Health Care Reform- The Independent Payment Advisory Board (IPAB) And Its Implications on Health Care Providers

(September 14, 2010): As one of the most controversial provisions in the recently enacted health care reform legislation, Congress created the IPAB – a board that is independent from Congress and the United States Department of Health and Human Services (“HHS”) as a mechanism to control Medicare – and potentially all – health care expenditures. Specifically, beginning January 2015, for any year in which the Chief Actuary of the Centers for Medicare and Medicaid Services (“Chief Actuary”) projects that the increase in per capita Medicare expenditures will exceed a defined target level, the IPAB is to develop a detailed proposal to scale back Medicare expenditures for that year. With limited exceptions, unlike the Medicare Payment Advisory Committee, these “recommendations” become binding unless Congress affirmatively acts in an expedited fashion and with a super majority vote to prevent them from becoming law. Additionally, the IPAB is to make non-binding recommendations on controlling expenditures for non-Federal health care programs.

The IPAB provision was developed because the administration and certain members of Congress were concerned that Congress did not have the political will to impose fiscal discipline upon itself. The IPAB has the potential to be a significant player in controlling health care costs overall. However, because some believe that it usurps Congress’ authority, it is also extremely controversial. Complicating the process is the fact that certain provider classes, such as hospitals, are exempted from cost reductions in the IPAB process during the early years, thus placing greater pressure to reduce expenditures for other provider and payor classes. This provision, coupled with a number of incentives in the health reform legislation to change the manner in which providers deliver care, will place strong incentives for the health care community to develop new methods to constrain cost increases without adversely affecting care. These include such mechanisms as coordinating care through such vehicles as Accountable Care Organizations and Medical Homes, bundling of services, and enhanced methods of disease management for high cost patients, as well the use of electronic medical records and more frequent use of email between practitioners and their patients.

Health care entities seeking advice on strategies for adapting to the new health care reform legislation should contact Michael Cook at (202) 298-8750. Also, Mr. Cook has authored a more detailed article on the IPAB and its likely impact on health care entities that is scheduled to be published in October issue of the American Health Lawyers Association Journal on Health and Life Sciences Law. Once that article is published, this website will include an abstract and a link to the article. Additionally, Mr. Cook will be presenting at the Healthcare Reform: Dealing with Hurdles and Building up Success Conference, sponsored by GTCbio, on November 8 and 9, 2010, in Washington, DC.

Liles Parker attorneys represent health care providers in connection with a wide variety of health care projects.  Michael Cook has extensive experience as a health lawyer and is a nationally-recognized attorney.  For more information, please contact Mr. Cook.  He can be e-mailed at: mcook@lilesparker.com  Alternatively, call Mr. Cook for a complimentary consultation at: 1 (800) 475-1906.

Providers Should Exercise Caution When Handling Overpayments — More Than Likely, You Can’t Keep It, Even if the Payor Doesn’t Want it Back!

(July 15, 2010): Since the May 2009 passage of the Fraud Enforcement and Recovery Act (FERA) and subsequent enactment of the PPACA, we’ve heard a lot about how the government looks at Medicare overpayments and how providers should handle them.  Two major misconceptions seem to underlie the public response to provisions clarifying that failure to timely refund Medicare overpayments can result in False Claims Act (FCA) liability.

I.          Historical Overview of the “Overpayment” Issue

Prior to the clarification and statutory reinforcement of the “overpayment” issue provided by PPACA, a number of providers have mistakenly believed that in the absence of a direct demand for repayment, an identified overpayment would belong to the provider.  Notably, this issue is not new.  In fact, the recent enacted provisions have merely reinforced the government’s long-standing position that a provider has a responsibility to voluntarily refund Medicare overpayments without an overpayment determination being made by the government.

As you will recall, the agreement to return any overpayments is fundamental to a provider’s eligibility to participate in the Medicare program.  Section 1866(a)(1)(C) of the Social Security Act (42 U.S.C. § 1395cc) requires participating providers to furnish information about payments made to them and to refund any monies incorrectly paid.  Implemented in 2006, the Medicare Credit Balance Report (CMS-838) is designed to ensure timely compliance with this obligation.

Secondly, PPACA Section 6402 echoes the requirements of CMS’ 2002 proposed rule that providers “must, within 60 days of identifying or learning of the excess payment, return the overpayment to the appropriate intermediary and carrier, at the correct address, and notify the intermediary and carrier, in writing, of the reason for the overpayment.”  (67 Fed. Reg. 3662 (January 25, 2002)).  A conservative reading of that proposed rule arguably suggested that HHS-OIG’s voluntary disclosure protocol may not be “voluntary” after all but a mandatory repayment may be required.  Thus, the government has long sought to clarify when, not if, overpayment refunds would be required.

Despite the publicity resulting from PPACA and its FCA implications, it is important to remember that this issue was addressed over a decade ago.  As set out in the 1998 holding in United States v. Yale University School of Medicine, Civil Action No. 3:97CV02023 (D.Conn.), the government intervened in a qui tam and obtained $1.2 million settlement based on alleged FCA violations for failing to return credit balances.  In summary, providers who fail to promptly (within 60 days of identification) return an overpayment to the government do so at their own peril.

II.         Handling Non-Federal Overpayments

As an aside, even if the overpayment at issue is not owed to a Federal payor (such as Medicare or Medicaid), it is imperative to remember that virtually no overpayments belong to a provider.  In the case of non-Federal payors (such as a private insurance company), we are aware of numerous instances where the non-Federal payor has notified the provider that due to the administrative burden of applying an overpayment to a beneficiary’s account (typically due to the complexity of the payment history), the non-Federal payor has chosen to either “waive” collection of an overpayment or not to cash a check sent by the provider.  This also regularly occurs when the identified overpayment is under a certain amount (such as $25.00).  When faced with such a situation, a provider must review applicable State law to ascertain how an overpayment must be handled.  For instance, in Texas, Title 6 of the Property Code requires businesses and other entities holding unclaimed property to turn the property over to the Texas Comptroller’s Office after the appropriate abandonment period has expired.  As in most States, violation of these escheat laws can subject a provider to various penalties.

III.        Conclusion

The lesson to be learned here is quite clear – regardless of who the payor is, an overpayment can rarely, if ever, properly be retained by a provider, regardless of the amount in controversy.  A provider must carefully examine both Federal and State statutes when faced with this issue.  The best practice is to return an overpayment to the payor (Federal, State, or private patient), regardless of the amount, upon identification.  Should a provider be unable to identify who is owed an overpayment or cannot locate a valid address to return the overpayment (due to a variety of factors), your State’s escheat law must be considered.

This can be a complicated issue, especially when a large overpayment has been identified and it is owed to a Federal payor.  While time is of the essence, it is strongly recommended that you contact your legal counsel as soon as it appears that a potential large or complicated Federal overpayment has been found.  Your attorney can help guide you through this complex process.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one our other attorneys at 1 (800) 475-1906.

HHS / CMS Issues Final “Meaningful Use” Objectives for Electronic Health Records (EHRs). Providers Should Exercise Extreme Caution Before Converting to an EHR System.

(July 14, 2010):Yesterday, the Department of Health and Human Services (HHS) issued its final regulations concerning what it means for eligible Medicare and Medicaid providers to be “meaningful users” of certified electronic health record (EHRs) technology in 2011 and 2012.  We are cautiously optimistic that HHS’ approach will allow small providers the flexibility they need to participate in the program if they choose but, as detailed below, are not convinced that CMS contractors are ready for the technology.

The rules support the Health Information Technology for Economic and Clinical Health Act (HITECH), which authorized incentive payments through Medicare and Medicaid to clinicians and hospitals when they use EHRs privately and securely to achieve specified improvements in care delivery.  According to HHS, the incentives could be as much as $44,000 (through Medicare) and $63,750 (through Medicaid) per clinician. Subsequent rules will govern later phases of the ten year program.

The meaningful use objectives for 2011-12 are categorized in two tiers – core and menu objectives.  The first set of “core” objectives comprises basic items essential to creating any medical record, such as:

• Recording patient demographics;
• Maintaining active medication list; and
• Generating and transmitting permissible prescriptions electronically.

The second “menu” set is comprised of 10 additional important activities from which providers will choose any 5 to implement in the first two years.  They include:

• Implementing drug formularies;
• Incorporating clinical laboratory test results into EHRs as structured data; and
• Sending reminders to patients (per patient preference) for preventative and follow-up care.

For most of the core and menu items, the regulations also specify rates at which providers must use the functions to be considered meaningful users and how to report clinical quality measures.

HHS is establishing a nationwide network of Regional Extension Centers to assist providers in adopting and using certified EHR technology.  The full 864 page rule is available at http://www.ofr.gov/OFRUpload/OFRData/2010-17207_PI.pdf

While the concept of EHR and electronic medical records (EMR) may sound great, a number of our clients have already experienced the dark side of EHR / EMR.  Unfortunately, the Centers for Medicare and Medicaid Services (CMS) have completely disregarded (or remained completely ignorant of) the fact that a number of early adopters of this technology have found that Medicare Administrative Contractors (MACs) and Program SafeGuard Contractors (PSCs) (now being replaced by Zone Program Integrity Contractors (ZPICs)) appear to be inexperienced in their review of medical records that have been generated with the assistance of EMR / EHR software programs. 

In some cases, the Medicare contractors have mistakenly alleged that the records documenting the care provided are overly similar – erroneously concluding that the records were “copied” or “cloned.”  Every software program is different.  Nevertheless, many of the programs utilize “drop-down” menus that offer providers a number of different options for documenting their observations, the patient’s symptoms, or clinical findings.  While such an approach may facilitate the completion of an evaluation, progress notes, or other clinical service, it also inadvertently leads to “similar” wording or phrases among classes of documents generated.  When a significantly number of these clinical documents are reviewed by a Medicare contractor, in some cases the contractor has incorrectly concluded that instead of documenting individualized observations, these EMR / EHR-generated medical records are mere “copies” or “clones” of other medical records.  In reaching such a conclusion, PSCs / ZPICs have denied claims and then extrapolated the alleged damages to the universe of claims at issue.

Thus, providers should exercise extreme care before transitioning over to an EMR / EHR system.  Every effort should be made to ensure that your observations are individualized to the greatest extent possible.  Prior to choosing a software program, a provider should test the program with a significant number of claims to ensure that the end product generated by the program does not leave a third party reviewer with an incorrect picture of the care provided.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

Identity Theft “Red Flags” Rule Treating Doctors Like Banks Is Delayed Once Again

(July 5, 2010): The Federal Trade Commission (FTC) has agreed to once again delay enforcement of its illogical and onerous “Red Flags” rule with respect to physicians.

The “Red Flags” rule arises under the Fair and Accurate Credit Transactions Act of 2003 and requires “financial institutions” and “other creditors” to develop written plans to detect identify theft in their day-to-day operations.  Under the FTC’s interpretation of the rule, physicians who permit patients to pay after they have rendered medical service are transformed into “creditors.”

Extension of the rule to physicians has been delayed several times as the extent of the burden on health care providers has become clear.  As recently as May 28, the FTC made note of the concerns:

“At the request of several Members of Congress, the [FTC] is further delaying enforcement of the ‘Red Flags’ Rule through December 21, 2010, while Congress considers legislation that would affect the scope of entities covered by the Rule….The Commission urges Congress to act quickly to pass legislation that will resolve any questions as to which entities are covered by the Rule and obviate the need for further enforcement delays.”

The June 25^th agreement arises in connection with a suit filed against the FTC last month by the American Medical Association (AMA) and others seeking to prevent enforcement of the “Red Flags” rule and alleging that the FTC overreached its bounds in seeking to enforce the rule against physicians.   A similar complaint by the American Bar Association (ABA) is currently making its way through the appeals process after the U.S. District Court for the District of Columbia enjoined enforcement of the rule against lawyers.  Until a ruling is issued in the ABA case, the AMA case will be held in abeyance and physicians will be safe from the “Red Flags” rule.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

Enactment of “Doc Fix” Bill Offers Another Temporary Reprieve for Medicare Physicians

(June 28, 2010): On Friday, June 25, 2010, President Obama signed the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (H.R. 3962), which provides yet another band-aid for our broken Medicare physician pay system.  The bill replaces the 21% Medicare physician payment cut that took effect at the beginning of this month with a retroactive 2.2% payment increase for the period from June 1 to November 30.

What this increase means, of course, is that after November 30, 2010 physicians’ pay is expected to tumble 23%, instead of 21%.  This bill is just the latest in a series of Congress’ short-term “doc fix” budget maneuvers, designed to stave off the deleterious impacts of the fundamentally flawed Sustainable Growth Rate (SGR).  The fact is that the constant cycle of SGR-mandated pay cuts and uncertain legislative patches punishes doctors and patients.

Upon signing the bill, the President issued a statement, noting that, “A 21-percent pay cut to physicians’ payments would have forced some doctors to [stop] seeing Medicare patients – an outcome we can all agree is unacceptable.”  We imagine that a 23% drop in December will be similarly unacceptable but, at this point, Medicare physicians (and patients) will be forced to continue operating without any certainty of a long-term solution.

The Centers for Medicare and Medicaid Services (CMS) have been processing claims at the lower rate since June 18 but will reprocess these and begin processing future claims at the increased pay rate by July 1.  Physicians should carefully monitor their claims for this period and ensure that CMS contractors make the necessary adjustments.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one our other attorneys at 1 (800) 475-1906.

Robert W. Liles Participates in Meeting with Congressman Culberson and Health Care Association Representatives in Houston

(April 8, 2010): On Wednesday evening, April 7, Robert W. Liles, Managing Member of the Firm, met with Congressman John Culberson and a group of  state and local medical association executives to discuss the recent passage of the health care reform bill.  Congressman Culberson heard from the participants, noting their views of how this legislation is going to impact Texas physicians and hospitals.  Mr. Liles discussed several provisions of the bill aimed at increasing health care fraud enforcement efforts.   He also discussed the currrent ZPIC audits being conducted in Texas by Health Integrity, a Medicare contractor.   The event was held at the Harris County Medical Society’s headquarters in downtown Houston.

Providers were understandably worried about the situation at hand. The Federal government’s recent emphasis on combating health care fraud and abuse – establishing nationwide RACs, ZPICs and HEAT teams in just the past year – has left hospitals, physicians and other health care providers in a state of panic. Audits of Medicare and Medicaid claims have been ramped up significantly, while Medicare reimbursement rates have been cut. While the deck seems stacked against health care providers, remember that providers themselves have a number of important rights under existing statutes, including rights for appealing denied claims. In this new environment though, it is imperative that health care providers accurately and appropriately document their services and that they use experienced and trained billers to process their Medicare claims.

If you would like more information on this meeting or the services of Robert W. Liles, please call us at:  1  (800) 475-1906 or send an email to rliles@lilesparker.com.