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April 2012 Health Law Update


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April 2012 Health Law Update

  1. 1. April 2012 In This Issue: Two New OIG Advisory Opinions OIG Report Criticizes IDTFs OIG: CMS Must Implement Regulations Governing Sanctions for Home Health Agency Medicare Violations Urgent Update Concerning One-Room ASCs Brach Eichler in the News HIPAA CornerFEDERAL UPDATE OIG OKs Arrangement to Operate Website Displaying Provider Coupons and AdsOIG Approves GPO Indirectly Owned The United States Department of Health & Human ServicesBy Health Care System Office of Inspector General (OIG) recently issued an advisoryThe United States Department of Health & Human Services opinion (Advisory Opinion 12-02) approving an arrangement forOffice of Inspector General (OIG) recently issued an advisory operation of a website that would display coupons and advertisingopinion approving a proposed group purchasing organization from health care providers, suppliers and other entities.(GPO) arrangement (Advisory Opinion 12-01). Under the Under the proposed arrangement, a corporation would operate aproposed arrangement, the GPO would be formed as a division website that includes coupons for health care items and servicesof an existing limited liability company, which is itself a wholly- and advertising on behalf of individuals and entities operatingowned subsidiary of the governing arm of a national health in the health care industry. The company would contract withsystem. The purposes of the GPO would be to, among other physicians and other health care providers and suppliers,things, utilize the purchasing power of the participants to who would also be subject to “terms of use” as a condition ofobtain discounts and realize efficiencies from suppliers based participation in the website. The terms of use would specifyon collective bargaining power. requirements related to permissible coupons, including aThe OIG concluded that, although the arrangement does prohibition on offering “free service” coupons. Only coupons fornot fit within the Discount Safe Harbor or the GPO Safe a reduced price or a percentage reduction on a designated item orHarbor, it nonetheless posed little risk of fraud and abuse specific service would be permitted. Coupons could not providebecause of the following: discounts directed only at patient cost-sharing amounts; providers• he various reporting and notice requirements for distributing T would be required to give the same discount to third-party payors excess administrative fees as offered to patients. The company would also sell banner, pop-up and other advertising on the website to individual and• ach participant, including an affiliated organization, would E institutional providers, as well as drug companies, pharmacies constitute a separate legal entity and other entities.• he parent organization health system and its subsidiaries T Although the OIG found that selling advertising space on a would continue to direct their purchasing volume through website to health care providers and suppliers that may bill other, independent GPOs offering better cost values than the federal health care programs, and posting coupons for health care proposed GPO items and services, are two activities that implicate the federal• he GPO was structured to allow other non-affiliated T anti-kickback statute, it determined that it would not impose participants to purchase from the GPO. sanctions because:For additional information, contact: • he company offering the website is not a health care TJoseph M. Gorrell  |  973.403.3112  | provider or supplierKevin M. Lastorino  |  973.403.3129  | • ayments from providers and advertisers to the company are P not dependent on customer use of the coupons or obtaining services from the providers continued on page 2
  2. 2. BRACH EICHLER • he website is publicly accessible; no registration is T OIG Criticizes CMS for Failure to Publish Regulations required for use Governing HHA Sanctions: Urges Action • here is little risk of overutilization or medically unnecessary T care, because the coupons involve no up-front investment The United States Department of Health Human Services Office by users of Inspector General (OIG) recently issued a report criticizing Centers for Medicare Medicaid Services (CMS) for not properly • he coupons would be for a reduced price or percentage T fulfilling its obligation to regulate noncompliant home health reduction that would benefit patients and payors alike agencies. (0E1-06-11-00401, March 02, 2012.) Under the Omnibus • he company would give providers and customers information T Budget Reconciliation Act of 1987 (OBRA), CMS was directed to necessary to facilitate their compliance with the anti-kickback implement intermediate sanctions for home health agencies out of discount safe harbor. compliance with Medicare conditions of participation. Intermediate For additional information, contact: sanctions include civil monetary penalties, payment suspension and Carol Grelecki  |  973.403.3140  | appointment of temporary management. Debra C. Lienhardt  |  973.364.5203  | Although CMS issued a Notice of Proposed Rulemaking in 1991 in response to OBRA, it never followed through with implementation and withdrew the notice in 2000. Without OIG Issues Report: Questionable Billing regulations to implement intermediate sanctions, CMS is left to pursue the only other alternative penalty: termination from for Medicare IDTF Services Medicare. However, as the OIG noted, CMS has rarely used the The United States Department of Health Human Services termination process and, instead, enforcement has been lackluster. Office of Inspector General (OIG) issued a report and Thus, OIG urged CMS to make intermediate sanctions a high recommendations last month regarding questionable Medicare priority, and to complete implementation. billing practices by Independent Diagnostic Testing Facilities For additional information, contact: (IDTFs), a type of provider that offers diagnostic services Todd C. Brower  |  973.403.3103  | and is independent of physicians’ offices or hospitals. Lani M. Dornfeld  |  973.403.3136  | (OEI-09-09-00380, March 14, 2012.) The OIG conducted a four-part review of such IDTF claims among geographic areas — specifically, Core Based Statistical Areas (CBSAs). The OIG found that (1) twenty high-utilization STATE UPDATE CBSAs accounted for 10.5% of Medicare Part B payments for IDTF services despite having only 2.2% of the total Urgent Update Concerning One-Room ASCs population of beneficiaries; (2) almost four times more beneficiaries in high utilization CBSAs received IDTF services The New Jersey Department of Health and Senior Services has than beneficiaries in all other CBSAs; (3) 9% of the IDTFs recently taken the position that one-room surgery centers set up as that served beneficiaries in high-utilization CBSAs provided general business corporations (i.e., “Inc.’s”) require ASC licensure 90.1% of IDTF services; and (4) high-utilization CBSAs had even if all other criteria for licensure exemption are met (that is, twice as many claims with at least two questionable characteristics even if the facility in question is limited to one operating room, as all other CBSAs. owned only by physicians, and used only by its physician owners or employees). The department’s position is based on Board of As a result, the OIG recommended that Centers for Medical Examiner rules that do not include “Inc.’s” as permissible Medicare Medicaid Services (CMS) monitor IDTF claims structures for physician practices. The department argues that if for questionable characteristics, take appropriate action the entity is not set up as a physician practice, it cannot qualify when IDTFs submit a high number of questionable claims for the exemption. and assess whether to impose a temporary moratorium Upon discovering that a one-room surgery center is set up as on new IDTF enrollments in CBSAs with high concentrations an “Inc.,” the department will send a “cease and desist” letter of IDTFs. requiring the facility to close and warn that failure to close could For additional information, contact: subject the center to civil penalties up to $1,000 per day. John D. Fanburg  |  973.403.3107  | We have successfully assisted a number of one-room ASCs that Debra C. Lienhardt  |  973.364.5203  | were set up as “Inc.’s” and received “cease and desist” letters to obtain appropriate corporate designation and avoid penalties. We have been able to do it in a manner that reduces exposure to2
  3. 3. BRACH EICHLERreimbursement recoupment claims from insurance companies as changes to or discontinue drug or device therapy—in collaborationmuch as possible. We have also assisted our clients in changing with physicians. Having proposed these rules before, the Statethe corporate designation with Centers for Medicare Medicaid Board of Medical Examiners (BME), together with the Board ofServices. Pharmacy (BOP), have made some changes and have taken another crack at moving this along.For additional information, contact:Mark E. Manigan  |  973.403.3132  | The BME and BOP advocate that jointly developed protocolsJohn D. Fanburg  |  973.403.3107  | by a physician and pharmacist will help manage a patient’s medication-related issues and enhance overall well-being. Under the proposed new rules, before a physician can refer his patient to a collaborating pharmacist, the physician must have an existing,Changes to Deficit Reduction Act Certification on-going relationship with the patient for at least a year, examinedRequire Monthly Exclusion Database Checks the patient at least four times or assumed responsibility for providing management and care of the patient’s condition afterIn October 2010, various state agencies including the Office of the conducting a comprehensive medical history and physical. TheState Comptroller, Medicaid Fraud Division, published a newsletter joint protocol would give the pharmacist the ability to identify andgoverning various background checks that must be completed manage medication-related problems, make medication changes,by providers and HMOs. The newsletter advised providers that order and perform certain tests, and interpret laboratory tests inthey must search various databases concerning licensure and direct consultation with a physician. Note, however, that payorsexclusions on a monthly basis to ensure employees, contractors or may decline to cover tests ordered by non-physicians. The rules alsosubcontractors are not excluded, unlicensed or uncertified. provide that the collaborative practice agreement will specify theAlthough the newsletter is dated almost 18 months ago and functions and responsibilities, including the scope of practice anddoes not carry the force of law, its burdensome requirements did authority, to be exercised by the pharmacist.not raise concern until recently, with the mailing by the New The proposed rules also contain training and certificationJersey Office of State Comptroller of the annual form entitled requirements for pharmacists participating in joint protocols.“Certification of Compliance with Section 6032 of the Federal The BME and BOP are presently soliciting comments to theDeficit Reduction Act.” (The act requires, among other things, that proposed rules, which are due on May 18, care providers and health care organizations that receive For additional information contact:more than $5 million in annual Medicaid funds have compliance Keith J. Roberts  |  973.364.5201  |  kroberts@bracheichler.compolicies that inform their contractors that furnish Medicaid health Joseph M. Gorrell  |  973.403.3112  |  jgorrell@bracheichler.comcare items or services and their employees about federal and stateanti-fraud and false claims laws and whistleblower protections.)This year, the State Comptroller is requiring certification thatthe provider or facility has a plan in place to complete monthly Brach Eichler In The Newsexclusion checks as required by the newsletter. The New Jersey John D. Fanburg and Joseph M. Gorrell were named NewHospital Association, agreeing with several of its members, has Jersey Super Lawyers 2012, a list consisting of only 5% of thebeen in discussions with the State Comptroller’s office regarding lawyers in the state. In addition, Mark Manigan and Isai Senthilthe validity of the newsletter’s overly burdensome requirements, were named New Jersey Rising Stars 2012. No more than 2.5%especially in light of the fact the that requirements were issued of the lawyers in the state are named to the Rising Stars list,through a newsletter and not the rulemaking procedure. We which consists of attorneys who are 40 or under, or have beenwill continue to monitor this matter and keep you informed. practicing law for under 10 years.For additional information, contact: For the second straight year, Mark Manigan was named toCarol Grelecki  |  973.403.3140  | NJBIZ’s “Power 50 Healthcare.” According to NJBIZ,Kevin M. Lastorino  |  973.403.3129  | Manigan “continues to grow, as does his influence on health care policy making. The advocate remains respected on both sides of the aisle.”House Calls to Pharmacy Protocols Conor Murphy recently joined the firm’s Health Care Practice Group.While physician house calls may largely be a thing of the past,patients may not have to go to their doctor’s office either when John D. Fanburg will present a “Legislative and Regulatoryit comes to pharmaceutical tinkering. Under new rules recently Update” at the New Jersey State Society of Anesthesiologists 53rdproposed, pharmacists will be able to dole out—manage and make Annual Spring Meeting on April 21. continued on page 4 3
  4. 4. BRACH EICHLER On April 30, Brach Eichler will sponsor “What You Don’t $1.5 million and to implement a corrective action plan to review Know about the Board of Medical Examiners Can Hurt You: and revise its HIPAA compliance program, conduct regular Regulations You Need to Know to Protect Your License,” at trainings for employees and perform monitor reviews to ensure Brach Eichler’s offices at 101 Eisenhower Parkway, Roseland. compliance. This is the first enforcement action resulting from The program will be moderated by John D. Fanburg, and a breach report required by the Health Information Technology speakers will include Brach Eichler’s Todd C. Brower, Joseph for Economic and Clinical Health (HITECH) Act Breach M. Gorrell, Carol Grelecki and Keith J. Roberts, as well as Notification Rule. Dr. Gregory Rokosz, Senior Vice President for Medical and OCR’s investigation followed BCBST’s November 2009 report Academic Affairs, Saint Barnabas Medical Center and former that over 50 unencrypted hard drives were stolen from a President, New Jersey State Board of Medical Examiners. leased facility in Tennessee. The computer drives contained For more information, contact Alan Levine at alevine@ the protected health information of over 1 million individuals, or 973-364-8389. including names, Social Security numbers, diagnosis codes, Keith Roberts will be a speaker at “PIP Issues for Practitioners,” dates of birth and health plan identification numbers. The on July 20. government’s investigation revealed that BCBST did not maintain or implement adequate safeguards to protect information at the leased facility. The HITECH Act breach notification rule requires that covered HIPAA CORNER entities notify the Secretary of HHS and affected individuals of any breach of unsecured protected health information. If Department of Health and Human the breach affects more than 500 individuals, notification must Services Settles With Blue Cross Blue be provided to the media. Breaches affecting fewer than 500 Shield for $1.5 million individuals must be reported to the Secretary on an annual basis. Since the BCBST breach involved more than 500 individuals, In mid-March, the Department of Health and Human Services’ BCBST was required to immediately report to the OCR. (HHS) Office for Civil Rights (OCR) announced it had For additional information, contact: reached an agreement with Blue Cross Blue Shield of Tennessee (BCBST) settling potential violations of HIPAA. As part of the Todd C. Brower  |  973.403.3103  | settlement agreement, BCBST agreed to pay the government Lani M. Dornfeld  |  973.403.3136  | Attorney Advertising: This publication is designed to provide Brach Eichler, L.L.C. clients and contacts with information they can use to more effectively manage their businesses. The contents of this publication are for informational purposes only. Neither this publication nor the lawyers who authored it are rendering legal or other professional advice or opinions on specific facts or matters. Brach Eichler, L.L.C. assumes no liability in connection with the use of this publication. Health Care Practice Group | 101 Eisenhower Parkway, Roseland, NJ 07068 | 973.228.5700 Members Todd C. Brower | 973.403.3103 | Carol Grelecki | 973.403.3140 | Lani M. Dornfeld | 973.403.3136 | Kevin M. Lastorino | 973.403.3129 | John D. Fanburg, Chair | 973.403.3107 | Debra C. Lienhardt | 973.364.5203 | Joseph M. Gorrell | 973.403.3112 | Mark E. Manigan | 973.403.3132 | Keith J. Roberts | 973.364.5201 | Counsel Richard B. Robins | 973.403.3147 | Associates Lindsay P. Cambron | 973.364.5232 | Leonard Lipsky | 973.364.5218 | Jenny Carroll | 973.364.5223 | Conor F. Murphy | 973.364.5214 | Jordan T. Cohen | 973.403.3144 | Isai Senthil | 973.403.3150 | Chad Ehrenkranz | 973.364.5234 | Edward J. Yun | 973.364.5229 | Rita M. Jennings | 973.364.5204 | You have the option of receiving your Health Law Updates via e-mail if you prefer, or you may continue to receive them in hard copy. If you would like to receive them electronically, please provide your e-mail address to Thank you.4