Place-of-Service (“POS”) codes allow CMS to pay for services based on where the physician performs the services. CMS pays physicians more when they perform services in their offices than in outpatient or inpatient departments, because in the case of services provided in an outpatient or inpatient department, hospitals pick up the tab for overhead and recover it through facility fees. CMS has revised its national policy on POS coding due to errors identified by the HHS Office of Inspector General (“OIG”). In a new Medicare transmittal (2407), CMS states that POS codes must be assigned based on where the beneficiary received the face-to-face encounter with the physician, nonphysician practitioner (“NP”) or other supplier. This allows the point of service to follow the patient as opposed to the doctor and bases the payment on where the patient receives the service, not where the physician performs the professional component. CMS provides an exception for inpatient and outpatient services, because the facility payment is bundled into the inpatient and outpatient prospective payment systems even if a specific service is performed at another site as part of hospital treatment. Therefore, for a service rendered to a patient who is an inpatient of a hospital (POS code 21) or an outpatient of a hospital (POS code 22) the facility rate is paid regardless of where the face-to-face encounter occurred. Proper coding of POS is important as POS coding has been identified as a major cause of improper errors by OIG and recover audit contractors and is a target on the OIG 2012 Work Plan. If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.
Gamma Knife Treatment
Two cases have been settled to resolve allegations that the hospital billed Medicare for admissions for Gamma Knife treatment that could have been performed on an outpatient basis. Gamma Knife treatment, formerly known as stereotactic radiosurgery, uses focused radiation to treat tumors, vascular deficiencies and other neurological conditions without damaging outlying tissue and is often performed on an outpatient basis without general anesthesia. Patients that stay overnight for a procedure are not necessarily considered inpatients. The Medicare Benefit Policy Manual (Chapter 1, Section 10) specifically states that patients undergoing minor procedures who are expected to require fewer than 24 hours of care often should be considered outpatients even if they spend the night in the hospital. This is often referred to as “outpatients in a bed” and APC payments under the outpatient prospective payment system include reimbursement for postoperative care up to 24 hours, including routine postoperative observation and monitoring. When determining whether a patient requires admission, the factors to consider on a case-by-case basis are: whether the procedure is on the Medicare inpatient-only list, whether the patient is expected to require more than 24 hours of care and whether the patient has increased risk or comorbidities that would require care in the inpatient setting. Because RAC auditor decisions are typically limited to what a chart supports, sufficiently-documented charts are key. Even when inpatient admissions may be justified, insufficient charted evidence will require denial. Therefore physicians should include all details, such as frequency of necessary vital signs or neuro checks, and distinguish between the term “admit” for observation versus “admit” for inpatient bed. If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.
IRS Action on Decision for Hormone Therapy and Sex Reassignment Surgery
The Internal Revenue Services ("IRS") issued an Action on Decision (“AOD”) regarding the issue of whether hormone therapy and sex reassignment surgery constitute medical care under §§213(d)(1)(A) and (9)(B) and are therefore a deductible expense. §213 of the Internal Revenue Code allows a deduction for expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer. Medical care includes amounts paid for the treatment of disease, but does not include amounts paid for procedures directed at improving the patient’s appearance, that do not meaningfully promote the proper function of the body or prevent or treat illness or disease. The Tax Court decided in a recent case that the plaintiff's gender identity disorder is a disease within the meaning of §§213(d)(1)(A) and (9)(B) and because the hormone therapy and sex reassignment surgery treat the disease the plaintiff may deduct the expenses for medical care under §213. Employer sponsored Group health plans, including health reimbursement accounts, flexible spending accounts and medical savings accounts, are subject to Section 213. Therefore, these types of expenses are reimbursable under these plans unless the employer specifically excludes such expenses. If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.
Guidance on Spinal Fusion Billing
TrailBlazer Health Enterprises, a Medicare administrative contractor (MAC), has provided guidance on spinal fusion (MS-DRG 460) which has become an area of increased scrutiny by CMS because of the growth in billing volume. The most common reason for denial of payment for spinal fusion-related hospital care is the lack of specific information about conservative care administered before the surgical intervention, but often times this missing information may exist in the outpatient records of the surgeon, primary care physician or other practitioner. To reduce audit errors caused by information missing from the hospital record, the hospital should proactively obtain previous diagnostic and therapeutic records from the surgeon and other practitioners including physical assessments, physician history and physical, progress notes, consultations, physical and occupational therapist evaluations and notes, radiology reports and therapeutic procedure notes. The practitioners should also either create clinically meaningful inpatient records or supply the hospital with relevant documents from their outpatient records. By including adequate history of the presenting illness it will improve the likelihood of payment of the hospital claim and payment of physician services performed in conjunction with the hospital stay. If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.
OMPP Beginning Recovery Audits for Inpatient Hospitals in January 2012
The Indiana Office of Medicaid Policy and Planning (“OMPP”) contracted with Thomson Reuters Healthcare to provide an enhanced fraud and abuse detection system (“FADS”). As a part of FADS, Thomson Reuters has subcontracted HMS to provide independent recovery audit contractor (“RAC”) services in compliance with Section 6411 of the Patient Protection and Affordable Care Act of 2010. HMS will audit provider payments and related financial records to identify and recover or correct Medicaid payments that were overpaid or underpaid. HMS is initially identifying and auditing inpatient hospital providers with outstanding credit balances, and has begun notifying selected providers of upcoming audits. If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.
Indiana DCS Residential Rate Review Requests Due Soon
OIG: Physician/Lab Arrangement Could Implicate Health Care Fraud and Abuse Laws
The OIG voiced additional concern over potentially improper and abusive marketing activities that may occur under the arrangement in that the laboratory company would have access to the physician's patients' information, and would thereby have the opportunity to encourage the physician to order medically unnecessary tests. The OIG stated that this would be considered suspect marketing activity.
For more information on this article or the OIG Advisory Opinion, please contact Leigh Ann O'Neill at 317-238-6346.
HHS Awards $220 Million in Affordable Insurance Exchange Grants to 13 States
On November 29, 2011 the Department of Health and Human Services (HHS) announced its award of nearly $220 million in Affordable Insurance Exchange Grants to 13 states to help them implement Insurance Exchanges pursuant to the Patient Protection and Affordable Care Act (PPACA). States receiving funds from the November 29th grant include Alabama, Arizona, Delaware, Hawaii, Idaho, Iowa, Maine, Michigan, Nebraska, New Mexico, Rhode Island, Tennessee and Vermont. Of those states, 12 are receiving Level One grants, which provide one year of funding to states that have already made progress using their Exchange planning grant. The 13th state, Rhode Island, is receiving the first Level Two grant, which provides multi-year funding to states further along in the planning process.
Under the PPACA, states have the freedom to design Affordable Insurance Exchanges, where consumers can choose a private health insurance plan that fits their health needs. In the Exchanges, insurers will provide new information such as an easy-to-understand summary of benefits and costs to consumers.
HHS also released a set of Frequently Asked Questions in anticipation of state legislative sessions beginning in January. The answers are designed to help advance state policy development for Exchanges. Some examples include: that Exchange grants can be used to build a state Exchange that is operational after 2014; that state-based Exchanges will not be charged for accessing Federal data needed to run Exchanges in 2014; and that state insurance rules and operations will continue even if the Federal government is facilitating an Exchange in the state. HHS will also allow greater flexibility in eligibility determinations, allowing, for example, an Exchange to permit the federal government to determine eligibility for premium tax credits.
States have many opportunities to apply for funding. To accommodate state legislative sessions and to give states more time to apply, HHS also announced a six-month extension for Level One establishment grant applications. Applications now will be accepted until June 29, 2012.
For more information on Affordable Insurance Exchanges, click here.
CMS Makes Minor Adjustments to Rules for Doc-Owned Hospitals
Buried deep in the CMS final rule with comment period on Hospital Outpatient and Ambulatory Surgery Center payments are a few modifications to the federal rules regarding expansion of physician-owned hospitals, physician self-referral prohibitions, and patient notification requirements.
The document mostly addresses the processes for a physician-owned hospital to request exemptions to restrictions on self-referral and expansion, and also summarizes comments that the CMS received on proposals it made in July.
The rule also includes provisions noting that physician-owned hospitals must not “discriminate against beneficiaries of federal healthcare programs” or “permit physicians practicing at the hospital to discriminate against such beneficiaries,” and specifying that any permitted capacity increases must not result in a hospital increasing its number of licensed operating rooms, procedure rooms, and beds by 200%.
The rule also clarified patient-notification regulations that mandate how “dedicated emergency departments “must conspicuously post notices if a facility does not have a physician on site 24 hours a day, 7 days a week. CMS stated that medical residents would qualify as “physicians” and that the notification would apply to all hospitals, not just physician-owned hospitals.
Another change is that inpatients and outpatients who receive observation services, surgery, or services involving anesthesia must be given written notice that a hospital may not have a physician on-site 24 hours a day, and that this notification must be followed by a signed acknowledgment from the patient of this fact.
For more information on any of the above, contact Thomas N. Hutchinson at thutchinson@kdlegal.com or (317) 238-6254
HHS Announces Formal Start of HIPAA Privacy and Security Audit Program
The time has come for group health plan sponsors to stop procrastinating regarding HIPAA privacy and security compliance. The Office of Civil Rights (“OCR”), which is the division of the Department of Health and Human Services (“HHS”) that is responsible for enforcement of the HIPAA Privacy and Security Rules and the Breach Notification standards, recently announced the “pilot phase” of a HIPAA audit initiative beginning immediately and extending through December of 2012. The audit initiative is part of OCR’s implementation of the HITECH Act amendments to the Privacy and Security Rules enacted as part of the American Recovery and Reinvestment Act of 2009. The HITECH Act mandates that HHS conduct periodic audits to ensure that HIPAA covered entities are complying with HIPAA’s requirements to protect the privacy and security of plan participants’ protected health information.
According to the OCR’s website, over the next year this initiative will include a broad range of HIPAA covered entities, including group health plans, health care providers, and health care clearinghouses. Specifically, OCR will target up to 150 covered entities between now and December of 2012, including not only health care providers, but also “health plans of all sizes and functions.” Although HIPAA business associates are not the target of the initial pilot program, OCR indicates that business associates will be included in future audits.
The beginning of this OCR’s formal audit program serves to highlight the importance of periodic review of group health plan HIPAA compliance by plan sponsors. This HIPAA compliance review should include, at a minimum, the following steps:
· Review of plan documentation to ensure that appropriate provisions addressing HIPAA obligations are included;
· Implementation and periodic review of written HIPAA privacy policies and procedures;
· Implementation and periodic review of required administrative, technical and physical safeguards related to electronic protected health information;
· Implementation and documentation of a risk assessment and breach notification procedures;
· Review of business associate agreements, as well as periodic audit of HIPAA compliance procedures adopted by business associates; and
· Periodic workforce training regarding HIPAA’s privacy and security requirements for those workforce members with access to group health plan information.
For more information regarding HIPAA privacy and security compliance, or for assistance with a compliance review, please contact Katy Stowers or another member of our Employee Benefits and Executive Compensation Practice Group.
U.S. Supreme Court Will Review Constitutionality of Health Care Reform in 2012
On November 14, 2011, the United States Supreme Court announced its decision to hear legal challenges to federal health care reform legislation as part of the Court's scheduled 2012 docket. Specifically, the Supreme Court will consolidate and hear various issues raised in three separate cases challenging the constitutionality of the Patient Protection and Affordable Care Act ("PPACA"). Parties to the lawsuits include the federal government, 26 states, and the National Federation of Independent Business, a trade association representing small businesses. Key issues under review include the constitutionality of the individual mandate to purchase health insurance that is a fundamental part of PPACA's reforms, as well as the viability of the PPACA in its entirety if in fact the individual mandate is deemed unconstitutional. The Court has scheduled oral arguments in March of 2012. A decision is likely in late June or early July, before the end of the Court's 2012 term.
If you have any further questions, please contact Katy Stowers.
HHS Announces Revised Standards to Eliminate Discriminatory Care
On October 31, 2011, The United States Department of Health & Human Services (HHS) released revised and final survey standards to be used to consistently measure race, ethnicity, sex, primary language, and disability status in an effort to highlight and target disparities in health status.
These new standards for data collection and reporting were mandated under the Affordable Care Act. Proposed standards were published in June of this year and comments were accepted until August 1st.
The new standards became immediately effective and will be used in all new surveys sponsored by HHS. A copy of the final standards and an accompanied explanation can be found here.
Please contact Brian Heaton at bheaton@kdlegal.com or (317) 238-6354 with any questions regarding these new standards.
CMS Adopts Changes for ASC and Hospital Outpatient Care
This final rule will increase payment rates in calendar year 2012 by 1.6% for ASCs and by 1.9% under the Outpatient Prospective Payment System. Designated cancer hospitals received a much larger payment adjustment, as required by the Affordable Care Act, with an increase of 11.3%.
The final rule also creates a new quality reporting program for ASCs, establishes an electronic reporting pilot to report clinical quality measures, and strengthens the hospital value-based purchasing program for inpatient stays beginning October 1, 2012.
The final rule will appear in the November 30th Federal Register, and comments to the final rule are due by January 3, 2012. A copy of the full final rule is available here. http://www.ofr.gov/(X(1)S(h2non102de2t5dfsoq3k2uxk))/inspection.aspx?AspxAutoDetectCookieSupport=1
If you have any questions regarding the impact of these developments on your organization, please contact Brian Heaton at bheaton@kdlegal.com or (317) 238-6354.
Indiana DCS Publishes Residential Provider Manual
- Errors have been made in the cost report submitted to the department, calculation of the rate, or the determination by the department of the reasonableness of any cost; or,
- The determination of the rate by the department has an adverse impact on child welfare in Indiana and no other residential provider in the State of Indiana, or other licensed provider, can adequately address the adverse impact to child welfare in the State of Indiana.
- Identification of the current rate and approved new rate, as applicable to a specific program or service offered by the residential provider;
- An updated or revised cost report for the applicable program or service, including an itemized statement of administrative and indirect costs that the residential provider considers allowable under the provisions of this rule;
- A clear, concise statement of the reasons for the requested change; and
- A detailed statement of related information in support of the change.
The administrative appeal request must be submitted on the DCS form, Residential Treatment Services Provider and Child Placing Agency Rates Administrative Appeal Request (available here). An administrative appeal against DCS will be conducted under applicable provisions of the Administrative Orders and Procedures Act. The residential provider will have the burden of proving that, by a preponderance of the evidence, DCS’ decision following the administrative review was erroneous. Two (2) or more separate appeals with the same or substantially the same facts may be consolidated by the administrative law judge into one appeal. During the period of a review or an appeal, DCS will pay the rate stated in the most recent letter mailed to the provider. If a new rate is established during the review or appeal, the new rate will be applied retroactively to the effective date stated in the original rate notification letter. Any rates already paid will be adjusted up or down.
If you have questions regarding the Manual, or would like assistance with requesting a review of your DCS residential rate, please contact Leigh Ann Lauth O'Neill at 317-238-6346.
CMS Issues Guidance to States for an Independent Informal Dispute Resolution Process for Long Term Care Facilities
Section 6111 of the Health Care Reform Law, the Patient Protection and Affordable Care Act (PPACA), formed the basis for the establishment of a new Independent Informal Dispute Resolution (IIDR) process within the Civil Money Penalty scheme. Per Federal Nursing Home Regulations at 42 CFR 488.431, the new IIDR process has specific time lines and requirements for facilities to meet in order to take advantage IIDR. On October 14, 2011, CMS issued Survey & Certification Memorandum 12-02-NH that provides further guidance on the new IIDR process.
The new IIDR process is an option for facilities to elect if the facility is the subject of a Civil Money Penalty (CMP) that will be collected and placed in an escrow account. CMS is phasing in the CMS collection and escrow provisions of the PPACA and attendant regulations and will only be applying the CMP collection and escrow authority on the most serious deficiencies. Until further notice from CMS only those deficiencies that cite actual harm or immediate jeopardy (G or above) will be subject to the CMP collection and escrow and only those deficiencies will trigger the opportunity for IIDR. Any CMPs imposed for D, E and F deficiencies will be collected under the current process and are not subject to the new IIDR process.
Federal funding is available to States, through the State Survey Agency, for development of the IIDR process. The Indiana State Department of Health (ISDH) recently issued an alert indicating that the department is in the process of developing a new IIDR process according to the CMS guidance. The new IIDR process must:
1. Offer a facility the opportunity for IIDR within 30 calendar days of notice of imposition of CMP that will be collected and placed into escrow. A facility has 10 calendar days to request IIDR after receiving notice.
2. Be completed within 60 calendar days of receipt of the facility request for IIDR. “Completed” IIDR means that (a) a final decision has been rendered, (b) a written report has been generated, and (c) the ISDH has provided written notice to the facility of the decision.
3. Generate a written record of the decision before the CMP is collected. Such written record must include (a) each disputed deficiency/survey finding, (b) a summary of the IIDR recommendation with rationale for the result, (c) documents submitted by the facility, and (d) comments submitted to the IIDR by the Ombudsman and/or residents and their representatives.
4. Notify the Ombudsman, resident and resident’s representative of the opportunity to submit comments to the IIDR entity prior to the completion of the IIDR process.
5. Be administered by an entity that does not have a conflict of interest with the ISDH (State Survey Agency) and that has specific understanding of Medicare and Medicaid program requirements.
CMS indicates that for States to receive Federal funds for IIDR in FY 2012, States must have a process and estimated budget submitted to CMS by November 30, 2011. Furthermore, the new IIDR process is set to begin on January 1, 2012. It is unclear at this time whether the ISDH will meet either deadline. Given that Indiana law regarding state agencies contracting for services requires a fairly lengthy procurement process, it does not seem likely that the ISDH process will be finalized and ready by January 1, 2012. For deficiencies that are subject to the new IIDR process, States may not charge facilities for the IIDR process. For situations that do not require the new IIDR (deficiencies that do not require escrowing of CMP), the State may develop and charge for its own resolution process.
Krieg DeVault will continue to monitor the development of the new IIDR process in Indiana. If you have any questions about the crime reporting requirements, please contact Zach Cattell at 317-636-4341.Accountable Care Organizations Final Rule Released
The official version of the final rule will be published in the Federal Register on November 2, 2011, at which time it is expected that the Innovation Center will officially launch its Advance Payment Model program, which is aimed at determining if pre-payment of a portion of future shared savings might spur ACO participation. Information on the Advances Payment Model program can be found here.
For more information on the Final Rule, please contact one of our health care reform lawyers, Leigh Ann O'Neill or Tom Neal.
ASC Notice Rule Eased
If you have questions about this article, or about other ASC compliance requirements, please contact Leigh Ann Lauth O'Neill at 317-238-6346.
Upcoming Unclaimed Property Deadline for Indiana Providers
Indiana health care providers and other entities who have been holding unclaimed funds of patients or other persons are required to submit their annual report to the Indiana Attorney General on or before November 1st. Generally, the property that will be subject to the 2011 report will be that property that has been abandoned between July 1, 2007 and June 30, 2008.
Penalties for non-compliance with Indiana's unclaimed property rules include (i) a late fee of $100 for each day the annual report is late (up to $5,000), (ii) payment of interest for the time of delinquency at a rate equal to the one-year T-Bill rate plus 1% (currently 1.19%), (iii) the cost of any audit performed and associated administrative expenses in investigating the failure to pay, and (iv) if found to have intentionally failed to pay or deliver property, an additional civil penalty of 10% of the value of the property.
The instructions for filing a Report with the Indiana Attorney General are available on its website at: http://ucp.indianaunclaimed.com/attorneygeneral/ucp/holder_reporting.html. For any other questions regarding Indiana's unclaimed property rules, please contact Brian Heaton at (317) 238-6354 or bheaton@kdlegal.com.
CMS Releases Draft Affordable Care Act Federal Upper Limits
The Patient Protection and Affordable Care Act (PPACA) modifies the statutory provisions that establish a Federal Upper Limit (FUL) for multiple source drugs. The Social Security Act was revised to require that the Secretary calculate FULs as no less than 175 percent of the weighted average (determined on the basis of manufacturer utilization) of the most recently reported monthly average manufacturer prices (AMP). As a step in implementing this change, CMS has issued the first Draft Affordable Care Act FUL reimbursement files and draft methodology for review and comment.
CMS notes that the PPACA specifies that the FULs amendments shall take effect without regard to whether final regulations to carry out the amendments have been promulgated.
Comments on the draft PPACA FULs and the methodology used the calculate the FUL may be submitted to CMS at FUL@cms.hhs.gov. CMS will consider all comments received, but does not plan to respond to individual comments. Following a period of releasing the FULs in draft format, CMS plans to publish the final FULs. For more information on the Draft PPACA FULs, please contact one of our health care and pharmacy law attorneys, Anne O'Brien.
HHS Announces Comprehensive Primary Care Initiative
On September 28, 2011, the United States Department of Health and Human Services (HHS) announced a new initiative to provide bonuses to primary care physicians who are able to deliver higher quality, better coordinate care and use health care funds more wisely. The initiative, made possible by the Patient Protection and Affordable Care Act (PPACA), is voluntary and will initially begin as a demonstration project in 5 to 7 geographic markets.
Public and private health care payers must submit a Letter of Intent by November 15, 2011 to be eligible to be selected for the initiative. In selected markets, primary care providers will be enrolled and then provided a monthly fee by CMS.
Additional information about the initiative can be found at here. For any other questions regarding this initiative or other health care reform grants, please contact Brian Heaton at (317) 238-6354 or bheaton@kdlegal.com.
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