Wachler & Associates Health Law Blog

New Bill Aims to Ensure Medicare Payment Accuracy and Reduce Red Tape

Tue, 18 Jun 2013 17:39:55 -0500

Congressman Adrian Smith (R-NE), along with 13 co-sponsors, introduced a new bill on June 12, 2013, titled the Administrative Relief and Accurate Medicare Payments Act of 2012. This initiative, House Rule (H.R.) 2329, aims to ease administrative burdens on healthcare providers and efficiently allocate energy and resources related to Medicare payment and audits.

In addition to addressing the concerns of administrative burdens and short timeliness-of-filing requirements, the bill also seeks to improve payment accuracy. By increasing the filing period for claims and making other changes to streamline the appeals process, the Act is designed to ease the burden on hospitals.

In a press release, Congressman Smith announced,

While strong oversight of Medicare payments is essential to prevent waste and fraud, the current process is overly-burdensome and time consuming... I introduced the Administrative Relief and Accurate Medicare Payments Act as a first step to reduce the red tape for providers while ensuring payments are accurate. This commonsense solution would allow hospitals and doctors to focus more resources providing quality care for their patients, and spend less time dealing with the Medicare bureaucracy.

In March 2013, CMS released a Proposed Rule which, should it become final in its current form, provides hospitals the ability to rebill under Medicare Part B when an inpatient admission is denied as not reasonable and necessary under Part A so long as the claim is rebilled within one year from the date of service. H.R. 2329 seeks to amend title XVIII of the Social Security Act by providing for a maximum period of two years for Medicare Part B claim submissions initially submitted as Medicare Part A claims by hospitals. The Act proposes, amongst other purposes, a 60-day maximum period for one-day stay claims. H.R. 2329 has been referred to the Committee on Energy and Commerce, as well as the Committee on Ways and Means to determine whether the Act's provisions fall within the committees' jurisdictions.

H.R. 2329 is a lean version of a bill that has been traveling through the House with Congressmen Sam Graves (R-MO) and Adam Schiff (D-CA), titled the Medicare Audit Improvement Act of 2013. The Medicare Audit Improvement Act of 2013 has a similar goal: to help small hospitals that may be ill-equipped to handle extensive document requests. This Act seeks to put a cap on the amount of document requests that Recovery Audit Contractors (RACs) may demand from providers.

Although RACs have successfully recovered millions of dollars in improper Medicare payments to health care providers, this Act may be valuable to hospitals struggling with the administrative burdens created by RAC audits. A thorough compliance plan is essential for hospitals seeking to decrease the risk of receiving an audit. If you or your healthcare entity needs assistance in developing an effective compliance plan, or assistance in Medicare, Medicaid, or third party payer audit defense, please contact our experienced health care attorneys at 248-544-0888.

DME Competitive Bidding Program Round Two Begins July 1, 2013

Mon, 17 Jun 2013 17:06:37 -0500

As of July 1, 2013, 799 suppliers will participate in Round 2 of the Competitive Bidding Program (CBP) for Medicare Durable Medical Equipment Prosthetics, Orthotics, and Supplies (DMEPOS), offering medical equipment and supplies to Medicare beneficiaries in the United States. The CBP has been in effect for one year in nine areas, and, according to the Centers for Medicare & Medicaid Services ("CMS"), has already resulted in $202 million in savings.

The CBP was established under Section 302 of the Medicare Modernization Act of 2003. Section 302 requires all DMEPOS entities within selected areas to compete to become Medicare suppliers by submitting bids to furnish equipment and supplies. The lower bids resulting from the competition replace the old Medicare DMEPOS fee schedule amounts for the bid items. Under the Act, the CBP must be phased in. Round 1 of the CBP occurred in 10 areas in 2007. The program was then implemented on July 1, 2008 for two weeks until the contracts were terminated by the Medicare Improvements for Patients and Providers Act of 2008. The program began again in 2009, as the Round 1 Rebid.

CMS granted 13,126 Round 2 DMEPOS CBP contracts to 799 suppliers, which collectively have 2,988 locations in 91 established communities across the United States. In addition to the 2,988 locations, the National Mail-order Program suppliers have 52 locations and have been contracted to serve the entire country by delivery. All suppliers must comply with Medicare standards. The Affordable Care Act expanded the program to require that all areas of the country are subject either to DMEPOS competitive bidding or payment rate adjustments using competitively bid rates by 2016.

CMS is required by law to recompete contracts for the CBP at least every three years. The contract period for the Round One Rebid expires on December 31, 2013, and CMS will be conducting the Round One Recompete in the same areas as the original Round One Rebid.

CMS expects the CBP to save $25.7 billion for the Medicare Part B Trust Fund between 2013 and 2022. In addition, CMS expects beneficiaries will save $17.1 billion, due to lower premium payments and co-insurance rates.

Beneficiaries living in one of the 91 communities participating in the CBP will be required to use a DME supplier from CMS' list of approved vendors. Although DME suppliers argue that the CBP hurts small business by forcing suppliers to price DMEPOS too low, CMS claims that beneficiaries will see average prices that are 45 percent lower than what Medicare currently pays for the same items included in the Round 2 areas and 72 percent lower on mail-order diabetic testing supplies nationwide.

Wachler & Associates will continue to keep you updated on the DME CBP and other changes regarding the Medicare and Medicaid programs. If you need assistance or have any healthcare law related questions, please contact an experienced healthcare law attorney at Wachler & Associates at 248-544-0888.

New Research Reveals Bundled Payment Program Success

Thu, 13 Jun 2013 14:45:27 -0500

A recent study published by Bailit Health Purchasing, has revealed that bundled payment programs are an effective option for organizations interested in an alternative to fee-for-service reimbursement for providers. Bundled payment differs from fee-for-service reimbursement by compensating a provider for all of the services a patient receives during a single hospital stay or during recovery from that stay on the basis of expected costs for an episode of care. Bundled payment initiatives seek to give providers greater incentive to better coordinate care with other providers, thereby reducing unnecessary duplication of services, reducing medical errors, improving patient health, and lowering costs.

Bailit Health Purchasing was commissioned by the Health Care Incentives Improvement Institute to research the viability of 19 active programs that have piloted bundled payment initiatives. Bailit released an initial report in May 2012. Bailit's most recent study, published on May 30, 2013, provides a status update on the 19 active programs and highlights early adopters that have been successful in making bundled payment part of their permanent reimbursement strategy.

Bailit's study, shared on Tuesday at the National Bundled Payment Summit in Washington, DC, highlights two successful case studies that have moved a bundled payment program from a pilot stage to a permanent reimbursement strategy: Blue Cross Blue Shield of North Carolina (BCBSNC) and Horizon Healthcare Services, Inc. (Horizon). The case studies reveal factors that have helped carry BCBSNC and Horizon to successful application of bundled payment.

Proven factors for success in implementing a bundled payment initiative include support from engaged and committed leadership, adequate resources, transparent data sharing, internal capabilities for complex data analysis, and an open mind to new ideas. These concepts and strategies will likely prove useful to other organizations seeking an alternative payment model.

Thoughtful payment reform is key to CMS' Bundled Payments for Care Improvement initiative, CMS' initiative begins this upcoming fall on October 1, 2013. CMS has selected 450 organizations to participate in this initiative, which aims to reward quality and reduce waste, ultimately lowering costs to Medicare. As Bailit's study exposes, bundled payment is a viable alternative to fee-for-service payment.

If you need assistance understanding or negotiating the terms of health care reform initiatives such as bundled payments, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.

Amy Fehn and Reesa Handelsman Appointed to ABA Health Law Section Leadership Positions

Thu, 13 Jun 2013 12:53:15 -0500

Wachler & Associates is pleased to announce the appointment of two of our attorneys to leadership roles within the American Bar Association's Health Law Section.

Amy K. Fehn will serve as Vice Chair of three ABA Health Law Sections, including the Health Law and Policy Coordinating Committee, the ABA Health eSource Editorial Board, and the ABA Health Law Section Publication Committee. Ms. Fehn has represented healthcare organizations for 15 years, focusing on HIPAA, Stark Law and the Anti-Kickback Statute, and other regulatory compliance matters. She also serves on the ABA's Accountable Care Organization (ACO) task force.

Reesa N. Handelsman received her first ABA Health Law Section leadership appointment. Ms. Handelsman will serve as Vice Chair of the Business & Transactions Interest Group. Ms. Handelsman has significant experience counseling healthcare entities in a variety matters, including Stark law and Anti-Kickback Statute compliance, hospital and physician contracting, and all types of healthcare transactions.

According to the ABA, these appointments represent the Health Law Section's "recognition of one's abilities, dedication and demonstrated commitment to the mission of the section."

Our firm is proud to see our attorneys continue to be recognized as leaders in the health law field. We take great pride in our position in the healthcare law community, and enjoy the opportunity to stay in front of legal developments and be involved with health law policy discussions at the highest level.

For more information on the respective ABA Health Law Section committees, boards, or interest groups, check out the ABA Health Law Section website.

Auditors Using Sophisticated Data Mining Techniques to Identify Fraud

Tue, 11 Jun 2013 17:53:32 -0500

Auditing entities are utilizing more sophisticated electronic data mining methods than ever before. Today's sophisticated data mining techniques enable auditors to identify greater cost recoveries, making auditing activities both more efficient and more effective.

Auditors utilize statistical data mining testing to determine whether a provider's billing practices are statistically different from their peers'. If data patterns from a provider's utilization rates are significantly different from that of their peers', auditors are able to identify situations where a provider's practices may be improper. By mining data on a regular basis, healthcare auditors isolate potential fraud and abuse.

Comparative Billing Reports (CBRs), a tool used by CMS to educate providers about their individual billing practices, detail complex statistical analysis in the form of charts and graphs and show how a practices' utilization rates compare to those of their peer group. Safeguard Services, LLC, a company contracted by CMS, produces and sends out CBRs to certain provider types. CBRs compare both state and national standards and may help a provider detect possible billing and coding problems for their practice.

CBRs alert healthcare providers of the possibility that their services are being improperly billed to Medicare and help providers ensure that their practices comply with Medicare billing rules. Medicare auditors use data mining analyses to recognize potential "outliers," whose practices deviate from the mean in a statistically significant way. As a result of the sophisticated statistical scrutiny used in CBRs, it is important for healthcare providers to understand how their coding and billing practices compare to coding and billing practices of their peers.

Although identifying an "outlier" does not guarantee that a provider's practices are improper, auditors are able to recognize potential issues. It is essential that providers conduct internal reviews and risk assessments, and understand the statistical analysis auditors employ in a CBR. Benchmarking charts allow providers to compare billing and utilizing practices to those of their peers.

If your provider type has been identified to receive a CBR, or if you are already a recipient of a CBR, please contact an experienced healthcare attorney at Wachler & Associates at 248-544-0888 to discuss evaluating your CBR analysis and to create an appropriate compliance plan that will reduce audit risks.

Outpatient Therapy Services Must Assign G-Codes or Face Medicare Denials

Mon, 10 Jun 2013 21:57:54 -0500

As of July 1, 2013, Change Request 8005 requires outpatient therapy service providers to report new functional G-codes and modifiers on claims for physical therapy (PT), occupational therapy (OT), and speech-language pathology (SLP) services or face Medicare payment denials. The G-codes will be used to identify the primary issue being addressed by the therapy, and the modifiers will identify the severity or complexity of the patient, as well as their change over time. The policy includes a list of 42 new non-payable G-codes, 14 sets of three codes each, and seven new severity/complexity modifiers on therapy claims.

This change became effective for therapy services with dates of service on and after January 1, 2013. However, the first six months are a testing period for providers to acclimate to the new coding requirements. During this pre-July 1 testing period, claims without G-codes and modifiers will be processed. Claims for therapy services with dates of service on or after July 1, 2013 that do not have the appropriate G-codes and modifiers will be returned or rejected. In addition, providers may not bill the patient for the rejected services.

After July 1, 2013, the correct G-codes and modifiers must be included on claim forms at the outset of the therapy episode, every 10 treatment days or every 30 calendar days (whichever is less), and at discharge. According to CMS transmittal 1196, contractors are required to alert providers, with the exception of institutional providers, to include the new G-codes with modifiers on future therapy claims through a Remittance Advice Message as of April 1, 2013.

Specifically, the new policy applies to PT, OT, and SLP services furnished in hospitals, critical access hospitals, rehabilitation agencies, comprehensive outpatient rehabilitation facilities, skilled nursing facilities, home health agencies (when the beneficiary is not under a home health plan of care), and private offices of therapists and physicians. The policy also applies to non-physician practitioners, including nurse practitioners, physician assistants, and certified nurse specialists.

In response to these changes, therapy providers must ensure that their billing staff has familiarized themselves with these new requirements for correctly billing Medicare Part B claims. If you need assistance in preparing for these changes, or need assistance preparing for and/or defending against Medicare audits, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.

RACs to Recover Radiation Oncology Treatment Payments

Thu, 06 Jun 2013 17:01:35 -0500

Earlier this year, Connolly, Inc., the Recovery Audit Contractor (RAC) for Region C, posted a new issue to its CMS-Approved Issues List targeting Stereotactic Radiation Therapy (SBRT) and Stereotactic Radiosurgery (SRS) services for providers in the following states: Arkansas, Colorado, Delaware, District of Columbia, Florida, Louisiana, Maryland, Mississippi, New Jersey, New Mexico, Oklahoma, Pennsylvania, and Texas.

According to the issue's description, CMS has approved auditing providers who have incorrectly billed for SBRT and SRS procedures found to be, upon review, "not medically appropriate." Connolly will be able to audit the billed SBRT/SRS claims as far back as three years from the initial determination date of the procedures, and will be focusing its audit efforts on the outpatient hospital setting. Consequently, this Connolly initiative may affect radiology oncology providers that have performed SRS and SBRT procedures in the states mentioned above.

In response to this news, providers must ensure they are keeping accurate records regarding the rationale and medical necessity for these treatment procedures, as well as maintaining and following effective compliance plans. If you need assistance in preparing for, or defending against RAC audits, or implementing a compliance program geared towards identifying and correcting potential risk areas related to RAC audits, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.

Wachler & Associates Partner Quoted by Michigan Lawyers Weekly

Wed, 05 Jun 2013 14:30:22 -0500

Michigan Lawyers Weekly, an independent newspaper that covers the legal profession in the State of Michigan, recently quoted Wachler & Associates partner Amy K. Fehn on the use of blogs by law firms.

The article, "Blogging: Making the words work," surveyed legal experts from around the state on the proper uses and benefits of a well-run legal blog. Ms. Fehn discussed the role of our blog in keeping our attorneys on the cutting edge of legal developments related to health law as well as keeping our clients informed of changes that may impact their health care related businesses.

To subscribe to Wachler & Associates' Health Law Blog, please add your email address and click subscribe in the window on the top right of this page. As always, check back here for continuing updates on health law developments around the country.

Pharmaceutical Company Violates Anti-Kickback Statute and Pleads Guilty to Fraud

Tue, 04 Jun 2013 15:40:15 -0500

On Friday, May 24, 2013, ISTA Pharmaceuticals, Inc., a pharmaceutical company recently acquired by Bausch & Lomb, Inc., pled guilty to violating the Federal Anti-Kickback Statute and the Food, Drug and Cosmetic Act (FDCA). Under the terms of a civil settlement agreement and ISTA's guilty plea, the pharmaceutical company has agreed to pay a total of $33.5 million to states and the federal government in fines and fees for conspiracy, misbranding, false submissions to government health care programs, and under whistleblower provisions of the False Claims Act.

The Anti-kickback Statute provides criminal penalties for companies who knowingly and willfully offer, pay, solicit or receive remuneration in order to induce business payable by Medicare or Medicaid. According to the Department of Justice's press release, ISTA violated the Anti-kickback statute by offering doctors illegal inducements, such as wine tastings and golf outings, in order to persuade doctors to prescribe ISTA's eye drug, Xibrom, to their patients.

Under the FDCA, companies may not introduce drugs into interstate commerce for uses that have not been approved by the Food and Drug Administration. Although the Food and Drug Administration approved ISTA's eye drug, Xibrom, for pain and inflammation after cataract surgery, ISTA pled guilty to marketing Xibrom for unapproved uses, such as to prevent swelling of the retina and to prevent cystoid macular edema.

As part of ISTA's plea agreement, its parent company, Bausch & Lomb, agreed to maintain their compliance and ethics program, conduct an annual review of the effectiveness of their program as it relates to ISTA's Xibrom violations, and annually certify the program's effectiveness. As a result of ISTA's violations, the federal government will no longer reimburse ISTA's drugs under the Medicare and Medicaid program.

This case should encourage providers to ensure their physician arrangements do not violate provisions of the Anti-Kickback Statute, False Claims Act, or any other fraud and abuse laws. Wachler & Associates healthcare attorneys regularly counsel providers in proactively addressing potential kickback violations and defending providers against government allegations. If you need assistance determining how the Stark law and False Claims Act may affect your practice or how to set up a regular review process, please contact an experienced healthcare attorney at Wachler & Associates at 248-544-0888.

Medicaid fraud control units (MCFUs) to receive Federal funding for data mining activities to identify fraud

Mon, 03 Jun 2013 13:41:20 -0500

Effective June 17, 2013, state Medicaid fraud control units (MCFUs) will be authorized to receive Federal funding for data mining, an audit technique used to identify Medicaid provider fraud. The Department of Health and Human Services Department (HHS) released a final rule on May 17, 2013, which modified an existing regulation prohibiting MCFUs from Federal funding participation (FFP).

Data mining tools and methods electronically screen, sort, and analyze state Medicaid data to identify Medicaid fraud. Advances in data mining technology benefit MCFUs by increasing investigative effectiveness. According to interpretations of the 1978 FFP regulations, state MCFUs are prohibited from receiving federal funds for the use of data mining. As a result of the technological advances now available, this final rule modernizes the regulations adopted in 1978.

To ensure effective funding and use of data mining of MCFUs, MCFUs must adhere to three essential elements:
1. Coordination between state Medicaid agencies and MCFUs in data mining activities.
2. Coordination between state Medicaid agencies and MCFUs on policy change and consistent practice and interpretation.
3. Appropriate staff training on data mining techniques.

Additionally, MCFUs must identify their plan of compliance to the above elements in a written agreement with state Medicaid agencies. Agreements may then be approved for a period of three years. In order to ensure appropriate usage of FFP funding, MCFUs must detail their progress and expenses in their annual report. OIG will use this information to monitor and oversee the MCFUs.

Federal reimbursements to MCFUs for data mining activities will increase effectiveness and efficiency in identifying Medicaid fraud and assist state officials in anti-fraud investigation and monitoring. The timing of this increase in state Medicaid auditing power coincides with the expansion of state Medicaid programs under the Patient Protection and Affordable Care Act, which increases federal funding for states that elect to expand the eligibility criteria for individuals to enroll in the Medicaid program. In response, Medicaid providers must be diligent in their compliance plans to avoid Medicaid audits in the future. If you, or your healthcare entity, need assistance in developing an effective compliance plan, or if you have any audit concerns, please contact an experienced Wachler & Associates health care attorney at 248-544-0888.

Hospital Lobbying Groups Push Congress to Pass RAC Bill

Wed, 29 May 2013 16:45:42 -0500

Hospital lobbying groups are pushing for Congress to pass the Medicare Audit Improvement Act of 2013, which would put a cap on the amount of document requests that Recovery Audit Contractors (RAC) may demand from providers. Specifically, the bill would limit RAC document requests to 2% of hospital claims and a maximum of 500 additional document requests over 45 days.

The legislation was introduced in the House on March 19, 2013 by Representatives Sam Graves (R-MO) and Adam Schiff (D-CA); and was introduced two months later in the Senate by Senators Roy Blunt (R-MO) and Mark Pryor (D-AK). On March 19, 2013, Graves stated in a press release that "[d]octors and nurses should be focused on caring for patients, not trying to comply with the ever-increasing requests for documents." Graves also stated that small, rural hospitals will benefit from this new legislation the most, since they are often ill-equipped to handle extensive document requests.

The American Hospital Association (AHA) endorsed both bills, and since the new year, has spent $4.3 million thus far in lobbying efforts. In addition, the Federation of American Hospitals and six state hospital associations also joined the AHA in its lobbying efforts. Despite this significant lobbying, neither bill has gained momentum. The same bill was also introduced last year by Graves, but failed to move out of committee. A spokeswoman for the AHA stated that the House bill was not expected to move soon. As a result, lobbying efforts have been placed on increasing the number of co-sponsors of the bill. Last year, only 26 members of Congress co-sponsored the bill, whereas the current legislation has 70 co-sponsors.

The passage of the Medicare Audit Improvement Act of 2013 would be very beneficial to hospitals, particularly small hospitals that struggle with the administrative burdens RAC audits create. However, a thorough compliance plan is essential for a hospital seeking to decrease the risk of receiving an audit as well as dealing with audits successfully and efficiently. If you or your healthcare entity need assistance in developing an effective compliance plan, or assistance in Medicare, Medicaid or third party payor audit defense, please contact our experienced healthcare attorneys at 248-544-0888.

Idaho State University Agrees to $400,000 Settlement For HIPAA Violation

Tue, 28 May 2013 13:42:37 -0500

On May 21, 2013, the Department of Health and Human Services (HHS) released its settlement agreement with Idaho State University (ISU) for Health Insurance Portability and Accountability Act (HIPAA) violations. The $400,000 settlement agreement involves ISU's self-reported breach of unsecured electronic protected health information (ePHI) of about 17,500 patients.

HHS received notification of ISU's breach on August 9, 2011, and shortly thereafter began an investigation into ISU's HIPAA compliance. Due to disabled firewall protections on ISU's servers, about 17,500 patients' ePHI were left unsecured for a minimum of 10 months. Furthermore, according to the investigation conducted by HHS, ISU's security measures were not adequate and ISU did not evaluate the possibility of potential risks occurring.

Most importantly, the Office for Civil Rights (OCR) which enforces HIPAA and oversees health information privacy in HHS, determined that processes for routine review were not in place at ISU. As a result, ISU was not able to detect the firewall breach as early as they could have if proper procedures were in place. Routine review is part of the HIPAA's minimum necessary standard which every HIPAA covered entity must comply with.

If you are a HIPAA covered entity or business associate and need assistance with complying with or understanding the HIPAA Privacy and Security Rules and its exceptions, please contact an experienced healthcare attorney at Wachler & Associates.

HHS Announces Pre-Existing Condition Insurance Plan (PCIP) Payments to Providers Will Decrease

Thu, 23 May 2013 09:20:59 -0500

On May 17, 2013, the Department of Health and Human Services (HHS) released an interim final rule, which lowers payments to providers for services furnished to individuals enrolled in the Pre-Existing Condition Insurance Plan (PCIP). The new rule will require providers to accept Medicare rates for services provided to PCIP participants instead of the commercial rates providers have received since the plan's inception.

The PCIP was established under the Patient Protection and Affordable Care Act (PPACA) which was enacted in March 2010. The plan was intended to be a temporary bridge to provide health insurance to uninsured individuals with pre-existing conditions until 2014. In 2014, most health insurance providers will be required under PPACA to offer coverage to all individuals, regardless of pre-existing conditions. Initially, HHS predicted that up to 400,000 individuals would enroll in PCIP, and Congress provided $5 billion in funds for the program. In fact, only 135,000 individuals have enrolled in the program, but due to the cost of the claims per enrollee being higher than originally projected, most of the $5 billion provided by Congress has been exhausted.

Several changes have already been instituted since the PCIP's creation in order to reduce costs, including ceasing referral payments to agents and brokers, changing provider networks, offering only a single plan option, increasing the maximum out-of-pocket limit for in-network services, and an increase in coinsurance once the enrollee's deductible has been met. Furthermore, the federally administered PCIP suspended its acceptance of new enrollment applications on February 15, 2013 until further notice.

Beginning June 15, 2013, services furnished to enrollees in the federally administered PCIP program will be paid at Medicare payment rates, or if Medicare payment rates cannot be implemented, then 50 percent of billed charges or at relative value scale pricing. HHS did note that prescription drugs, organ/tissue transplants, dialysis, and durable medical equipment benefits will continue to receive the commercial value payment these services have received since 2010. Furthermore, the new rule generally prohibits doctors and hospitals from increasing charges to consumers or PCIP enrollees to make up the difference resulting from this rule.

When this final interim rule becomes effective, providers will be paid less to treat PCIP enrollees. Providers will be forced to choose between treating PCIP patients and receiving less for their services, or to not treat PCIP enrollees at all. HHS alleged that the decrease in PCIP revenue providers experience will be offset by the uncompensated treatment providers would be forced to provide if the PCIP did not exist.

The interim final rule will not change the costs to the federal government; rather the rule specifies how HHS plans to spend the remaining $5 million appropriated by Congress. The rule did not specify what will happen if the $5 million runs out completely before 2014. For further information regarding the effect of this interim rule, or any question regarding billing for federal health care programs, please contact an experienced Wachler & Associates healthcare attorney at 248-544-3111.

Bard Agrees to $48.26 Million Settlement for FCA Violations

Mon, 20 May 2013 15:07:47 -0500

On May 13, 2013, the Department of Justice (DOJ) announced that C.R. Bard Inc. agreed to pay the United States $48.26 million to resolve allegations that Bard knowingly caused false claims to be submitted to Medicare in violation of the False Claims Act (FCA). Bard is a corporation based out of New Jersey which develops, manufactures, and markets medical products. The claims that purportedly violated the FCA were for brachytherapy seeds used to treat prostate cancer.

The government alleged that from 1998 to 2006, Bard delivered illegal remuneration in the form of grants, rebates, fees, marketing assistance, and/or free medical equipment to customers and physicians to induce them to purchase Bard's brachytherapy seeds, in violation of the Anti-Kickback Statute. The government argued that the hospital bills submitted to Medicare for these seeds were rendered false due to Bard's illegal kickback activity. The government alleged that Bard was liable for causing the submission of those false claims.

This settlement also resolves a lawsuit filed by Julie Darity, a former manager at Bard. Darity brought her claim under the whistleblower provisions of the False Claims Act, which allows private citizens to bring suits for false claims on behalf of the United States and share in the recovery obtained by the government. The former manager will receive $10,134,600 as her share of the civil settlement.

Furthermore, Bard has agreed to pay an additional $2.2 million and to take several remedial steps to enhance its corporate compliance program to prevent similar illegal actions in the future. For example, Bard has agreed to refine its Code of Conduct and other written policies to further promote Bard's commitment to full compliance with all Federal health care program requirements.

Wachler & Associates healthcare attorneys regularly counsel providers in proactively addressing potential kickback violations and defending providers against government allegations. If you or your healthcare entity need assistance in developing an effective compliance plan, or assistance in Medicare, Medicaid or third party payor audit defense, please contact our experienced healthcare attorneys at 248-544-0888.

Jury Rules Tuomey Violated Stark Law and the FCA through Physician Employment Agreements

Fri, 17 May 2013 12:11:58 -0500

On May 8, 2013, in a retrial of a 2010 case, a federal jury found that Tuomey Healthcare System (Tuomey) in Sumter, SC violated both the Stark Law and the False Claims Act (FCA). The jury found that Tuomey violated the FCA by submitting 21,730 claims to the Medicare program that were tainted by illegal compensation arrangements which induced physicians to refer patients to the hospital in violation of the Stark Law.

The underlying employment arrangements were made for 19 surgeons who each received base pay, significant benefits, and potentially two bonuses. The jury agreed with the government's contentions that the pay was not consistent with fair market value and was not commercially reasonable. The government argued that the excess compensation was evidence that the employment agreements took into account the volume or value of the physicians' referrals to Tuomey.

The jury assessed damages against Tuomey in the amount of $39,313,065, which is the full amount of the Medicare claims at issue. In addition, under the FCA, the government may seek up to three times the amount of damages plus $11,000 per claim, meaning Tuomey could potentially face up to $357 million in liabilities under the FCA. However, since Tuomey is a community hospital, they are likely to receive a penalty less than that amount. Each side will now submit motions interpreting what they think are the appropriate amount of damages, with a final damage amount coming sometime in the future.

This case should encourage providers to further evaluate potential business arrangements, or reevaluate current business arrangements, to ensure the arrangement does not run afoul of the Stark Law, Anti-Kickback Statute, False Claims Act or other fraud and abuse laws. Although the majority of penalties assessed for violating the FCA are reached through settlements, the jury's findings in Tuomey may result in a greater number of these cases reaching a jury verdict, which would likely result in substantially larger penalties. If you have any questions relating to the Anti-Kickback Statute, Stark Law or other federal or state fraud and abuse regulations, please contact an experienced Wachler & Associates healthcare attorney at 248-544-0888.