The 2012 OIG Work Plan – The Government is Still at Work During the Holidays

On November 10, 2011, the Office of the Inspector General of the Department of Health and Humans Services (the “OIG”) issued their 2012 Work Plan. The annual Work Plan is designed to give Medicare providers and supplier notice and information on areas of potential abuse that the OIG to address with particular attention. As we approach a new year, here are some areas that our clients and friends may wish to examine to avoid scrutiny by the OIG

Medical Equipment Companies

Enrollment Abuses

The OIG has discovered a pattern of improper enrollment among supplier of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). The OIG is looking to Medicare contractors (carriers and intermediaries) to be more scrutinizing in the enrollment of DMEPOS suppliers. The contractors will be assessed on their use of enrollment screening mechanisms and post enrollment monitoring activities to find companies that may pose fraud risks. It is, therefore, important for DMEPOS suppliers to make sure all applications for enrollment and even those for change of ownership are completed accurately and thoroughly.

Payments for High Priced Equipment

Additionally, the OIG will be undertaking a heightened review of the appropriateness of payments to DMEPOS suppliers for “high ticket” items such power mobility devices, oxygen and hospital beds. The medical equipment industry has always been the target of potential abuse. The OIG confirms this stating that there continues to be wide spread abuse of DME not ordered by physicians, not delivered or not needed. The OIG will focus on geographic areas with high volumes of “high ticket” reimbursements and review for compete records demonstrating that the services are “reasonable and necessary for the diagnosis and treatment of the illness or injury.” For frequently replaced supplies such as CPAP and respiratory supplies, the OIG will review compliance with the requirements that a Certificate of Medical Necessity must specify the type of supplies needed and the frequency with which they must be replaced used or consumed.

Diabetic Testing Supplies

The OIG will also review Medicare claims for diabetic testing strips and lancets (diabetic testing supplies) to identify questionable billing. Medicare has utilization guidelines for the amount of diabetic testing supplies (DTS) that beneficiaries may receive. To receive reimbursement from Medicare, suppliers must maintain documentation demonstrating that their DTS claims meet all Medicare coverage, coding, and medical necessity requirements. DTS claims with certain characteristics (e.g., DTS provided to a beneficiary at irregular intervals) may indicate improper supplier billing.

Physicians

Some highlights of physician’s services that are going to be under review include the following:

Place-of-Service Errors

The OIG will be reviewing physicians’ coding practices on Medicare Part B claims for services performed in ambulatory surgical centers and hospital outpatient departments to determine whether they properly coded the places of service. The OIG will particularly pay attention to this as there is evidence of physicians coding for services at the higher non-facility rate when the services were actually performed in an ASC or outpatient setting. Medicare pays a physician higher amounts for serviced performed in a non-facility setting such as the physician’s office.

Incident-To Services

“Incident-to” services will also be reviewed. This is a new initiative on the part of the OIG and therefore, should garner lots of attention. The OIG will try to determine whether payment for such services had a higher error rate than that for non-incident-to services. We will also assess CMS’s ability to monitor services billed as “incident-to.” One of the main focuses of this review is to cut down the amount of billings for incident to services performed by non-physicians without the required direct physician supervision. The OIG has found that unqualified non-physicians performed 21 percent of the services that physicians did not perform personally. Incident-to services represent a potential abuse for the Medicare program in that they do not appear in claims data and can be identified only by reviewing the medical record.

Evaluation and Management Services (“E/M Services”)

In 2009, Medicare paid $32 billion for E/M services. This represented nearly 20% of all Medicare Part B payments. With those dollars at stake, the OIG will be reviewing E/M claims to assure there is appropriate documentation to justify payment for the more intensive E/M codes. It is important to thoroughly document records to demonstrate the type, setting, and complexity of services provided and the patient status, such as new or established. Also under review will cases of multiple E/M services for the same providers and beneficiaries to identify electronic health records (EHR) documentation practices associated with potentially improper payments. Medicare contractors have noted an increased frequency of medical records with identical documentation across services.

Payments for Services Ordered or Referred by Excluded Providers

Medicare does not allow payment to a physician or supplier for services and items provided that were prescribed or ordered by individuals or entities excluded from the Medicare program. To combat that practice, the OIG will undertake a review of the nature and extent of Medicare payments for services ordered or referred by excluded providers (those who have been barred from billing Federal health care programs) and examine CMS’s oversight mechanisms to identify and prevent payments for such services.

There are numerous other areas of concern that will be reviewed by the OIG during 2012. To assure compliance with the items describes as well as other health care laws, the Florida Healthcare Law Firm offers a comprehensive compliance audit of your organization. For more information please contact us  at 561-455-7700


Physician Owned Distributorships (PODS) Make Waves

doctor

Physician owned distributorships (PODs) have been the source of considerable controversy for years, but now they’ve caught the attention of Congress!

PODs distribute various things, most commonly surgical implants and devices, that are reimbursed by insurers. A patient needs a spinal rod, a surgical implant/device company makes it and a distributor rep distributed it. Device/implant companies usually contract with distributorships to sell their products. Distributorships contract with reps who are paid commissions for sales. Surgeons who actually order the devices sometimes think “Since I’m the one doing the surgery and ordering all this stuff, why don’t I make something from the selling it?” PODs are one way for physicians to financially benefit from the sales of devices and items their patients need, but they have never been more controversial than now.

Conceptually speaking, PODs are controversial because government regulators think physicians who have an economic stake in health care items or services will tend to over utilize them. Moreover, there is a specific concern that allowing physicians to profit from the devices their patients need violates federal anti kickback laws or the Stark prohibition on compensation arrangements.

In 2006, the Office of the Inspector General of HHS and CMS expressed major concerns about PODs, and cited concerns about “improper inducements.” At that time, the OIG stopped short of prohibiting them, but called for heightened scrutiny. CMS itself has stated that PODs “serve little purpose other than providing physicians the opportunity to earn economic benefits in exchange for nothing more than ordering medical devices or other products that the physician-investors use on their own patients.”

Implantable medical devices are unusual in the way they come into use. Unlike DMEPOS, for instance, medical devices are not sold to distributors. They’re sold from the manufacture to the medical facility where the surgery will take place. So, the argument goes, physicians are not actually in a position to drive the sales volume of the implants. The counter: physicians invested in a POD can leverage their hospital admissions to influence the device choice of hospitals and surgery centers.

The biggest legal hurdle for PODs is the federal Anti Kickback Statute, which carries both criminal and civil penalties. Simply put, if even one purpose of an arrangement is to pay for patient referrals, the law is violated. So, the law is arguably violated if one purpose of the POD is to induce physicians to order implants for their patients. Looked at another way, the law is violated if one purpose of a hospital doing business with a POD is to ensure patient referrals by the physician POD investors.

A 1989 OIG Special Fraud Alert on fraudulent physician joint ventures is especially interesting on the fraud and abuse issues in pointing out that the following would indicate unlawful intent to induce patient referrals—

Investor choice. If the only investors chosen are surgeons with an opportunity to refer and if they lack any business or management expertise, the arrangement appears to be a cloaked way to incentivize unlawful referrals (i.e. ordering implants). The key question is whether the business, in selecting investors, is looking to raise capital or to lock in referral sources.

Risk. If the POD investment involves little or no financial risk, the OIG would likely take issue with it.

The bottom line seems to be that if there isn’t a real business, with real financial risk and qualified investors, a POD will likely be viewed as a suspicious arrangement based on locking in patient referrals or physician admitting pressure by physician investors.

In its June, 2011 Inquiry “Physician Owned Distributors (PODs): Overview of Key Issues and Potential Areas for Congressional Oversight,” the U.S. Senate Finance Committee Minority Staff, the Committee reports “A number of legal and ethical concerns have been identified as a result of this initial inquiry into the POD Models.” The Committee reviewed over 1,000 pages of documents and spoke with over 50 people in preparing its report. The Committee cited long-held concerns regarding PODs, and leaned heavily on the 2006 Hogan Lovells (previously Hogan & Hartson) law firm’s anti-POD analysis.

With the Committee’s call for greater OIG and CMS involvement, one thing seems clear: the future of PODs is uncertain. In this era of cost-cutting, it seems clear that PODs are gonna get a haircut and may even lose their head.


Path Lab Proposal Shot Down by OIG

The Office of Inspector General of the Department of Health and Human Services recently (October 11, 2011) shook its head at a proposal involving a pathology lab management services business that was to be owned by physicians. The proposed arrangement had the following features:

1.A path lab management business (“Manager”) would be formed and the business would be owned by doctors;
2.The Manager would provide a list of management services to a path lab;
3.The path lab (“Lab”) would not be owned by the doctors that own the Manager;
4.The Manager would provide a fixed amount of hours of services each year and would receive a percentage of the Lab’s income (fixed percentage in advance) and that fee would approximate the Lab’s use of the Manager’s services for the year;
5.The physician Manager investors would be in a position to refer to the Lab;
6.The ownership interests of the physician investors in the Manager would exceed forty percent (40%);
7.More than forty percent (40%) of the Lab’s revenues would come from the physician investors.

The OIG decided that the proposed arrangement posed more than a minimal risk of violating the Anti Kickback statute. The OIG also said the manager cannot refer its own patients or generate business in connection with the proposed arrangement. The OIG focused on the following points in its advisory opinion:

1.The Manager’s “usage fees” to the Lab are percentage based and not flat and set in advance;
2.The ownership interests of the doctor investors in the Manager would exceed what is specified in the so called “small entity” Safe Harbor;
3.The physician owners of the Manager have no experience in managing a lab, but are in a position to generate referrals to it.

Though the regulatory Safe Harbors (to the Anti Kickback Statute) are illustrative of permissible arrangements, the OIG is clearly sticking very close to them. where federal or state healthcare program dollars are involved, physician investors would do well to make sure they are Safe Harbor compliant.


OIG Views Favorably Ophthalmologist-Optometrist Co-Management Arrangement Relative to Cataract Surgery

Via:  The Health Law Partners | Permalink

In the Office of Inspector General (“OIG”) Advisory Opinion 11-14, dated October 7, 2011, the OIG analyzes an arrangement in which Requestor is an opthalmic physician group practice that provides cataract surgeries and also employs optometrists. By way of brief background, generally, patients receiving cataract surgery may elect to have either a conventional intraocular lens (“Conventional IOL”) or a premium intraocular lens (“Premium IOL”) (Premium IOLs have the ability to correct preexisting refractive problems whereas Conventional IOLs do not). Medicare covers Conventional IOLs when reasonable and necessary, but only partially covers the professional and facility fees associated with Premium IOLs as Premium IOLs are significantly more expensive. When billing Medicare, cataract surgery is a global surgical procedure in which the physician is reimbursed one global fee covering the pre-operative care, the surgery and the post-operative care for the ninety (90) days following the surgery. If a physician transfers the patient to another healthcare professional during the “global surgical period,” the healthcare provider must use either modifier -54 (surgical care only) or -55 (post-operative management only).

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OIG Advisory Opinion Nicks the Heels of "Company Model" Arrangements

palm beach county task force

A “company model” arrangement is reasonably popular in surgery centers these days. The model entails a legal entity owned by both anesthesiologists and referring surgeons, which performs anesthesia. Why not just have the surgery center contract with an anesthesia group to performs those services? Because the referring surgeons who are owners of the surgery center want to share some of the anesthesia fees. Does it raise fee splitting and fraud and abuse issues? You bet, but there is no real clear or direct legal guidance from any governmental body yet. A recent OIG Advisory Opinion will have physicians and healthcare lawyers alike buying new spectacles to keep a closer watch on how the legal issues unfold.Continue reading

OIG Crushes Proposed Sleep Study/Hospital Venture

 

The OIG weighed in on a request to give a green light to a proposed venture between a sleep testing provider and a hospital.  The proposed arrangement involved:

  1. A sleep testing provider providing the equipment, technology, supplies and staff necessary to operate a sleep lab at the hospital, as well as marketing services;
  2. The hospital contributing the space, utilities, pharmacy and other necessary support;
  3. The sleep testing provider charging the hospital a per test fee which has been independently fair market valued; and
  4. The hospital billing payers for the procedure as an “under arrangement” arrangement.

 

The OIG frowned on the proposed arrangement because of the per test fee and the marketing services provided by the sleep testing company.  The OIG correctly determined that the proposed arrangement does not fall within one of the Safe Harbors, which are regulatory exceptions to the federal Anti Kickback statute (“AKS”) because the compensation payable to the sleep testing company was not set in advance.

The Advisory Opinion is interesting because it has implications for many “under arrangements” collaborations between hospitals and businesses and also because it gives an idea of the OIG’s current enforcement inclination, not only based on the specific facts presented but also in general in terms of how we can expect the government to enforce the AKS.  It is no surprise that the OIG is taking a very conservative view of the AKS in light of the fact that the healthcare reform law has authorized stepped up enforcement in the healthcare arena to fund reform changes.