that is not signed by one or more parties) through the Self-Referral Disclosure Protocol; the per-arrangement penalty would be capped at $5,000 if submitted within the year of the noncompliance and $10,000 thereafter;
- Require a study on how to establish a permanent physician-hospital gainsharing program;
- Expand the professionals who can document DME face-to-face encounters beyond physicians to align with the professionals who can furnish such encounters;
- Establish claims processing edits to prevent Medicare payments for incarcerated, unlawfully present, and deceased individuals;
- Require Medicare administrative contractors (MACs) to establish improper payment outreach and education programs, and modify how MACs prioritize efforts to reduce improper payment or error rates;
- Allow Medicaid fraud control units to investigate abuse and neglect in home and community based facilities;
- Provide the HHS OIG with up to 1.5% of all amounts collected from Medicare false claim and fraud cases;
- Give the Secretary greater flexibility to protect Medicaid from fraud, waste, and abuse;
- Improve incentives for individuals to report Medicare fraud and abuse under the Senior Medicare Patrol;
- Require valid prescriber National Provider Identifiers to be included on pharmacy claims;
- Revise the process for renewing MAC contracts;
- Create a high-risk beneficiary drug management program under the supervision of a Part D plan sponsor;
- Require the Secretary to issue guidance on the application of the “Common Rule” to clinical data registries;
- Revoke eligibility for Medicare benefits for providers convicted of defrauding the Medicare program under certain circumstances;
- Require home health agencies to obtain a surety bond in the amount of at least $50,000 as a condition of Medicare participation;
- Require prior authorization (PA) for certain chiropractic visits, blepharoplasty, and browplasty surgeries and expand a PA demonstration for non-emergent ambulance services;
- Require Social Security numbers to be removed from beneficiary Medicare cards; and
- Require the Secretary to include vacuum erection systems in the DME competitive bidding program by 2016.
Subcommittee Chairman Kevin Brady (R-TX) will accept comments on the discussion draft until September 1, 2014.
According to an OIG report, “Questionable Billing for Medicare Part B Clinical Laboratory Services,” Medicare allowed $1.7 billion for clinical laboratory claims in 2010 associated with eight types of “questionable billing.” Such indicators of questionable billing identified by the OIG include: claims for beneficiaries with no associated Part B service with ordering physician; claims with beneficiaries living more than 150 miles from the ordering physician; duplicate lab tests; claims with ineligible or invalid ordering-physician numbers; claims with compromised beneficiary, ordering-physician, or lab provider number. More than 1,000 labs had unusually high billing for five or more measures of questionable billing for Medicare lab service, and almost half of these labs were located in California and Florida. The OIG notes that while “some of this billing may be legitimate, all labs that exceeded thresholds on five or more measures of questionable billing may warrant further scrutiny.” The OIG recommends that CMS: review the labs identified as having questionable billing and take appropriate action; review the effectiveness of existing program integrity strategies; and ensure that existing edits prevent claims with invalid and ineligible ordering-physician numbers from being paid. CMS concurred with these recommendations.
The Senate Aging Committee has released a staff report entitled “Improving Audits: How We Can Strengthen the Medicare Program for Future Generations.” The report describes the burden audits can impose on providers, and raises concerns that CMS’s current efforts are “aimed more at identifying and recovering improper payments that have already occurred, rather than a proactive strategy to ensure that those errors are not made in the first place.” For instance, the Recovery Audit Contractor (RAC) contingency fee structure “could be viewed as providing an incentive to keep improper payment rates high.” The report also notes that inconsistent local coverage determinations (LCDs) can increase the burden on providers and contractors, since different rules apply depending on the location of the service provided. Moreover LCDs have not been targeted to the most costly, highly-utilized services in a consistent way and may lead to discrepancies in access to care based on the beneficiary’s location. The report includes a series of recommendations for reforms of the audit and local coverage decision processes, including consolidating post-payment review activities; revising the RAC incentive structure to focus on reduced improper payment rates; assessing the effectiveness of pre-payment review processes; improving provider education; and ensuring that LCDs are targeted and do not create inconsistent access to care. The report was issued in connection with a hearing on improving the Medicare audit program.
Today the HHS OIG issued a Special Fraud Alert highlighting its concerns regarding two trends involving transfers of value from laboratories to physicians that the OIG believes “present a substantial risk of fraud and abuse under the anti-kickback statute.” Specifically, the OIG details risks involved with certain compensation paid by laboratories to referring physicians and physician group practices for (1) blood specimen collection, processing, and packaging, and (2) submitting patient data to a registry or database. The Special Fraud Alert reiterates the OIG’s “longstanding concerns” when payments from laboratories to physicians exceed the fair market value of the physicians’ services or reflect the volume or value of referrals of federal health care program business. Reed Smith is preparing an analysis of the Alert.
Recent Congressional hearings on health policy issues include the following:
- A House Energy and Commerce Health Subcommittee “21st Century Cures Roundtable” discussed steps Congress can take to bridge the gap between medical advances and the regulatory policies that govern them, and ultimately advance digital and personalized health care. The panel also released a related white paper on digital health care and is seeking feedback on this topic through July 22, 2014.
- The Energy and Commerce Oversight Subcommittee held a hearing on “Medicare Program Integrity: Screening Out Errors, Fraud, and Abuse.” The Committee also held hearings on health care access under the ACA.
- The Senate Special Committee on Aging held a hearing entitled “State of Play: Brain Injuries and Diseases of Aging.”
- The Ways and Means Health Subcommittee held a hearing on MedPAC's June Report to the Congress on Medicare delivery reforms.
- The House Oversight and Government Reform Committee held a hearing on health insurance company profits under the ACA.
Is anybody home? Medicare contractors on the prowl for DMEPOS supplier violations of posted business hours and other physical facility standards.
Medicare suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) should be on the alert for enhanced Medicare supplier standard compliance monitoring by CMS, the National Supplier Clearinghouse (NSC), and their agents. Recently, these entities have taken draconian actions to revoke the enrollment of a number of suppliers who failed to be present during indicated hours of operation. Recent Administrative Law Judge (ALJ) decisions have upheld such revocations for technical violation of the Medicare supplier standard, even in the face of extenuating circumstances, reinforcing the need for suppliers to review their practices and policies to ensure full compliance.
Medicare supplier standard number 7 requires suppliers to appropriately maintain their physical facilities, including being accessible and staffed during posted hours of operation, maintaining a permanent visible sign in plain view, and posting hours of operation. In addition, supplier standard 7 requires the supplier’s business location to be accessible to the public, Medicare beneficiaries, CMS, NSC, and their agents (although there is an exception for “closed door” businesses, such as a pharmacy or supplier providing services only to beneficiaries residing in a nursing home, under certain circumstances).
Since compliance with all Medicare supplier standards is a condition of Medicare participation, suppliers must be present during published business hours or face revocation of their supplier number. This includes having staff present during lunch, unless the posted hours of operation specifically exclude certain lunch hours, and during holidays unless otherwise posted. We have observed a trend in deficiencies relating to supplier standard 7 being found during CMS and/or NSC supplier site visits resulting in supplier number revocations. For instance, suppliers have been found in violation when staff are out to lunch during a site visit or when an inspector uses the wrong set of elevators in a multi-use office building and is therefore unable to find the supplier’s office.
Recent ALJ decisions have upheld revocation of various DMEPOS suppliers’ billing privileges in similar situations. In one case, the supplier appealed the decision, noting that the days the surveyor attempted to visit the site were Christian and Jewish holidays. The ALJ, however, ruled that the timing of religious holidays was irrelevant because the supplier’s signage failed to notify the public that the business was closed for religious holidays (Lubell v CMS, Docket No. C-14-380, Decision No. CR3192, April 7, 2014). In another case, the supplier appealed the decision, arguing that its door was locked for the protection of its single staff member and that the staff member may not have noticed the inspector knocking due to being on lunch break. The ALJ upheld this revocation as well, noting that the office’s posted hours of operation did not indicate that the office would be closed for lunch. In that decision, the ALJ further ruled that the business was not accessible because the supplier’s locked-door approach represented an inappropriate restriction on access and indicated that a supplier may not close, even temporarily, during its posted hours of operation (Southeastern Orthotics and Prosthetics, Inc. v CMS, Docket No. C-14-315, Decision No. CR3208, April 23, 2014). In both of these cases, the ALJs held that retroactive revocations are not permitted under supplier standard 7, despite attempts by regulators to revoke the suppliers’ enrollments retroactive to the day of their second unsuccessful attempts to visit the sites.
As a reminder, suppliers must comply with all 30 supplier standards set out in 42 CFR § 424.57, an abbreviated version of which can be found on the NSC website. Given that Medicare authorities have been emphasizing supplier standard 7, we strongly encourage suppliers to ensure that their hours are posted, their offices are open to the public, and their staff are prepared for unannounced site visits at all times during posted business hours. Suppliers also should ensure that their address on file with the NSC is up to date and specific as to suite, room, and floor. In addition, we recommend that suppliers regularly review and update their Medicare 855S enrollment application whenever any changes to its content occur. Changes to a Medicare DMEPOS supplier’s enrollment information are due 30 days after they take place.
A number of Congressional panels have focused on following health policy issues recently, including the following:
- The House Ways and Means Health Subcommittee examined various Medicare hospital issues, including the CMS two-midnights policy, short inpatient stays, outpatient observation stays, Recovery Audit Contractor audits, and the appeals backlog.
- The House Energy and Commerce Committee held a hearing on two bills that seek to equalize payments between different providers: (1) the Medicare Patient Access to Cancer Treatment Act of 2014, which would establish payment parity under the Medicare program for ambulatory cancer care services furnished in the hospital outpatient department and the physician office setting; and (2) the Bundling and Coordinating Post-Acute Care (BACPAC) Act of 2014, which would provide bundled payments for post-acute care services under Medicare Parts A and B.
- The House Oversight and Government Reform Committee held hearings entitled "Examining the Federal Response to Autism Spectrum Disorders" and "Medicare Mismanagement: Oversight of the Federal Government Effort to Recapture Misspent Funds."
- The Senate Special Committee on Aging focused on the role of health care providers in advance care planning.
- The Senate Commerce, Science and Transportation Committee examined the ACA minimum medical loss ratio (MLR) requirements, which requires health insurers to provide rebates to consumers if the plans do not spend sufficient proportion of premium dollars on medical care.
The OIG has issued its spring Semiannual Report to Congress, which summarizes major OIG activities during the period of October 2013 through March 2014. The OIG highlights “ramped up” oversight of Affordable Care Act implementation efforts, particularly with regard to eligibility systems, payment accuracy, contractor oversight, and data security associated with the Health Insurance Marketplaces. Other core areas for the OIG during this time included ensuring the appropriate use of prescription drugs by Medicare and Medicaid beneficiaries, CMS oversight of Medicare contractors, and grants oversight and management. With regard to enforcement activities during the first half of FY 2014, the OIG reported 465 criminal actions against individuals or entities that engaged in crimes against HHS programs, along with 266 civil actions (including false claims and unjust-enrichment lawsuits, civil monetary penalties settlements, and administrative recoveries related to provider self-disclosure matters), and exclusions of 1,720 individuals and entities from participation in federal health care programs. The OIG also expects recoveries of more than $3.1 billion in the first half of FY 2014 (about $295 million in audit receivables and $2.83 billion in investigative receivables.
CMS has just released a proposed rule that would require Medicare prior authorization (PA) for certain Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) items that the agency characterizes as “frequently subject to unnecessary utilization.“ As part of the rulemaking, CMS has developed a “Master List” of initial items that it considers to meet this standard based on being (1) identified in a GAO or HHS OIG national report published in 2007 or later as having a high rate of fraud or unnecessary utilization; or (2) listed in the 2011 or later Comprehensive Error Rate Testing (CERT) program's Annual Medicare FFS Improper Payment Rate Report DME Service Specific Overpayment Rate Appendix. CMS also proposes limiting the items on the Master List to those with an average purchase fee of at least $1,000 or an average rental fee schedule of at least $100 to allow CMS to focus on items with the largest potential savings for the Medicare Trust Fund. CMS proposes that the Master List will be “self-updating” annually, and that items generally will remain on the list for 10 years. Note, however, that presence on the Master List would not automatically require prior authorization. CMS would limit the PA requirement to a subset of items (called the “Required Prior Authorization List") “to balance minimizing provider and supplier burden with our need to protect the Trust Funds." CMS would publish the Required Prior Authorization List in the Federal Register with 60-day notice before implementation. CMS also proposes that the PA program could be implemented nationally or locally. The proposed rule does not announce the first items on the Required Prior Authorization List. Instead, CMS is seeking public comment on the number of items that should be selected initially and in the future, and the frequency with which CMS should select items.
The proposed PA process would not create new clinical documentation requirements for the selected DMEPOS items. Instead, the same information necessary now to support Medicare payment for the item would be submitted to the contractor, but before the item could be furnished to the beneficiary and before the claim could be submitted for payment. Upon receipt of a PA request, CMS or its contractors would determine whether the item complies with applicable coverage, coding, and payment rules, and then communicate a decision that provisionally affirms or non-affirms the request. CMS or its contractors would “make reasonable efforts” to provide a decision within 10 days of receipt of all applicable information, unless this timeline could “seriously jeopardize the life or health of the beneficiary,” in which case the target review period would be 2 business days.
The proposed rule also discusses, among other things: the process for updating the Master List; liability for an item on the Required Prior Authorization List if authorization is submitted and denied, the opportunity for unlimited PA resubmissions, and applicability to competitive bidding areas. The rule also would add a contractor's decision regarding prior authorization of coverage of DMEPOS items to the list of actions that are not initial determinations and therefore not appealable. The official version will be published on May 28, 2014. CMS will accept comments on the proposed rule until July 28, 2014.
In a related development, CMS has announced that it is expanding its current demonstration for prior authorization for power mobility devices to 12 additional states. CMS also will launch two payment model demonstrations to test prior authorization for hyperbaric oxygen therapy and repetitive scheduled non-emergent ambulance transport; information from these models will inform future CMS policy decisions on the use of prior authorization.
On the heels of its proposed rule to expand its health program exclusion authority, the Office of Inspector General (OIG) of the Department of Health and Human Services has published a proposed rule that would amend the health care program civil monetary penalty (CMP) regulations. The rule would codify the OIG’s expanded statutory authority under the Affordable Care Act to impose CMPs on providers and suppliers and would allow for significant penalties in a variety of scenarios, some of which could extend beyond what is currently permitted.
Reed Smith attorneys have prepared a Client Alert summarizing and analyzing the OIG’s proposed rule, including the various scenarios under which CMPs could be issued under the proposed regulations, such as: failure to report and return an overpayment; failure to grant OIG timely access to records upon request; ordering or prescribing items or services while excluded from a federal health care program, as well as arranging or contracting with an individual or entity who meets this criteria; making false statements or omitting or misrepresenting material facts in an application, bid, or contract; and failing to submit or certify drug-pricing and product information in a timely manner. In addition, the alert covers the changes in technical language proposed by OIG to clarify and more clearly define the scope of CMP regulations.
The Client Alert is available here.
On May 9, 2014, the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) published a proposed rule that would significantly expand the exclusion regulations applicable to persons or entities that receive, directly or indirectly, funds from federal health care programs (the Proposed Rule). The Affordable Care Act (ACA) expanded the OIG’s authority for exclusion, and authorized the use of testimonial subpoenas in investigations of exclusion cases. In this Proposed Rule, the OIG incorporates these statutory changes, revises the definitions applicable to exclusions, proposes early reinstatement procedures, and offers a number of proposed policy changes as to when and how exclusions may take place.
Reed Smith has prepared a Client Alert that provides an overview of the Proposed Rule, including: proposed revisions to definitions; new grounds for exclusion; clarifications to existing regulations to add mitigating and aggravating factors; early reinstatement procedures; and proposed procedural changes in the OIG’s exclusion authorities. In particular, we discuss the OIG’s assertion that there should be no statute of limitations within which it would have to seek exclusion. This limitless look-back authority could place a tremendous burden on providers and suppliers, since their conduct and compliance efforts could be second-guessed many years into the future, when supporting documentation and witnesses may be long gone. We also discuss how these proposed changes to the OIG’s exclusion authorities could impact the debarment authority applicable to government contracts more generally.
The Client Alert is available here.
Another OIG Fraud Rule in the Pipeline: Anti-kickback Safe Harbors, CMPs for Beneficiary Inducements, Gainsharing
On the heels of publication of sweeping proposed rules to expand its exclusion and civil monetary penalty (CMP) authorities, the HHS Office of Inspector General (OIG) is seeking White House clearance of another rule to expand its Medicare and state health care program fraud and abuse authorities. Specifically, yesterday the OIG sent to the Office of Management and Budget (OMB) a proposed rule that would add new anti-kickback safe harbors to reflect statutory changes, codify the Affordable Care Act’s definition of "remuneration," and add a gainsharing CMP regulation. The OIG also has indicated that a separate rulemaking on inflation adjustment for CMPs will be forthcoming, but that regulation has not yet been submitted to OMB. The OIG considers each of the proposed rules to be a stand-alone, independent rule, although there is obviously overlap in the subject matter. We will continue to closely follow these regulatory developments.
On May 9, 2014, the Office of Inspector General (OIG) of the Department of Human Services (HHS) published a proposed rule that would significantly expand the exclusion regulations applicable to persons or entities that receive, directly or indirectly, funds from federal health care programs. The Affordable Care Act (ACA) expanded the OIG’s authority for exclusion and authorized the use of testimonial subpoenas in investigations of exclusion cases. In this proposed rule, the OIG incorporates these statutory changes, revises the definitions applicable to exclusions, proposes early reinstatement procedures, and offers a number of proposed policy changes as to when and how exclusions may take place. Comments on the proposed rule are due July 8, 2014.
Separately, on May 12, the OIG published a proposed rule that would implement the ACA’s expanded civil monetary penalty (CMP) authorities, including penalties for: failure to grant OIG timely access to records; ordering or prescribing while excluded; making false statements, omissions, or misrepresentations in an enrollment application; failure to report and return an overpayment; and making or using a false record or statement that is material to a false or fraudulent claim. The proposed rule addresses when and how these CMPs are applied, the methodology for calculating the penalties, and the liability guidelines under other OIG authorities. Comments will be accepted until July 11, 2014. Reed Smith is preparing Client Alerts regarding both rules, which will be available shortly.
The OIG’s “Medicaid Integrity Program Report for Fiscal Year 2013,” released earlier this month, provides details on funding for the OIG's Medicaid program integrity efforts, summarizes significant OIG Medicaid-related reviews and investigations, highlights Medicaid Fraud Control Unit activities, and notes Medicaid-related projects included in the OIG’s Work Plan for FY 2014.
On Wednesday, April 30, 2014, the House Ways and Means Committee will focus on “Ideas to Improve Medicare Oversight to Reduce Waste, Fraud and Abuse." On May 1, the House Energy and Commerce Health Subcommittee is holding a hearing on “Telehealth to Digital Medicine: How 21st Century Technology Can Benefit Patients."