According to the latest Health Care Fraud and Abuse Control Program (HCFAC) Annual Report, federal health care fraud prevention and enforcement efforts resulted in the recovery of a record $4.3 billion in FY 2013, up from $4.2 billion in FY 2012. In announcing detailed enforcement achievements, the Administration cites new ACA authorities – including enhanced provider screening requirements, limited enrollment moratoria, and authority to suspend Medicare payments during pending investigations -- that have improved the government’s ability to clamp down on health care fraud. The report also notes the successes of coordinated Department of Justice (DOJ) and HHS efforts such as the Health Care Fraud Prevention & Enforcement Action Team (HEAT) and interagency Medicare Fraud Strike Force teams.
The OIG released a report on March 3, 2014, “Adverse Events in Skilled Nursing Facilities: National Incidence among Medicare Beneficiaries,” that examines the national incidence rate, preventability, and cost of adverse events in skilled nursing facilities (SNFs). This report is an outgrowth of a series of studies about hospital adverse events. For purposes of this report, the OIG defined an adverse event as harm to a patient or resident as a result of medical care in a health care setting that resulted in a prolonged SNF stay or hospitalization (including emergency room visit), permanent harm, life-sustaining intervention, or death. Based on a small sample of individuals discharged from hospitals to SNFs with SNF stays that ended in August 2011 (a total of 653 Medicare beneficiaries), the OIG estimates that 22% of Medicare beneficiaries experienced adverse events during their SNF stays and 11% of Medicare beneficiaries experienced temporary harm events during their SNF stays. The OIG’s physician reviewers determined, based on review of the patients’ medical record, that 59% of these adverse events and temporary harm events were clearly or likely preventable. More than half of the residents who experienced harm were rehospitalized, with an estimated Medicare cost of $208 million in August 2011. This equates to $2.8 billion spent on hospital treatment for harm caused in SNFs in FY 2011 (or roughly 2% of inpatient hospital spending).
The OIG observes that the preventable nature of many of the events it identified indicates an opportunity for SNFs to significantly reduce the incidence of resident harm events. To that end, the OIG recommends that the Agency for Healthcare Research and Quality (AHRQ) and CMS raise awareness of nursing home safety and reduce resident harm through methods the agencies previously used to promote hospital safety. For instance, OIG recommends that the agencies collaborate to create and promote a list of potentially reportable nursing home events to help nursing home staff better recognize and reduce harm (but AHRQ and CMS should specify that they do not require external nursing home reporting of these events). Likewise, the OIG recommends that AHRQ and CMS encourage nursing homes to report adverse events to Patient Safety Organizations. CMS also should include potential events and information about resident harm in future guidance to nursing homes on the development of Quality Assurance and Performance Improvement (QAPI) programs pursuant to the ACA. Finally, the OIG recommends that CMS instruct state agency nursing home surveyors to review facility practices intended to identify and reduce adverse events. AHRQ and CMS concurred with the OIG’s recommendations.
A recent HHS Office of Inspector General (OIG) report examines Medicare services provided during the Medicare Severity Diagnosis Related Group (DRG) payment window – that is, the period when certain outpatient services related to an inpatient admission are considered to be included in the DRG payment. Currently, outpatient services delivered within three days of an inpatient admission in a setting owned by the admitting hospital are included in the DRG payment. On the other hand, the OIG notes that services provided by hospitals that share a common owner (i.e., multiple hospitals owned by the same corporation) are not subject to the DRG window. The OIG estimated that Medicare payments for outpatient services provided at settings owned by admitting hospitals in the 11 days prior to the DRG window totaled $263 million in 2011. The Medicare program also paid an estimated $45 million in 2011 for outpatient services provided at hospitals affiliated with, but not owned by, admitting hospitals during the three days prior to inpatient admissions. The OIG recommends that CMS seek legislative authority to (1) expand the “DRG window” to include additional days prior to the inpatient admission (the OIG does not specify the number of days), and (2) expand the DRG window to include other hospital ownership arrangements, such as affiliated hospital groups. CMS did not concur with either recommendation, noting that they have not been proposed by the President and observing that they would require legislation.
A recent OIG report examined potential problems associated with the growing use of contract pharmacies under the 340B discount drug program. The OIG describes these arrangements as when a 340B covered entity, such as a community health center or disproportionate share hospital, contracts with a pharmacy to dispense drugs purchased through the 340B program on the entity’s behalf. In short, based on interviews with covered entities and 340B administrators, the OIG found that some contract pharmacy arrangements create inconsistencies with regard to which prescriptions are treated as 340B eligible. Contract pharmacies also may not make necessary arrangements to prevent duplicate discounts (when a drug manufacturer pays a Medicaid drug rebate program on a drug sold at the already-discounted 340B price). The OIG also found that most covered entities it reviewed did not conduct all of the oversight activities recommended by the Health Resources and Services Administration (HRSA). In discussing its findings, the OIG stated that it was not making recommendations since HRSA has announced plans to propose new regulations for the 340B program this year the OIG’s results are intended to inform HRSA’s efforts. The OIG also intends to continue monitoring the issue.
The OIG has posted its FY 2014 Work Plan, which lists the various audit, inspection, and investigative initiatives that the OIG intends to conduct in the coming year. The OIG plans reviews of reimbursement and program integrity policies throughout the Medicare and Medicaid programs, with a particular focus on Medicare inpatient hospital care and Medicare and Medicaid prescription drug policies. The Work Plan also includes numerous reviews involving other HHS agencies, including the Centers for Disease Control and Prevention, the Food and Drug Administration, and the National Institutes of Health. In addition, the Work Plan includes a description of the OIG’s legal and investigative activities related to Medicare and Medicaid.
Inconsistent Medicare Part B local coverage determinations (LCDs) create disparities in Medicare beneficiary access to items and services, a recent OIG report concludes. The OIG focused on LCDs issued by MACs for Part B items and services performed by noninstitutional providers (e.g., medical procedures, evaluation and management services, imaging services, drugs, and tests), but excluded LCDs for durable medical equipment. Among other things, the OIG observed that as of October 2011, over half of the 7,500 Part B procedure codes reviewed were subject to an LCD in one or more states – but LCDs affected coverage for over 50% of codes in some states but as few as 5% in other states. These LCDs limited coverage for these items and services differently across the states, and defined similar clinical topics inconsistently. The OIG observes that while MACs may have developed LCDs for particular procedure codes to address local situations, including overuse or misuse of items or services, as a result “beneficiaries’ access to items and services can depend on geography as much as their clinical indications.” One third of the codes reviewed that were subject to a noncoverage LCD involved new technologies. The OIG recommends that CMS: establish a plan to evaluate new LCD topics for national coverage; continue efforts to increase consistency among existing LCDs; and consider requiring MACs to jointly develop a single set of coverage policies. CMS generally agreed with the OIG on the benefits of achieving greater LCD consistency, although CMS noted that there were hurdles associated with requiring joint development of policies (ranging from administrative burdens, beneficiary appeals rights, and state scope of practice laws).
The OIG has issued a report entitled “CMS and Its Contractors Have Adopted Few Program Integrity Practices to Address Vulnerabilities in EHRs,” which concluded that few Medicare contractors were reviewing EHRs differently from paper medical records, and not all contractors reported being able to determine whether a provider had copied language or over-documented in a medical record. The OIG recommends that CMS provide guidance to its contractors on detecting fraud associated with EHRs, including specific guidance addressing EHR documentation and electronic signatures in EHRs. The OIG also suggested that CMS should direct its contractors to use providers’ audit logs, which distinguish EHRs from paper medical records and could be valuable to CMS’s contractors when reviewing medical records.
The OIG has concluded that the HHS Office for Civil Rights (OCR) is not adequately overseeing and enforcing the HIPAA Security Rule. In short, the OIG found that OCR failed to provide for periodic audits, as mandated by HITECH, to ensure that covered entities were in compliance with the Security Rule, and instead continued to follow the complaint-driven approach to assess Security Rule compliance. OCR also failed to consistently follow its investigation procedures and maintain documentation needed to support key decisions made during investigations conducted in response to reported violations of the Security Rule. The report findings and recommendations are discussed in a posting on our Life Sciences Legal Update blog.
The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) has 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 February 25, 2014. For a status report on prior public safe harbor recommendations, see Appendix F of the OIG's Fall 2013 Semiannual Report to Congress.
The OIG has issued its latest list of top management and performance challenges facing HHS, reflecting “continuing vulnerabilities that OIG has identified for HHS over recent years as well as new and emerging issues that HHS will face in the coming year.” This year’s list includes the following challenges: (1) Overseeing the Health Insurance Marketplaces; (2) Transitioning to Value-Based Payments for Heath Care; (3) Ensuring Appropriate Use of Prescription Drugs in Medicare and Medicaid; (4) Protecting the Integrity of an Expanding Medicaid Program; (5) Fighting Fraud and Waste in Medicare Parts A & B; (6) Preventing Improper Payments and Fraud in Medicare Advantage; (7) Ensuring Quality of Care in Nursing Facilities and Home and Community-Based Settings; (8) Effectively Using Data and Technology to Protect Program Integrity; (9) Protecting HHS Grants and Contract Funds from Fraud, Waste, and Abuse; and (10) Ensuring the Safety of Food, Drugs, and Medical Devices.
The OIG has issued its Semiannual Report to Congress for the period of April 1 – September 30, 2013, in which it highlights significant investigation, audit, and enforcement activities and achievements across HHS programs. For all of FY 2013, the OIG reports expected recoveries of more than $5.8 billion, consisting of almost $850 million in audit receivables and about $5 billion in investigative receivables (including about $1 billion in non-HHS investigative receivables, such as states’ shares of Medicaid restitution). In FY 2013, the OIG was responsible for: exclusion of 3,214 individuals and entities from participation in federal health care programs; 960 criminal actions against individuals or entities; and 472 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).
The OIG has issued a report focusing on individual clinicians who generated high cumulative Medicare Part B payments (defined for purposes of this report as more than $3 million in Part B services) in 2009. Out of 303 such clinicians identified by the OIG, 34% had been identified for improper payment reviews, and as of December 31, 2011, they were tied to $34 million in overpayments, three of the clinicians had their medical licenses suspended and two were indicted. Since existing procedures may not always identify clinicians responsible for high cumulative payments in a timely manner, the OIG recommends that CMS: (1) establish a cumulative payment threshold above which a clinician’s claims would be selected for review, and (2) implement a procedure for timely identification and review of clinicians’ claims that exceed the cumulative payment threshold. While CMS noted that “[h]igh cumulative payments are not necessarily indicative of improper payments or fraud,” the agency partially concurred with the OIG recommendations and stated that it would work with its contractors to develop an appropriate, cumulative payment threshold.
An OIG report released in December 2013 assessed the extent to which hospitals that received Medicare EHR incentive payments as of March 2012 had implemented fraud safeguards for EHR technology previously recommended by an HHS contractor, RTI International, and set forth in a 2007 HHS Office of the National Coordinator for Health Information Technology (ONC) report. The OIG found widespread hospital compliance with RTI-recommended audit functions, user authorization and access controls, and data transfer safeguards, but less than half of hospitals had begun implementing RTI recommendations to include patient involvement in anti-fraud efforts, and only about one quarter of hospitals had policies regarding the use of the copy-paste feature in EHR technology, which potentially could pose a fraud vulnerability. The OIG report includes several recommendations for ONC and CMS to strengthen efforts to address fraud vulnerabilities in EHRs, with which the agencies concurred.
On December 27, 2013, the Office of Inspector General and the Centers for Medicare & Medicaid Services each published, in the Federal Register, a final rule that amends regulations protecting, from the Anti-Kickback Statute and Stark law, certain arrangements involving the donation of interoperable electronic health records (EHR) software or information technology and training services related to such EHR software. The final rules:
- Extend the protections of the Stark law exception (42 C.F.R. § 411.357(w)) and the Anti-Kickback safe harbor (42 C.F.R. § 1001.952(y)) from December 31, 2013 to December 31, 2021 (the “sunset” provisions)
- Exclude laboratory companies from the types of entities that may donate EHR items and services
- Update the provisions under which an EHR donor or recipient can ascertain, with certainty, that EHR is interoperable pursuant to the exception and safe harbor (the “deeming” provisions)
- Remove the requirements that donated EHR include electronic prescribing capability
- Clarify the requirement prohibiting any action that limits or restricts the use, compatibility, or interoperability of donated items or services
With the exception of the amendments to the sunset provisions, which go into effect December 31, 2013, the amended regulations will be effective as of March 27, 2014.
Reed Smith will prepare a comprehensive Client Alert on the final rules, which will be published shortly.
Reed Smith lawyers have significant experience advising clients on EHR technology issues and will continue to monitor regulatory changes in this area. For more information regarding how we can assist you, please contact your principal Reed Smith lawyer or a lawyer listed in this publication.
The HHS Office of Inspector General (OIG) has issued a report on variations in Medicare outlier payments made to acute hospitals under the inpatient prospective payment system (IPPS) during calendar years 2008 to 2011. According to the OIG, almost all hospitals received outlier payments, but some hospitals received a much higher proportion of Medicare IPPS reimbursements from outlier payments. Specifically, outlier payments averaged 12.8% of the Medicare IPPS reimbursement for 158 hospitals, compared to an average of 2.2% for all other hospitals. As a result, the high-outlier hospitals ended up charging Medicare substantially more for the same Medical Severity Diagnostic Related Groups (MS-DRG) provided in the subset of hospitals compared to other hospitals, even though their patients had similar lengths of stay. There were 16 specific MS-DRGs that accounted for 41% of such outlier payments. The OIG observed that high outlier charges could result from a hospital attracting a disproportionate share of exceptionally costly patients or applying costly technologies and treatments. Nevertheless, the OIG raised concerns about why charges for similar cases vary substantially across hospitals, and recommended that CMS: (1) instruct its contractors to increase monitoring of outlier payments, (2) publicly report hospital data regarding the distribution of outlier payments; and (3) examine whether MS-DRGs associated with high rates of outlier payments warrant coding changes or other adjustments. CMS concurred with the recommendations.
OIG Examines Inappropriate Medicare Payments on Behalf of Deceased or Unlawfully-Present Beneficiaries
According to the HHS Office of Inspector General (OIG), the Medicare program continues to make inappropriate payments on behalf deceased beneficiaries and beneficiaries who are unlawfully-present in the country. First, despite safeguards intended to prevent and recover Medicare payments made on behalf of deceased beneficiaries, Medicare inappropriately paid $23 million in 2011 for claims with service dates after beneficiaries' deaths. The majority of the improper payments were made under Medicare Part C. The OIG recommended a series of steps to improve payment safeguards in this area and to address providers and suppliers identified by the OIG with high numbers of claims with service dates after beneficiaries' deaths.
In a separate report, the OIG found that CMS did not adequately prevent Medicare Part D payment for unlawfully-present beneficiaries for calendar years 2009 through 2011. As a result, CMS inappropriately accepted 279,056 prescription drug event records submitted by Part D sponsors with unallowable gross drug costs totaling $29.0 million on behalf of 4,139 unlawfully-present beneficiaries. CMS used those records to make final payment determinations to sponsors. The OIG recommended that CMS resolve improper Part D payments made for drugs provided to unlawfully-present beneficiaries and take steps to develop and implement controls to prevent inappropriate payments in the future.
A recent OIG report links the growing presence of physician-owned distributorships, or PODs, to increased spinal surgery volumes and potentially increased Medicare costs. The OIG notes a “substantial presence” of PODs in the spinal device market, with PODs supplying spinal devices for 19% of the spinal fusion surgeries billed to Medicare in FY 2011. According to the OIG, hospitals that purchased devices from PODs performed more spinal surgeries in 2012 than hospitals that did not purchase from PODs, and hospitals increased the rate of growth in the number of spinal surgeries after they began purchasing from PODs. Hospitals identified surgeon preference as the strongest influence on their decisions to purchase spinal devices from PODs. The OIG also disagrees with PODs’ claims that their devices cost less than those from other suppliers; rather, in the categories examined by the OIG, the devices cost the same as or more than devices from companies not owned by physicians. This fact, coupled with increased volumes, according to the OIG, could increase overall Medicare costs over time. In addition, the OIG raises concerns about inconsistencies in hospital policies regarding physician disclosure of ownership to either hospitals or their patients of interests in PODs (although the OIG suggests that the new “Sunshine Act” disclosure rules may improve the ability of hospitals and patients to identify physicians’ investment in device companies). For a case urging an alternative perspective on PODs, see the report on our sister blog, http://www.lifescienceslegalupdate.com/, about a recent complaint filed in the U.S. District Court for the Central District of California that seeks a declaration that the OIG’s Special Fraud Alert on PODs unfairly and unconstitutionally burdens First Amendment rights of free speech and due process. The complaint defends the lawfulness of the physician-owned model, and characterizes the Fraud Alert as the result of a multi-year lobbying campaign by “Big Corporations” forced to compete with small physician-owned entities. For more details, see our full report.
As reported on our sister blog, http://www.lifescienceslegalupdate.com/, Reliance Medical Systems, LLC, filed a complaint in the U.S. District Court for the Central District of California this week that seeks a declaration that an Office of Inspector General (OIG) Special Fraud Alert on physician-owned distributors (PODs) unfairly and unconstitutionally burdens First Amendment rights of free speech and due process. The complaint sets forth Reliance’s legal rationale in support of the lawfulness of the physician-owned model, and it characterizes the Fraud Alert as the result of a multi-year lobbying campaign by “Big Corporations” forced to compete with small physician-owned entities. For more details, see our full report.
The OIG has issued a consumer alert warning consumers about potential fraud related to enrollment in ACA Health Insurance Marketplaces. Among other things, the OIG cautions individuals about people asking for money to enroll the individual in the Marketplace or “Obamacare”; high-pressure solicitations; or requests for personal information. Likewise, HHS, the Department of Justice, and the Federal Trade Commission have launched an interagency initiative to prevent and, as necessary, prosecute consumer fraud and privacy violations in the ACA Marketplace.