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The Continued Scamming of Healthcare

July 30, 2016 Leave a comment

Here are just a few healthcare fraud cases of note during July 2016:

Three Miami men — $40 million in fines and restitution and 188 months of prison for billing for phantom home healthcare, money laundering, and kickback schemes.

New York surgeon — $25 million in false claims for billing for services not performed.

Maryland X-Ray company owner — 10 years prison for fraudulently billing bogus medical interpretations for diagnostic tests that resulted in two patients’ deaths.

New York physician — jail time for kickback with hospitals in exchange for referring patients to nursing homes.

South Carolina hospital — $17 million in fines for improper financial arrangements with referring physicians.

Illinois woman — $15.6 million and six years prison for fraudulent billing in home health services.

Texas physician — 63 months prison and $1 million in fines and restitution for falsely certifying patients for home health services.

Florida physician — 46 months prison and $2.1 million in fines and restitution for intentionally falsifying diagnoses to get higher Medicare advantage plan capitation payments.

FSA Qui Tam Suit Against “Company Model” Providers

April 15, 2016 Leave a comment

In October 2013, the Florida Society of Anesthesiologists filed a qui tam action under seal as required, which named as defendants a large number of Florida GI physicians, surgery centers, and “company model” anesthesia providers.  The action was unsealed and made public during the last week of March.

Chief among the FSA’s allegations is that the defendants violated the federal False Claims Act by billing and collecting for anesthesia services performed by captive “company model” anesthesia providers.

At its simplest, the term “company model” refers to an anesthesia company jointly owned by referring physicians and anesthesiologists that is formed to provide anesthesia services at the ambulatory surgery center that the referring physicians own.  The jointly owned anesthesia company takes the place of anesthesiologists (or an entity owned 100% by them) which previously performed the anesthesia services for the ASC. By using the company model arrangement, the referring physicians are then able to share in the revenues generated by the anesthesia services that previously would go solely to the anesthesiologists who performed the services.

The OIG made it clear in its Advisory Opinion 12-06 posted on June 1, 2012 that the company model and similar arrangements “could potentially generate prohibited remuneration under the anti-kickback statute and that the OIG could potentially impose administrative sanctions.”  The American and Florida Societies of Anesthesiologists had been urging the OIG to take action like this for a long time, and it is not surprising that the FSA would take the lead in filing a qui tam action on company model arrangements that continued after the OIG posted its opinion.

This is a very significant case.  The U.S. Attorney’s Office has presently declined to intervene, but its investigation is ongoing.

The Healthcare Marketplace — There is No Invisible Hand (until when consumers start paying)

October 26, 2015 Leave a comment

The Tampa Bay Times included on its front page this morning an article entitled: “Big swings in medical prices make for a wild market, but savvy patients can benefit”

“It is a chaotic landscape, which is why it is so difficult for consumers and employers to navigate,” said Castlight vice president Kristin Torres Mowat.

So what gives?

For one, the market for health care doesn’t behave like most other markets. Consumers usually don’t know how much a procedure costs until after they’ve had it, and it can be challenging to compare prices beforehand. That means providers can set their rates somewhat independently of normal market forces — the forces that keep prices consistent at neighboring gas stations.

Bruce Vogel, an associate professor of health policy at the University of Florida (and a dorm mate at UF many years ago) was quoted in the Tampa Bay Times article — “It’s hard to find a market that deviates more from the perfectly competitive structure.”

Even Florida Gov. Rick Scott, a staunch conservative who opposes most government regulation, has expressed concern over the healthcare marketplace, focusing on the transparency of hospital pricing.  In the September 29 online edition of Florida Politics, Gov. Scott was quoted:

“This is all about patients and empowering patients,” he told reporters after a Florida Cabinet meeting. “They should know what (a procedure) costs and be able to get as much information as they can.”

You can read the Governor’s official statement regarding hospital price transparency and supportive comments from members of the Commission on Healthcare and Hospital Funding here.

Gov. Scott is a smart guy – an M&A attorney, who founded Columbia Hospital Corporation which merged into the Hospital Corporation of America to become Columbia/HCA, of which he was CEO for a number of years (during which time Medicare fraud issues arose). It is not like he does not know how healthcare providers in general, and hospitals in particular, price their services.

Since the advent of third-party payers, healthcare has always been an artificial market. Vendors of healthcare and consumers of healthcare (those with health insurance) have rarely negotiated prices.  The insurance companies negotiated with providers over what they would pay and with the insureds (or their employers) what their premiums would be. Add Medicare to the mix which set an artificial payment standard of some negotiated percentage of the Medicare rate, and pricing for healthcare services became almost completely independent of typical economic forces like supply and demand. Don’t even try to analyze pricing in rural or underserved markets.

So what is happening nowadays, when everyone is supposed to be insured, that makes healthcare pricing and bargaining with hospitals and other healthcare providers such a hot topic?  I think it is because of high deductible plans. Health insurance has basically become insurance only for catastrophic claims. When the family deductible may be $5,000 or more, the cost for “unreimbursed” services becomes a matter of personal economics — even if the provider is charging the rate previously negotiated with the healthcare insurer.

Unfortunately, the negotiating for healthcare services is far more complicated than the negotiating over the price of a car. Transparency in healthcare pricing is important, but transparency in healthcare quality is critical. Quality of care will soon be the dominant factor as we move away from procedure based payment for healthcare services to preventive care services (paid 100%) and bundled/global payments focused on the episode of care.

Adam Smith never had a chance in healthcare.

CMS Proposes Significant Changes to the 2016 Medicare Physician Fee Schedule, including to Stark

August 16, 2015 Leave a comment

CMS Factsheet:

“On July 08, 2015, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that updates payment policies, payment rates, and quality provisions for services furnished under the Medicare Physician Fee Schedule (PFS) on or after January 1, 2016. This year, CMS is proposing a number of new policies, including several that are a result of recently enacted legislation. The rule also finalizes changes to several of the quality reporting initiatives that are associated with PFS payments, including the Physician Quality Reporting System (PQRS), the Physician Value-Based Payment Modifier (Value Modifier), and the Medicare Electronic Health Record (EHR) Incentive Program, as well as changes to the Physician Compare website on Medicare.gov.”

The proposed rule includes provisions relating to the following;

  • physician quality reporting system
  • “Physician Compare”
  • EHR incentive program
  • Medicare shared savings
  • advance care planning
  • payment provisions on Part B drugs, misvalued codes, RVU reductions, “incident to” services, physician value-based payment modifier, etc.

Perhaps most significant in the area of healthcare business transactions are the physician self-referral (Stark law) updates:

  • expansion of recruitment and retention provisions to NPPs
  • updating physician-owned hospital requirements
  • reducing burdens of technical noncompliance through more reasonable regulations in a number of areas (based on information learned from self-dsiclosures and the rersults of recent cases)

The complete proposed rule as published in the Federal Register on July 15 can be found here.

Comments will be accepted by CMS on the proposed rule until September 8, 2015.

OIG Fraud Alert on Physician Compensation — Why Is No One Listening?

July 11, 2015 1 comment

A few weeks ago, the OIG published another one of its fraud alerts.  This one was entitled, “Physician Compensation Arrangements May Result in Significant Liability.”

Everyone knows (don’t they?) that business arrangements in healthcare have to meet several legal requirements, including: (1) it cannot be based on the value or volume of referrals, (2) it must be at arms’ length, and (3) it must be commercially reasonable.  When a healthcare provider enters into a transaction that violates any of these three requirements, he may have violated the anti-kickback statute or physician self-referral/Stark law or both, and any claim arising from the transaction that is submitted to the federal government for payment may be a false claim.  Healthcare lawyers have long been warning their clients to be cautious about how they pay (and recruit) physician employees and contractors in order to avoid violations of the kickback, self-referral, and false claims laws. Violations carry stiff penalties and in some cases criminal sanctions.

There is nothing new in this recent Fraud Alert.  Many similar fraud alerts and OIG advisory opinions and actual court cases have passed on the same message.  And there is nothing surprising other than that the facts described in this Fraud Alert so obviously violate these healthcare laws that you have to ask, why is no one listening?

I have a three explanations:

  • The false claims act was passed during the Civil War and was aimed at stopping corruption in how defense contractors were paid.  The law made sense.  There was a direct relationship between the defense contractor and the government dollars received.  However, the false claims act makes no sense in healthcare — treating a patient is so separated from payment; the provider at the time of care may not know who is paying — government, commercial, the patient, or no one.
  • The healthcare laws are so contrary to the economic rules that apply to other businesses and so counter-intuitive as to make them offensively ridiculous and begging to be ignored (which they are).
  • As we move to a pay for performance, quality-based healthcare reimbursement system, these laws become even more irrelevant.  Case in point — Accountable Care Organizations — a critical foundation for healthcare reform under the Accountable Care Act.  ACOs could not operate unless waivers to these healthcare laws were implemented.  Every healthcare provider is not in an ACO, but many are developing clinically integrated networks and other arrangements to oversee quality and utilization in order to compete more effectively with large healthcare systems and negotiate with payors in keeping with the goals of healthcare reform.  They are forced to act as if the waivers applied to them also.  In fact many consultants advise that the waivers DO apply to non-ACO networks.

It is time for a thoughtful review (and repeal) of these antiquated and economically debilitating laws in how they apply to healthcare providers.  It is time to stop calling business sensible healthcare transactions fraudulent and punishing the participants.

These laws allow regulators to be lazy and stupid. Anyone can enforce laws based an strict liability or ones that have lines so faint that crossing them is unavoidable.

Seriously, who cares if someone pays a fee for referring a patient for care?  Liability should be based on the quality and necessity of the care.  Providing care not needed or charging for care not given — those actions should be punished.  But that’s harder for regulators, so we continue to vilify healthcare providers and impose burdens on them that are far tougher than the benefits derived.

Last Week’s Big Healthcare Law Stories

May 30, 2015 Leave a comment

As healthcare providers and their lawyers know, things happen fast in healthcare.  Business deals, enforcement activity, new inventions and discoveries.

Here are a few headlines from last week in no particular order:

  • OIG Mid-Year 2015 Work Plan Mid-Year Update — The OIG published its 86 page mid-year update to its 2015 Work Plan. “This edition of the Work Plan, effective as of May 2015, describes OIG audits, evaluations, and certain legal and investigative initiatives that are ongoing. In response to adjustments made to our Work Plan, this mid-year update removes items that have been completed, postponed, or canceled and includes new items that have been started since October 2014. The word “new” before a project title indicates that the project did not appear in the previous Work Plan. For each project, we include the subject, primary objective, and criteria related to the topic. At the end of each description, we provide the internal identification code for the review (if a number has been assigned) and the year in which we expect one or more reports to be issued as a result of the review. This edition also forecasts areas for which OIG anticipates planning and/or beginning work in the upcoming fiscal year and beyond. Typically, these broader areas of focus are based on the results of OIG’s risk assessments and have been identified as significant management and performance challenges facing HHS. In FY 2015 and beyond, we will continue to focus on emerging payment, eligibility, management, and information technology systems security vulnerabilities in health care reform programs, such as the health insurance marketplaces. OIG plans to add to its portfolio of work on care quality and access in Medicare and Medicaid, as well as on public health and human services programs. OIG’s examination of the appropriateness of Medicare and Medicaid payments will continue, with possible additional work on the efficiency and effectiveness of payment policies and practices in inpatient and outpatient settings, for prescription drugs, and in managed care. Other areas under consideration for new work include, for example, the integrity of the food, drug, and medical device supply chains; the security of electronic data; the use and exchange of health information technology; and emergency preparedness and response efforts.”
  • CMS Proposes New Rule for Medicaid Managed Care — “This proposed rule would modernize the Medicaid managed care regulations to reflect changes in the usage of managed care delivery systems. The proposed rule would align the rules governing Medicaid managed care with those of other major sources of coverage, including coverage through Qualified Health Plans and Medicare Advantage plans; implement statutory provisions; strengthen actuarial soundness payment provisions to promote the accountability of Medicaid managed care program rates; and promote the quality of care and strengthen efforts to reform delivery systems that serve Medicaid and CHIP beneficiaries. It would also ensure appropriate beneficiary protections and enhance policies related to program integrity. This proposed rule would also require states to establish comprehensive quality strategies for their Medicaid and CHIP programs regardless of how services are provided to beneficiaries. This proposed rule would also implement provisions of the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) and addresses third party liability for trauma codes.”
  • Florida Senate Tweaks Health Exchange Plan For Fast Action — “The new Senate plan would jettison an initial proposal to expand Medicaid this summer, but instead would still rely on federal money linked to President Barack Obama’s health care overhaul. Low-income Floridians would be eligible to purchase coverage through a new state-run exchange, but they would have to pay premiums and they would be required to work. The new health coverage plan would require federal approval and would not kick in until January.  It would also allow consumers who are currently getting insurance through the federal exchange to continue doing so instead being bumped to an expanded Medicaid program — something the House criticized in the initial proposal.”
  • New York Assembly Passes Universal Health Care Bill — The New York Assembly passed the New York Health Act, which is seen largely as a symbolic gesture and not likely to be passed by the Republican New York Senate.  The bill’s Economic Analysis stated “This report analyzes the economic effects of the New York Health Act …, which would establish a comprehensive, universal health insurance program for all New Yorkers. The Act would replace the current multi-payer system of employer-based insurance, individually acquired insurance, and federally sponsored programs (e.g., Medicare and Medicaid) with a single billing pipeline funded by broad-based progressively graduated assessments collected by the State and based on income and ability to pay, thereby reducing administrative bloat and monopolistic pricing and dramatically reducing the cost of health care to New Yorkers even while extending and improving the provision of care.”
  • 21st Century Cures Act: A Call to Action — “The House Energy and Commerce Committee recently approved the 21st Century Cures Act with a vote of 51-0. The nonpartisan legislation will help to modernize and personalize health care, encourage greater innovation, support research, and streamline the system to deliver better, faster cures to more patients.”
  • FTC Commissioner Calls For War On Hospital Construction Laws — Law360 reported yesterday that “Federal Trade Commissioner Maureen K. Ohlhausen on Friday urged the antitrust agency to put pressure on state legislatures around the country to scrap laws requiring state approval for the construction of new hospitals, saying the laws are ‘anti-competitive’ in nature and create barriers for new market entrants.”
  • Two Cardiologists To Pay Over $3.6 Million For Fraud — “Jasjit Walia and Preet Randhawa and their New Jersey-based cardiology practice Garden State Cardiovascular Specialists will pay the amount to resolve allegations that they submitted claims to federal insurance program Medicare for various cardiology diagnostic tests and procedures. The tests included stress tests, cardiac catheterizations and external counterpulsation, which were not medically necessary, US Attorney Paul Fishman for the District of New Jersey said.”
  • Florida’s Medical Marijuana Rules Upheld — “Florida Administrative Hearings Judge David Watkins rejected claims by an Orange County nursery that the state’s proposed rules and regulations were unfairly developed to give advantage to bigger, politically connected nurseries to win the five regional medical-marijuana-growing licenses the law allows. … Florida may now start creating a statewide medical-marijuana program that so far has only been proposed. The program, as written, allows five companies to grow low-THC marijuana, extract an oil and sell it as medicine for people who suffer from intractable epilepsy and several other debilitating conditions.”

THE MEDICARE ACCESS AND CHIP REAUTHORIZATION ACT (a/k/a the Repeal of the SGR)

April 15, 2015 Leave a comment

There is great celebration in the healthcare community about the repeal of the Medicare Sustainable Growth Rate (“SGR”).  All the healthcare-related and other media are abuzz reporting on the jubilation:

among others.

In fact, the only comparable celebration that I can recall occurred on the death of the Wicked Witch in the Wizard of Oz. Actually, the repeal of the SGR and the witch’s death are more alike than different.

For years, the SGR has terrorized physicians.  Every December and into the following new year, physicians had to wait to see whether their reimbursement from Medicare would be reduced by some double-digit percentage.  Recently, physicians have been pawns for Democrats and Republicans trying to make points (perhaps “ping pong balls” is the better metaphor), with their livelihoods held hostage until some form of political rationality prevailed.

According to the summary/analysis of MACRA prepared by the Staffs of the House Energy and Commerce and Ways and Means Committees:

The legislation repeals the flawed Sustainable Growth Rate (SGR) formula and replaces it with the bicameral, bipartisan agreement to return stability to Medicare physician payments. The SGR formula is a cap on aggregate spending on physicians’ services where exceeding the cap resulted in punitive recoupments in subsequent years. The formula was passed into law in the Balanced Budget Act of 1997 to control physician spending, but it has failed to work. Since 2003, Congress has spent nearly $170 billion in short-term patches to avoid unsustainable cuts imposed by the flawed SGR. The most recent patch will expire on March 31st. Based on H.R. 1470, the bicameral, bipartisan unified Committee bill to replace the SGR, this policy removes the imminent threat of draconian cuts to Medicare providers and ensures a 5-year period of stable annual updates of 0.5 percent to transition to a new system. The new system moves Medicare away from a volume-based system towards one that rewards value, improving the quality of care for seniors.

The Medicare Access and CHIP Reauthorization Act, or MACRA for short, has been praised by President Obama who has  promised to sign it.  The 324-page Congressional print of MACRA does a lot of things in addition to repealing the SGR, including the following:

  • Extension of the Children’s Health Insurance Program (“CHIP”) for two years
  • Development of “alternative payment models” away from fee for service and toward quality of care
  • Strengthening of Medicare’s ability to fight fraud and build on existing program integrity policies
  • Additional $7.2 billion for community health centers
  • Increasing Medicare premiums for some seniors and elimination of Medigap policies starting in 2020 from covering Medicare deductibles for new beneficiaries
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