Health Care Reimbursement

On April 9, 2012, CMS announced the one-year delay of ICD-10 implementation.  It is recommended that hospitals use this extra one year to further prepare for the drastic change in coding.  While ICD-9 has 13,000 diagnosis codes and 3,000 procedure codes, ICD-10-CM has 68,000 diagnosis codes and ICD-10-PCS has 87,000 inpatient procedure codes.  The ICD-10 codes are more descriptive and require more detailed documentation.  Hospitals are warned against having a false sense of security that electronic health records (“EHR”) will take care of ICD-10, because EHR information is only as good as the provider using it.  If the provider does not provide sufficient documentation and data, which lacks the required specificity, payors will reduce reimbursement.  ICD-10 procedure codes will likely be more difficult to comply with than diagnostic codes, as procedure codes will require coders to think more three-dimensionally, beef up their anatomy knowledge, and understand what is considered a full body part.  It is also recommended that the one-year delay be used to bring compliance officers in on the ICD-10 transition.  Compliance should work with the health information management department to ensure adequate training and certification. Hospitals may consider hiring temporary codes while the hospital is training their own staff, and training community physicians and their office staff as their coding will affect hospital billing compliance. 

The following are steps compliance officers should take during the ICD-10 preparation process: (1) monitor milestones related to software application testing and validation; (2) educating all levels and types of staff, including physicians, coders, and clerks who deal with managed care authorizations; (3) monitor claims edit software to determine which types of claims fail edits before they leave the hospital and monitor payer data to track payment, denial, and suspension; and (4) follow software application upgrades and programs after ICD-10 has been implemented.   If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

Medicare administrative contractors (“MACs”) are cracking down on physician signatures and certifications.  But, if the MAC is relying on a Medicare manual provision that goes beyond the statute or regulation for denying payment due to lack of signature, physicians may have grounds to fight back.  According to the Medicare Program Integrity Manual, if physician signatures are missing from any other piece of documentation, the MAC or comprehensive error rate testing (“CERT”) contractor must accept an attestation from the author of the medical-record entry.  Generally, the attestation statement is required to be signed and dated by the author of the medical record entry and contain enough information to identify the beneficiary.  Even though the Medicare Program Integrity Manual states that physician orders must be signed, providers may not necessarily be out of luck if the claim is denied because of a lack of signature.  The Program Integrity Manual, is a manual, not a regulation, and lacks the force of law.  Furthermore, Medicare regulations set forth requirements for each services, but not all requirements include signatures, some just state the order must be written.

There are conflicting rules on durable medical equipment and prosthetics and orthotics supplies (“DMEPOS”).  The Program Integrity Manual states that unless suppliers obtain a signed, detailed, written order prior to billing DMEPOS, Medicare contractors will deny their claims as medically unnecessary, whereas, the law says that CMS may require a written order before delivery.  Another twist in the rules, is that according to the Medicare Benefit Policy Manual, Medicare Part B covers artificial eyes, arms and legs, and braces and trusses when furnished incident to a physician’s services; so arguably an order may not be required as long as the incident-to requirement is satisfied.  For home health, the physician must certify the patient is confined to their home and needs intermittent skilled nursing care or physical, occupational, or speech therapy.  A face-to-face encounter to assess the need for home health care must occur, within 90 days before home health care starts of 30 days after, by a physician, or by a physician extender if the extender must communicate their findings to the physician.   Home Health must also be recertified every 60 days, but there is no subsequent face-to-face encounter requirement.  Hospice benefits require physician certification, that the patient’s prognosis for life expectancy is six months or less, before billing. Such certification and brief narrative of clinical findings supporting the prognosis must be signed and dated by the physician.  Hospice certification lasts for two 90-day periods, and if the stay is expected to extend into a third period, there must be a face-to-face encounter with a physician or nurse practitioner.  With the crack down on home health and hospice documentation, it is imperative that physicians get the certifications and signature requirements correct.

Although the Medicare manual does not have the force of the law, it is recommended that the hospital and physicians still make an effort to make sure orders are written and signed, as this will help protect reimbursement and promote compliance.  If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

Telehealth is the delivery of health care through telecommunications, which allows providers to use videoconferencing and other technology to provide certain services to patients in other regions or states.  For Medicare coverage, a patient has to be located in a health professional shortage area not included in a metropolitan statistical area, but the treating providers can be anywhere.  Recent moves by CMS and some states may fuel its use by hospitals, however if a hospital anticipates using telehealth, it should implement compliance measures.  Below is a list of legal and regulatory challenges facing telehealth users. 

Credentialing and privileging. Required credentialing, verification of a provider’s credentials, and privileging, what services providers are qualified to perform, is now easier for telehealth users due to a recent change in credentialing and privileging rules by CMS.  CMS now allows hospitals and critical access hospitals to rely on credentialing and privileging conducted by the distant-site facility for telemedicine practitioners providing telemedicine services, however there must be a written agreement between the facility that credentials and privileges the provider and the facility where the patient presents.

State licensure. Although about 20 states still require providers to have licenses in the states where patients are located, there is a movement of reducing state licensure barriers based on the excitement for telehealth.  For example: 10 states have special telehealth licenses; a few states have reciprocity, so a license in one state is the same as a license in another for telehealth purposes; and some states allow an exception for consultations.

Prescribing.  Many states have different approaches to prescribing using telehealth, but there is some movement with states liberalizing prescribing laws.  For example, Virginia allows physicians to prescribe drugs via telehealth if the physician has a bona fide relationship with the patient, in which the physician has conducted a physical exam either physically or using instruments and diagnostic equipment through which images and medical records can be transmitted electronically.

Medicare coverage and reimbursement. Medicare covers 20 categories of telehealth services.  Such services will be covered if the patient is seen at approved originating sites and the service is performed at distant sites by physicians, clinical psychologists, nurse practitioners, physician assistants or other designated clinicians.

Medicaid coverage. About 39 state Medicaid plans reimburse telehealth.  Although Medicaid’s definition of “telehealth services” is modeled on Medicare’s, CMS allows states to decide whether to cover telehealth and which services to pay for.

Private insurance coverage.  Only a few states require private pay insurance to cover telehealth and reimbursement of telehealth is generally lower than comparable face-to-face meetings. 

Anti-kickback fraud and abuse.  Although distant sites and vendors may give originating sites expensive telehealth equipment to allow telehealth encounters, this may trigger the anti-kickback statute for giving or receiving free items or services.  However, telehealth arrangements may escape through the anti-kickback law’s safe harbors for space rentals, equipment rentals, personal services and management agreements, or donations for electronic health record technology and e-prescribing.  When determining whether a telehealth arrangement creates a kickback risk, the provider shall consider whether (1) a subsidy for telehealth resulted in referrals; (2) something of value was offered, requested or changed hands; (3) the conduct was willful; (4) patients were informed of the inducements; (5) providers knew about the kickback law, and if so, whether there was a relevant safe harbor; and (6) a federal health program pays for some or all of the telehealth services.

HIPAA privacy and security. Because some telehealth providers communicate with patients using Skype, GoogleTalk or ooVoo, the protected health information is not encrypted.  Providers should create a HIPAA authorization form and consent form for certain technology in which the potential risks and consequences are disclosed.

Although telehealth is becoming more popular, the above listed risks should be considered and addressed by providers before making the move to using telehealth.  If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

A recent IHCP Newsletter published an article regarding the various requirements for disenrolling certain Medicaid enrollees.  When Indiana Health Coverage Program (“IHCP”) members transition to a long-term care facility, a psychiatric residential treatment facility (“PRTF”), hospice care, a waiver program, or to the 590 program; the member must be disenrolled from the Hoosier Healthwise risk-based managed care (“RBMC”) program.  Until Hoosier Healthwise disenrollment occurs, fee-for-services (“FFS”) claims, except for carved-out services, for these members will be denied.  

Long-Term Institutional Care

                The nursing facility or ICF/MR must request a Pre-Admission Screening Resident Review (“PASRR”) for facility placement before admission and notify the member’s managed care entity (“MCE”) of the PASRR request within 72 hours of admission. The State will then approve the PASRR request and designate the appropriate level of care in IndianaAIM, which will automatically trigger RBMC disenrollment and result in same-day processing for disenrollment and level of care. If the provider fails to verify an IHCP member’s coverage or fails to contact the MCE within 72 hours, the provider is responsible for charges incurred until the member is disenrolled from the MCE.  If the provider does not complete the paperwork for the appropriate level of care determination, and the member is still enrolled in Hoosier Healthwise after two months, the MCE is no longer liable for payment, and as long as the patient remains a member of the MCE, and FFS claims will be denied.  If the member’s PASRR is in processing while the member is linked to an MCE, the financial responsibility lies with the MCE for up to 60 days.  However, an MCE may obtain services for its members in a nursing facility for a short-term stay, less than 30 days, and the MCE may negotiate rates for reimbursing the nursing facilities for these short-term stays.

Psychiatric Residential Treatment Facility Services

                Before a PRTF can be reimbursed for FFS claims for a Hoosier Healthwise member, the member must be disenrolled from the MCE.  The PRTF must fax a PRTF prior authorization (“PA”) request to the PA vendor, ADVANTAGE Health Solutions, at 1-800-689-2759.    The PRTF must also contact the MCE before the member is admitted to the PRTF, or immediately upon admission, if advance notice is not feasible.   ADVANTAGE will approve the PA request, then enter the PRTF level of care in IndianaAIM which will automatically trigger RBMC disenrollment and provide for same day processing.  Upon discharge, the PRTF must notify ADVANTAGE, and ADVANTAGE will end-date the level of care for the member.  If the member is still eligible for RBMC, the auto-assignment process will immediately reassign the member to the member’s previous MCE, effective the first or 15^th of the month, depending on the disenrollment date.

Hospice Care

                Although hospice care is not covered under Hoosier Healthwise, terminally ill members may qualify for hospice care under the FFS Medicaid program upon disenrollment from RBMC.  Hospice providers must fax a hospice election form to ADVANTAGE at 1-800-689-2759 and contact the MCE the member is enrolled in.  ADVANTAGE will approve the request and designate the appropriate hospice level of care in IndianaAIM, which will automatically trigger RBMC disenrollment providing same day processing.  RBMC disenrollment documentation should be faxed to (317) 810-4488.  MCEs are required to coordinate care for its members who are transitioning into hospice and give the hospice provider any information necessary to complete the hospice election form.

Home and Community-Based Waiver Services

                Home and Community-Based Waiver Services (“HCBS”) are excluded from Hoosier Healthwise, and therefore members approved for waivers must be disenrolled from RBMC.  The MCE must coordinate care for a member during the member’s transition to HCBS, until disenrollment is effective.  The case manager must submit a Notice of Action to the Division of Disability and Rehabilitative Services (“DDRS”) for autism, developmental disabilities, and support services waivers; or the Division of Aging (“DA”) for aged and disabled, and traumatic brain injury waivers.  The appropriate division will review the waiver designation request and enter a waiver level of care into IndianaAIM, which will automatically disenroll the member from RBMC, effective the date the level of care was processed.  If a retroactive level of care date is entered, the disenrollment date will be the “processing date.”

Medicaid-to-590 Program Disenrollment

                Hoosier Healthwise members being transitioned to the 590 program must be disenrolled from RBMC.  As most members seeking enrollment in the 590 program are on disability Medicaid and not in Hoosier Healthwise, the facility must send a request to suspend Medicaid, to the county casework of the Division of Family Resources Service Center.   The facility must then fax State form 32696 E/D/T (Enrollment/Discharge/Transfer) to the HP Eligibility Unit at (317) 488-5217, to enroll the member in the 590 Program.   The HP Eligibility Unit will enter the enrollment and fax the completed for back to the facility, which will trigger RBMC disenrollment, effective the same day.   If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

Wound care centers are under increased scrutiny by Medicare administrative contractors (“MACs”) and will be a big target when recovery audit contractors (“RACs”) expand their scrutiny of medical necessity from the inpatient to the outpatient side.  Because wound care centers are very complex, and do not have a special designation, often times care is not properly and adequately documented causing centers to be a target upon MAC or RAC review.  Clinicians and coders need to understand the difference between documenting indications and documenting medical necessity.  Indications are the diagnoses, while medical necessity documentation provides evidence that services are used correctly and patients are improving.  Auditors are looking for medical necessity spread throughout the patient’s chart, like a story.  Clinicians and coders also need to be aware of documentation challenges with electronic health records (“EHRs”).  Even if they are putting a lot of data into field, if the software does not have the payers’ logic written into it behind the screen or the clinicians are not consistent in their entries, it may not translate the data into a compliant medical record.

Another challenging area for hospitals is the new codes for wound care on the outpatient side.  CPT 2011 update changed the definition of CPT codes 11042 to 11044: CPT 11042 is “debridement, subcutaneous tissue” (which is skin), 11043 is “debridement, muscle and/or fascia,” and 11044 is “debridement, bone” (which includes skin and muscle along the way).  Debridement is reported according to the depth of the tissue removed and by the surface area of the wound.  CPT  codes 11042, 11043, and 11044 are for the first 20 square centimeters of the wound, and there are three add-on codes for additional increments of 20 square centimeters (11045 for skin, 11046 for muscle, and 11047 for bone).  Also, effective January 1, 2012, the CPT book deleted 24 skin biologic and skin-substitute codes that were linked to products and replaced them with eight new application codes (15271-15278) which are grouped by the size of the wound and location on the patient’s body.  Skin-substitute products will still have unique HCPCS codes, but they must be used with the eight new application codes.  As skin substitutes are considered a drug/biologic, any part of the sheet that is discarded must be reported to Medicare as waste.

Because wound care is subject to repetitive billing to Medicare, hospitals may lump the wound care services over a thirty-day period on one claim.  However, MACs want expensive therapies and modalities to be reported on the claim with a primary code to ensure they correlate to the patient’s problem and Medicare coverage.  This is problematic when multiple services are provided in the same month and their primary diagnoses vary because the hospital UB-04 claim form has only one primary-code box available, and MACs may deny the claim if the primary diagnosis code doesn’t support all the services on the claim.

All CPT codes on Medicare claim forms must be linked to a revenue code, but because wound care centers do not have their own revenue code, the wrong revenue code is often used, which will affect hospital reimbursement through the cost report.  Most services performed at wound care centers are reported with the revenue codes for clinic or treatment rooms (0761 and 0510). To improve wound care center compliance and reimbursement, clinic managers, billers, coders, registration, and compliance department should trained on proper coding of services at wound care centers.  If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

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.

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.

The Centers for Medicare & Medicaid Services (CMS) released the Final Rule for SNF PPS and consolidated billing for fiscal year (FY) 2012 on Friday, July 29. An important provision included in this rule will reduce Medicare SNF PPS payments in FY 2012 by $3.87 billion, or 11.1% lower than payments for FY 2011. CMS states that the reason for this rate reduction is to correct for an unintended spike in payment levels and better align Medicare payments with costs.

CMS found that the parity adjustment made in FY 2011, which was intended to ensure that the new RUG-IV system would not change overall spending levels from the prior year, instead resulted in a significant increase in Medicare expenditures during FY 2011. This increase in spending was primarily due to shifts in the utilization of therapy modes under the new classification system differing significantly from the projections on which the original parity adjustment was based.  According to CMS, “additional data analyzed by CMS since publication of the proposed rule confirmed the extent of the overpayments that have occurred since implementation of the RUG-IV system.”  The FY 2012 recalibration of the CMIs will result in a reduction to skilled nursing facility payments of $4.47 billion or 12.6 percent.  However, this reduction would be partially offset by the FY 2012 update to Medicare payments to skilled nursing facilities.  The update — an increase of 1.7 percent or $600 million for FY 2012 — reflects a 2.7 percent increase in the prices of a “market basket” of goods and services reduced by a 1.0 percent multi-factor productivity (MFP) adjustment mandated by the Affordable Care Act.   The combined MFP-adjusted market basket increase and the FY 2012 recalibration will yield a net reduction of $3.87 billion, or 11.1 percent.

Along with recalibrating and updating the SNF PPS payment rates for FY 2012, this final rule makes a number of additional revisions aimed at enhancing SNF PPS accuracy and integrity.  The final rule also:

• Affordable Care Act initiatives:
  • CMS is in the process of developing the SNF value based purchasing plan and will submit a report to Congress by October 1, 2011.
  • The Secretary of the Department of Health and Human Services (HHS) will evaluate the possibility of expanding the hospital-acquired condition policy from acute care hospitals to a variety of other settings, including SNFs, and will submit a report to Congress by January 1, 2012.
  • Nursing home transparency and improvement. Due to the many comments CMS received regarding disclosure of certain parties on Medicare and Medicaid facility applications and revalidations, CMS has deferred any changes in this area for now and will release a final rule sometime in fiscal year 2012. 
• Therapy student supervision: The Final Rule will discontinue the policy requiring lineof-sight supervision of therapy students in SNFs. Instead, effective October 1, 2011, each SNF will determine for itself the appropriate manner of supervision of therapy students consistent with state and local laws and practice standards.
• Group therapy clarifications: Effective October 1, 2011, group therapy will be defined as therapy provided simultaneously to four patients who are performing the same or similar activities, and group therapy time will be divided by four in determining the reimbursable therapy minutes for each group therapy participant and, therefore, the appropriate RUG-IV group.
• Five- or seven-day a week therapy clarification: Elimination of the distinction between facilities regularly furnishing therapy services on a 5- or 7-day basis for purposes of setting the date for the End of Therapy (EOT) Other Medicare Required Assessment (OMRA).
• Introduction of the End of Therapy – Resumption (EOT-R) OMRA: Effective for services provided on or after October 1, 2011, when an EOT OMRA has been completed and therapy subsequently resumes, SNFs may complete an EOT-R OMRA rather than a Start of Therapy (SOT) OMRA, in cases where the resumption of therapy date is no more than five consecutive days after the last day of therapy provided and the therapy services have resumed at the same RUG-IV level that had been in effect prior to the EOT OMRA.
• Introduction of the Change of Therapy (COT) OMRA: Effective for services provided on or after October 1, 2011, SNFs would be required to complete a COT OMRA for patients classified into a RUG-IV therapy group whenever the intensity of therapy (that is, the total reimbursable therapy minutes provided) changes to such a degree that it would no longer reflect the RUG-IV classification and payment assigned for a given SNF resident based on that resident’s most recent assessment used for Medicare payment. The ARD of the COT OMRA would be set for day seven of a COT observation period, which is a successive seven-day window beginning on the day following the ARD set for the most recent scheduled or unscheduled PPS assessment and ending every seven calendar days thereafter.

Questions remain frequent among long term care providers in Indiana regarding facility-level impacts of the decision by the Indiana Office of Medicaid Policy and Planning (“OMPP”) to eliminate reimbursement for bed-hold days.  The elimination of reimbursement for bed-holds was effective February 1, 2011 (For a copy of this bulletin, click here), and the Indiana Medicaid State Plan will be amended in the coming months to finalize elimination of reimbursement.  OMPP has also posted, and periodically updated, a news summary on www.IndianaMedicaid.com that discusses the impact of the reimbursement changes on Indiana’s long term care facilities and their residents (Click here for the news summary).

More recently, requirements for long term care facilities to maintain updated bed-hold policies were discussed during a panel presentation at the 2011 Indiana Health Care Association's ("IHCA") Convention & Expo in May.  In addition to the above OMPP-issued materials, the IHCA offers the following points for long term care facilities when developing bed-hold policies. 

·         Facilities must have a bed-hold policy that states whether or not the facility allows a resident to pay to hold a bed during a leave of absence

o    Though facilities are not required to allow a resident to pay to hold a bed, facilities must still have a policy that states whether or not payment for holding a bed is permitted by the facility

·         The duration of the bed-hold period must be clearly stated in the facility policy

·         Bed-hold policies should state that Indiana Medicaid does not reimburse for bed-holds

·         Payment by residents for bed-holds must follow applicable Medicare and Medicaid guidelines regarding billing for non-covered services

·         Charges for bed-holds should be set at fair market value and must be equally applied to all residents regardless of payor source

o    Facilities may be at risk for Anti-Kickback violations related to improper inducements to government program beneficiaries if charges for bed-holds are not fair market value and equal application of those charges are not maintained.  However, an exception to the Anti-Kickback statute may apply in certain circumstances for bed-hold charges that are unable to be collected.  This exception depends on certain elements regarding facility advertisements, other relevant services and financial need of the resident. 

·         If a resident on leave is expected to return to the facility, regardless of whether they have paid to hold a bed, the facility is not required to discharge the resident

·         If a resident is discharged from a facility, however, the facility must permit the resident to return to the first available semi-private bed when (i) the resident continues to qualify for Medicaid, (ii) the resident requires nursing-level care and (iii) the facility is able to provide appropriate care for the resident.

o    A resident may be discharged from the facility for many reasons including, but not limited to, the resident’s failure to pay for a bed-hold or when the bed-hold period expires.  Facilities must follow applicable regulations and procedures when discharging a resident.

If you have questions about this article or about bed hold policies, please contact Zach Cattell at zcattell@ihca.org or 317-616-9001 or Leigh Ann O'Neill at 317-238-6346.  .

According to a study published in the Journal of the American Medical Association, nearly a “third of emergency departments closed shop over the last two decades.”  The trend has not been caused by a lack of patients.  According to the New York Times, the total number of ER visits increased by roughly 35% during the same time period.  As many hospitals have struggled with the financial drain caused by the mandatory treatment of uninsured and underinsured patients in the ER, many hospitals have simply decided that maintaining an emergency department is not worth the cost.

Closing an emergency department has many legal implications.  Before the decision to close an emergency department is made, a hospital should consider all possible issues including, but not limited to:

1.      Tax-Exempt Status – The IRS has generally considered the operation of an emergency department an important factor in determining whether a hospital should be granted tax-exempt status.  A nonprofit hospital must make sure it will not lose tax-exempt status due to the closure of an emergency department.

2.      Funding/Reimbursement – The closure of an ER may impact the amount of funding a hospital receives through Disproportionate Share Hospital (DSH) payments and Hill-Burton funds.  In addition, certain hospitals such as Critical Access Hospitals (CAHs) must maintain an emergency department in order to receive federal cost-based reimbursement.  Before closing an ER, a hospital should think through all possible changes to funding and reimbursement due to the closure of the emergency department.

3.      EMTALA – Since EMTALA applies to facilities that simply hold themselves out to the public as providing emergency care for emergency medical conditions, hospitals must make sure that they appropriate notify the community in advance of the ER closure and remove all signage from the hospital and local streets upon closure of the ER.  The hospital should also remove all references to the hospital’s ER on the hospital’s website.  Failure to do so could implicate EMTALA even though the hospital no longer operates an emergency department.

4.      Prior Contractual Obligations – A hospital that has existing contracts in place for ER services and supplies through physician groups and other medical suppliers should review all such contracts to ensure it appropriately terminates all applicable contracts upon the closure of the emergency department.  Failure to provide appropriate notice to these contractual parties in advance of the ER closure could result in subsequent lawsuits.  

For an abstract of the study published in the Journal of the American Medical Association, see: http://jama.ama-assn.org/content/305/19/1978.abstract

To read the New York Times article quoted in this article, see: http://www.nytimes.com/2011/05/18/health/18hospital.html?_r=1

If you would like additional information, please contact Jason D. Schultz at jschultz@kdlegal.com or (574) 485-2003 or Leeanne R. Coons at lcoons@kdlegal.com or (317) 238-6269.

Health and Human Services' Office of Inspector General (OIG) published a report on May 4, 2011 which concerns the improper use of anti-psychotic drugs in long term care.  The OIG's review of medical records for elderly nursing home residents during a six-month period revealed that 14% of the 2.1 million elderly nursing home residents had at least one claim for anti-psychotic medications.  Of those 14%, the OIG cited that approximately 22% were not administered in compliance with CMS standards.  The OIG also questioned at least 50% of these claims to be erroneous, either because the medications were not medically necessary or because their use was associated with off-label uses. 

The OIG report communicated numerous recommendations to CMS in order to (1) ensure accurate coverage and reimbursement decisions. (2) improve survey and certification procedures to prevent and detect unnecessary anti-psychotic drug use; and (3) correct all erroneous claims and related payments identified in the OIG report. 

According to CMS data, more than 20% of nursing facility residents have a psychiatric diagnosis and as many as one-third of patients admitted to nursing facilities were already taking these medications prior to admission.   All of these factors reflect the importance of facility standards and related safeguards governing the care of residents who require anti-psychotic medications as part of their treatment regimen. 

To access a copy of the OIG report, go to http://oig.hhs.gov/oei/reports/oei-07-08-00150.asp.  For additional information regarding these matters, contact Susan Ziel at sziel@kdlegal.com or (317) 238-6244. 

In a notice published in the April 5, 2011 issue of the Federal Register, the Department of Health and Human Services ("HHS") announced that the Early Retiree Reinsurance Program ("ERRP") will soon stop accepting new applications for participation in the program.  According to the HHS notice, applications for ERRP certification from group health plan sponsors will no longer be accepted after 5:00 p.m. ET on May 5, 2011.

The ERRP was created as part of the Patient Protection and Affordable Care Act ("PPACA"), in order to encourage employers to continue providing or implement new group health plan coverage for retired employees between the ages of 55 and 64.  According to an agency report released on March 31, 2011, the program has been widely utilized by both private and public sector employers since its inception, and has funded nearly $1.8 billion in payments to certified employers since it began disbursing claim reimbursements in October of 2010.  However, in order to participate in this funding reimbursement opportunity, sponsors of group health plans providing early retiree coverage must apply to HHS and receive certification.  The program has limited funding, and in accordance with PPACA requirements, will be offered only as long as funding is available.  It is due to the anticipated exhaustion of PPACA funding that HHS is formally ending the certification process for new applicants. 

If you need more information about this topic, or would like assistance with the submission of an application before the close of the application period, please contact Katy Stowers at 317-238-6257, or at cstowers@kdlegal.com.

The Internal Revenue Service (Service) issued Announcement 2011-14 explaining its conclusion that "breast pumps and supplies that assist lactation are medical care under Section 213(d) of the Internal Revenue Code."  This new interpretation affects group health insurance benefits as it allows expenses paid for breast pumps and supplies that assist lactation to be deductible medical expenses, allowing them to be reimbursable under flexible spending arrangements, Archer medical savings accounts, health reimbursement arrangements or health savings accounts.  As a result of this change, employers should review their informational materials regarding their employee benefits plan and group health coverage, relating specifically to eligible medical expenses, to ensure the materials are consistent with the Service's newest conclusion.  If you have any questions regarding how this change may affect you and your organization, please contact Kristen Gentry. 

On February 17, 2011, the Centers for Medicare & Medicaid Services (“CMS”) and the Department of Health and Human Services (“HHS”) announced a proposed rule under the Patient Protection and Affordable Care Act ("PPACA") that would grant states the authority to codify Other Provider Preventable Conditions (“OPPCs”) and Provider Preventable Conditions (“PPCs”) that include, at minimum, the Hospital Acquired Conditions (“HACs”) defined by Medicare, but also state-identified conditions.  HHS believes establishing Medicare requirements as the minimum for the application of the policy is appropriate because many states that have implemented Hospital Care Acquired Condition (“HCAC”) policies have adhered to Medicare requirements, because the conditions are generally accepted by the provider community.

PPCs are defined under two categories; HCACs and OPPCs. The proposed rule would include a definition for an HCAC that would not be limited to those specifically outlined by Medicare, but also include conditions identified by states for prevention of health care reimbursement under state plans, as approved by CMS through the state plan review process. Accordingly, the proposed definition would establish Medicare requirements as the floor, but allow further state innovation as determined by each state.

Such a policy would extend to applying nonpayment provisions to service settings beyond the inpatient hospital setting.  Under the proposed rule, states may identify similar OPPCs related to services furnished in settings other than inpatient hospitals, such as nursing home facilities.  State plans would have to provide for nonpayment for care and services related to these OPPCs and federal financial participation would not be available in state expenditures for such care and services related to OPPCs.

The proposed definition of an OPPC would include, at a minimum, wrong surgical or other invasive procedure performed on a patient, a surgical or other invasive procedure performed on the wrong body part, and a surgical or other invasive procedure performed on the wrong patient.   As of January 15, 2009, Medicare no longer covers the above mentioned surgical or invasive procedures, or hospitalizations and other services related to these non-covered procedures as defined by Medicare.

The proposed criteria for other OPPCs would be similar to the criteria for HCACs, including that a condition or event identified by a state must be; (1) a discrete, auditable, quantifiable, and clearly defined occurrence, (2) clearly adverse, resulting in a negative consequence of care that results in unintended injury or illness, and (3) reasonably preventable, meaning an event that could have been anticipated and prepared for, but that occurs because of an error or other system failure.

HHS hopes to make these requirements effective July 1, 2011, and is currently soliciting comments.

If you have questions about the proposed rule, or about how the PPACA may impact your organization, please contact one of our health care reform lawyers, Leigh Ann O'Neill at 317-238-6346. 

Last week Illinois Governor Pat Quinn signed into law major reforms to the State’s Medicaid program. Public Act 96-1501 authorizes the Illinois Department of Healthcare and Family Services (HFS) to expand HMO-style “coordinated care” to cover at least 50% of all recipients by the year 2015. The law also changes the Illinois Medicaid eligibility process by requiring certain income verifications and annual re-determinations.

On the provider side, the law empowers HFS to impose significant Medicaid fraud penalties. HFS may now impose civil monetary penalties up to $2,000 for each fraudulent claim submitted to the Illinois Medicaid program. Providers will be able to appeal the assessment of these civil monetary penalties through an administrative process before HFS and through the Circuit Court. Pharmacy providers, meanwhile, may now promote 90-day maintenance prescriptions to Medicaid beneficiaries. The law also reduces the interest rate the State must pay to pharmacies from 2% to 1% for late reimbursement payments.

For additional information about this new law, Illinois State health care, or other issues involving Medicare or Medicaid fraud, please contact Randall Fearnow or Mark Bina in the Firm’s Chicago office at 312-423-9300.