As New Yorkers are preparing for Thanksgiving and the official start to the holiday season (although some could argue it started a month ago), required Medicaid providers should also be reviewing their Compliance Programs in preparation to submit their Annual Provider Compliance Program Certification to the New York State Office of the Medicaid Inspector General (“OMIG”).  Required providers must submit a certification at the time of their enrollment and each December thereafter.

As defined by Social Services Law Section 363-d (“Section 363-d”) and Part 521 of Title 18 of the New York Code of Rules and Regulations (“Part 521”), required providers are considered any provider that can answer “Yes” to one of the following questions and therefore must implement a comprehensive Compliance Program:

  1. Is the provider organization subject to Article 28 or Article 36 of the NYS Public Health Law?
  2. Is the provider organization subject to Article 16 or Article 31 of the NYS Mental Hygiene Law?
  3. Does the provider organization claim or order, or can be reasonably expected to claim or order, Medicaid services or supplies of at least $500,000 in any consecutive 12-month period?
  4. Does the provider organization receive Medicaid payments, or can be reasonably expected to receive payments, either directly or indirectly, of at least $500,000 in any consecutive 12-month period?
  5. Does the provider organization submit Medicaid claims of at least $500,000 in any consecutive 12-month period on behalf of another person or persons?

There are two important concepts to be aware of when answering these questions.  First, as defined by the OMIG, Indirect Medicaid Reimbursement is any payment that a provider receives for the delivery of Medicaid care, services, or supplies that comes from a source other than the State of New York.  An example of this is when a provider provides covered services to a Medicaid beneficiary who is enrolled in a Medicaid Managed Care Plan, any payment from the Managed Care Organization is considered an indirect payment.

The second important concept is that the OMIG considers any consecutive 12-month period to be exactly that, any twelve consecutive months.  This determination should not be considered solely on a calendar year.  For example, if a provider established her practice on April 1, 2018 and will not reach $500,000 in either claims or payments by December 31, 2018 but can reasonably expect to hit that mark by March 2019, then that provider should have a Compliance Program in place and be prepared to certify to its implementation by December 31, 2018.

To assist providers, the OMIG’s website identifies seven compliance areas that a provider’s Compliance Program must apply to, as well as eight elements that should be included in all Compliance Programs, regardless of provider type.

The Seven Compliance Areas are:

  1. Billings;
  2. Payments;
  3. Medical necessity and quality of care;
  4. Governance;
  5. Mandatory reporting;
  6. Credentialing; and
  7. Other risk areas that are or should with due diligence be identified by the provider.

The Eight Elements required in every Compliance Program are:

Element 1: Establish written policies and procedures that clearly describe and implement compliance expectations, as well as provide guidance to employees and others on dealing with potential compliance issues.  The written policies and procedures must also identify how to communicate compliance issues to appropriate compliance personnel and describe how potential compliance problems are investigated and resolved.

Element 2: Designate a Compliance Officer who is responsible for the day-to-day operation of the Compliance Program.

Element 3: Establish an effective training and education program for all affected employees and persons associated with the provider, including executives and governing body members (“affected persons”).

Element 4: Establish clear lines of communication to the Compliance Officer that allow all affected persons report compliance issues.  Providers must also establish anonymous and confidential reporting systems.

Element 5: Establish disciplinary policies that are fairly and firmly enforced to encourage good faith participation in the Compliance Program by all affected persons.  The policies must include clear expectations for the reporting or and assistance in resolving compliance issues.  The policies must also include defined sanctions for:

  • failing to report suspected problems;
  • participating in non-compliant behavior; or
  • encouraging, directing, facilitating or permitting either actively or passively non-compliant behavior.

Element 6: Conduct routine compliance assessments for those risk areas specific to the individual provider type, including but not limited to self-audits. These self-audits can be conducted internally or a provider may choose to have an external party conduct the audit.

Element 7: Establish a system for responding to and investigating potential compliance problems as the Compliance Officer becomes aware of them, either by a report received from an affected person or as the result of an internal assessment.  Compliance Program must also establish systems for the provider to report compliance issues the OMIG, as well as repay any related overpayments.

Element 8: Establish a policy of non-intimidation and non-retaliation for good faith participation in the Compliance Program, including but not limited to reporting potential issues, investigating issues, self-evaluations, audits and remedial actions, and reporting to appropriate officials as provided in sections 740 and 741 of the New York State Labor Law.

As mentioned above, each December, required providers must submit a Provider Compliance Program Certification, attesting that they have a Compliance Plan in place and that Compliance Plan satisfies each of the OMIG’s Eight Elements.  If a provider is unable to unequivocally state that their plan meets these requirements then a certification should not be submitted and immediate steps must be taken to all necessary modifications to establish a satisfactory Compliance Plan.  Any provider who submits a false certification may be subject to sanctions, including monetary fines or provider enrollment termination.

If you are unsure whether your Compliance Plan would satisfy the OMIG’s Eight Elements, or if you are a provider who believes you are required to implement a Compliance Plan and have not done so, please do not hesitate to contact Farrell Fritz’s Regulatory & Government Relations Practice Group at 518.313.1450 or NYSRGR@FarrellFritz.com.

 

Earlier this month the New York State Department of Health released the first results of its recently adopted Medicaid redesign efforts, the Delivery System Reform Incentive Payment (“DSRIP”), in four core areas: (1) metric performance, (2) success of projects, (3) total Medicaid spending and (4) managed care expenditures.   The passing scores stem from the collaborative efforts of the Performing Provider Systems comprised of New York hospitals, providers and other key stakeholders.

In April 2014, New York State and the federal government agreed to a DSRIP framework, pumping approximately $8 billion in state health care savings to target Medicaid reforms. The goal of the DSRIP waiver is to reduce patient hospital usage by 25% over 5 years while improving patient-centered care. The program includes $6.42 billion for DSRIP Planning Grants, Provider Incentive Payments, and administrative costs.

The Centers for Medicaid and Medicare Services did find, however, that New York still needs to show improvement in certain areas, including preventable hospital readmissions and emergency room visits as well as access to timely appointments.

Speaking on the results, Donna Frescatore, the New York State Medicaid Director, said “[a] passing grade on all four of the milestones proves that we are making monumental progress toward improving care for millions of New Yorkers….While we are on a clear path to success, our work is far from over. In the months and years ahead, we will shift our focus toward improving performance metrics and health outcomes as we work to change the culture of health care.”

Even though New York received passing scores on its first report card, the state must continue to demonstrate improvement going forward to avoid financial penalties associated with failing to meet the requisite benchmarks.  It will be interesting to see if New York meets the 25% hospital usage reduction by March 31, 2020, the date the DSRIP waiver ends.

The full report can be found here.

As we have discussed in an earlier blog post, the federal administrative agencies have been placing greater emphasis on being more transparent and promoting “interoperability”.

As such, on April 24, 2018, the Centers for Medicare & Medicaid Services (“CMS”) proposed changes to its Inpatient Prospective Payment System and Long-Term Care Hospital Prospective Payment System to promote better access to patient electronic health information and increase pricing transparency. For example, while hospitals are already required to make pricing information publicly available, the proposed rules impose more stringent guidelines, including a requirement that hospitals post pricing information on the internet. Seema Verma, the CMS Administrator, stated “[t]oday’s proposed rule demonstrates our commitment to patient access to high quality care while removing outdated and redundant regulations on providers. We envision a system that rewards value over volume and where patients reap the benefits through more choices and better outcomes.”

Critical to the proposed changes is a complete overhaul of the Medicare and Medicaid Electronic Health Records Incentive Programs, which is commonly known as the “Meaningful Use” program, by executing on the following core principles:

  1. Having a program that is more flexible and less burdensome;
  2. Placing greater emphasis and encouraging the exchange of health information between providers and patients; and
  3. Incentivizing providers to streamline the process for patients to be able to access their medical records electronically.

A rebranding would not be complete without, of course, a name change; in fact, CMS has proposed changing the “Meaningful Use” program to “Promoting Interoperability”. Interoperability, which means “the ability of computer systems or software to exchange and make use of information,” has been missing from the healthcare industry as technology has been advancing at an unprecedented rate. In a system where healthcare is central to our lives, it appears the final goal is to have a system where patients could have access to a virtual portal where all of their health information from various providers would be available, thus promoting patient-centered care where providers have greater insight into their patient’s medical history—invariably resulting in more thoughtful care. It is refreshing to see government, which is commonly known to always be a step behind private industry, taking the initiative to modernize its infrastructure. At this point in history a patient should be able to obtain his health information on a whim via his mobile device or even see a new physician while not having to deal with the administrative nightmares associated therewith.

While it is unclear if the final goal of “interoperability” will be reached, CMS’ proposed changes are definitely an encouraging step forward.

For more information, please see the CMS fact sheet.

 

 

imagesNG7ROJJTCMS has published a Proposed Rule to clarify how physicians are to bill for services furnished “incident to” the professional services of a physician.

When a medical practice bills Medicare “incident to” for NPP services (i.e. “non-physician practitioners” such as nurses or physician assistants), the bill is rendered by the physician using the physician’s NPI number. Incident to services billed by the physician are paid at 100 percent of the fee schedule amount even though the physician did not perform the services. When the same services are billed by the NPP, the services are paid at 85 percent of the fee schedule amount. Specific requirements must be met for physicians to bill Medicare for incident to services. The services must be:

  • Furnished in a noninstitutional setting to noninstitutional patients.
  • An integral, though incidental, part of the service of a physician in the course of diagnosis or treatment of an injury or illness (understood to mean a physician has seen the patient first and initiated a plan of care being carried out by the NPP).
  • Furnished under direct supervision of a physician or other practitioner eligible to bill and directly receive Medicare payment (meaning the physician is present in the office suite).
  • Furnished by a physician, a practitioner with an incident to benefit, or auxiliary personnel.

NPP services may be billed under the physician’s NPI number when the services are part of the patient’s normal course of treatment, during which a physician performed an initial service and remains actively involved in the treatment.

The current regulations have caused confusion. The regulations state that the “physician supervising the auxiliary personnel need not be the same physician upon whose professional service the incident to service is based.” My interpretation of this is that a physician other than the physician that initiated the plan of care may supervise the NPP in the provision of services and such services will qualify as “incident to” if all other requirements are met. What remains unclear is which physician should bill for the incident to services, the supervising physician or the physician that initiated the plan of care. The proposed rule attempts to clarify that the billing physician must be the physician that supervised the services and not the physician that initially saw the patient and instituted the plan of care.

Care must be taken to ensure the supervising physician’s NPI number is used. This can be a challenge in busy medical offices where the physicians are regularly in the OR or conducting rounds.

When does the 60-day clock start for an identified overpayment of federal funds to become a reverse false claim under amendments to the False Claims Act?  A closely watched SDNY qui tam  case may provide an answer. 

In June, the United States and New York intervened in United States v. Continuum Health Partners, Inc., alleging that defendants had knowingly failed to return overpayments owed to Medicaid arising out of a computer glitch.  Defendants have now filed motions to dismiss the Federal and New York State FCA claims. 

In 2009, the Fraud Enforcement and Recovery Act defined “obligation” in the FCA to include “the retention of an overpayment.”  The following year, in 2010, the Affordable Care Act provided that an overpayment of federal funds must be reported and returned within “60 days after the date on which the overpayment was identified.”  In addition, the ACA amendments provided that the failure to return an overpayment in 60 days constitutes a reverse false claim, subjecting the provider to treble damages and civil penalties under the FCA. 

In their motion to dismiss, Beth Israel Medical Center, St. Luke’s-Roosevelt Hospital Center, and Continuum Health Partners argued that there was never an “obligation” to the Federal government, because there must be a present, existing duty to repay.  Defendants asserted that an overpayment is not “identified” unless it has been confirmed and quantified, and the 60 day period does not start until that occurs.  Defendants referenced the process most providers undertake when they become aware of a potential overpayment, including an internal audit, sampling of claims, consultations with physicians and staff, and factual and legal analysis.  This process ordinarily cannot occur within 60 days of initially becoming aware of a potential overpayment. 

The complaint attached an internal summary, by one of Continuum’s employees, of approximately 900 Medicaid claims, totaling over $1 million, that were potential overpayments.  Defendants stressed that this was not a list of actual overpayments, and in fact only 465 of the claims were paid.  As further analysis was required to determine if the claims did result in overpayments, defendants argued that the summary did not “identify” overpayments, and the complaint therefore did not allege any obligation owed the government under the FCA. 

Defendants also argued that the complaint failed to allege any affirmative act of concealment to prevent an overpayment from being disclosed, and that an overpayment from Medicaid is not an obligation owed to the Federal government under the reverse false claim section of the FCA.  In a separate memorandum seeking to dismiss the state FCA claims, defendants incorporated their Federal FCA arguments and also argued that the state reverse false claim provision was enacted after the alleged conduct, and therefore could not be applied retroactively. 

This case is being closely watched, as it raises significant issues on when the government can assert reverse false claim liability for overpayments.  Significantly, in this case, there is no dispute that the overpayments resulted from a computer glitch and not fraud, and that defendants repaid the overpayment to the government.  The complaint alleges that defendants did not make that payment soon enough.  The government intervened to seek treble damages and civil penalties, signaling that it will be aggressively pursuing cases where providers become aware of overpayments and fail — in the government’s view — to promptly reimburse the government. 

The case is pending before SDNY District Judge Edgardo Ramos, and the government opposition papers are due on October 22.

At the end of June, the U.S. Attorney’s Office in Manhattan filed a False Claims Act complaint against Beth Israel Medical Center, St. Luke’s-Roosevelt Hospital Center, and Continuum Health Partners, United States v. Continuum Health Partners, Inc., alleging that defendants had knowingly failed to return overpayments owed to Medicaid arising out of a computer glitch. 

In 2010, the Affordable Care Act amended the False Claims Act to provide that overpayments of federal funds must be paid within 60 days after they are identified, and that the failure to timely return an overpayment constitutes a reverse false claim, subjecting a party to liability for three times the amount of the claim and a penalty of between $5,500 and $11,000 for each claim. 

Under the Medicaid regulations applicable to this case, the defendant providers were not permitted to receive additional payments from Medicaid above amounts paid by a managed care organization.  A computer glitch caused defendants to erroneously seek additional payments from Medicaid. 

According to the complaint, defendants became aware of the problem in September 2010, when the State Comptroller identified a small number of improper payments.  A review by defendants in February 2011 revealed a more significant problem, involving approximately 900 claims totaling over $1 million that were wrongly submitted to Medicaid.  Nevertheless, defendants only repaid the small amount of claims identified by the Comptroller. 

The employee who identified the significant overpayment problem was terminated, and later filed the qui tam case in which the government intervened.  The State Comptroller continued to investigate, and defendants made certain payments when they were identified by the Comptroller.  The complaint alleges that defendants dragged their heels on making all the repayments, however, and sought to conceal the true extent of the problem.  Defendants only finished returning the overpayments in 2013, more than two years after they were identified.  In addition, many of the repayments were not made until after June 2012, when the government issued a Civil Investigative Demand to defendants. The government now seeks to recover treble damages and a penalty of up to $11,000 for each claim. 

There is no question that the overpayments in this case resulted from a mistake, a computer glitch.  Nevertheless, this case shows that the government will aggressively seek to recover False Claims Act damages and penalties for the failure to timely return overpayments once they have been identified, even if the original overpayment was due to mistake or inadvertence rather than fraud.  The allegations of this complaint seem particularly egregious, with defendants allegedly being aware of significant overpayments and making only minimal efforts to repay the government.  The law, however, only requires a failure to return an overpayment within sixty days after identification for False Claims Act liability to attach. 

This case highlights a serious problem for providers who become aware that they may have been overpaid on claims to the United States.  In that situation, providers will have to promptly assess whether an overpayment has in fact occurred, and then determine what next steps are in order to avoid False Claims Act liability.  The government can be expected to aggressively prosecute these cases.  In addition, False Claims Act investigations into allegedly improper claims will likely include investigation into whether providers were aware of problems with certain claims, and whether they let more than sixty days lapse before addressing them.

In Matter of Koch v. Sheehan, the New York Court of Appeals held that the Office of Medicaid Inspector General (“OMIG”) may remove a physician from the Medicaid program based solely on a consent order between the physician and the Bureau of Professional Medical Conduct (“BPMC”), even if BPMC does not suspend the physician’s license and OMIG does not conduct its own investigation.

The BPMC is the adjudicatory arm of the Office of Professional Medical Conduct (“OPMC”), the authority within the New York State Department of Health (“DOH”) charged with investigating complaints of physician misconduct.  OPMC sends the results of its investigations to OMIG, the DOH agency responsible for policing the Medicaid program.

In Koch, the petitioner-physician entered into a consent order with BPMC pleading “no contest” to charges that his care and treatment of two elderly patients failed to meet accepted standards of care.  He agreed to a 36-month probation, but BPMC allowed him to continue practicing medicine.  OMIG, however, removed him from the Medicaid program, without any further investigation and even though BPMC did not impose a suspension of his license.  The Appellate Division annulled the OMIG determination on the grounds that it was arbitrary and capricious for OMIG to bar petitioner-physician from Medicaid when BPMC allowed him to continue his practice, and that OMIG had to conduct an independent investigation before taking such action.

The Court of Appeals held, however, that OMIG is authorized to exclude a physician from the Medicaid program regardless of the sanctions imposed by BPMC, and OMIG is not required to conduct an independent investigation or develop additional evidence before making its decision.  Nevertheless, the Court held that the OMIG decision was arbitrary and capricious, but for a different reason than the Appellate Division.  The Court held that OMIG’s basis for finding the BPMC consent order sufficient to terminate Medicaid participation was not in the administrative record.  Thus, while OMIG has the power to exclude a doctor from Medicaid based solely on a BPMC consent order, and does not have to defer to the BPMC’s decision to allow a doctor to continue practicing, in this instance the administrative record did not have sufficient reasoning to support OMIG’s decision.

The takeaway from this case is supplied by the Court of Appeals itself:  “When resolving charges of professional misconduct with BPMC, physicians and their attorneys should be mindful that a settlement with BPMC does not bind OMIG.”

Senator Kemp Hannon, Chair of the New York State Senate Committee on Health (and counsel at Farrell Fritz), will be hosting a health care forum featuring a presentation by State Medicaid Director Jason Helgerson.  The event will take place on Monday, August 5 from 10:00 am to noon at the Hofstra University Student Center Theatre.

Helgerson, also Executive Director of the Medicaid Redesign Team (MRT), will speak on the topic “An Update on Medicaid Redesign and the Medicaid Budget in New York.”  He will give an overview of the State’s $53 Billion a year Medicaid program, the deep changes effected in the program by the MRT, and the progress of the changes.

Seating is extremely limited.  Parties interested in attending should call Senator Hannon’s office at (516) 739-1700, or email hannon@nysenate.gov with their name, title, address, organization and telephone number.

 

Just a reminder to New York State Medicaid providers that certifications under the NYS Social Services Law and the Federal Deficit Reduction Act are due no later than December 31.

All New York State Medicaid providers who are required to have a compliance program under Social Services Law Section 363-d must certify that their compliance programs are effective.  The certification must be completed during the month of December each year.  The Social Services Law certification is an online certification that may be accessed through the New York State Office of the Medicaid Inspector General website under the Compliance tab. 

Medicaid providers subject to the Federal Deficit Reduction Act of 2005 (DRA) must also provide a certification that they are meeting the DRA’s requirements.  The certification must be completed each year prior to January 1st.  The DRA certification may also be accessed on OMIG’s website under the Compliance tab.

There can be significant consequences both for failing to certify and for certifying compliance when not in compliance with the regulatory requirements.  Parties who are unsure whether they need to certify their programs, or who may have questions regarding their compliance programs or certifications, are advised to consult with their attorneys to review their options.

In this election season, both presidential candidates offer plans to deal with the rising cost of providing health care services, the President’s “Obamacare” by increasing the number of insured individuals through Health Insurance Exchanges, and reducing costs for a continuum of services through Accountable Care Organizations; and Governor Romney by a consumer-driven approach through Medicare vouchers, tax credits, and Health Savings Accounts.

A recent article on the website Salon written by Michael Lind of the centrist New America Foundation poses the provocative thesis that the immense and ever-increasing cost of providing health care services in the United States could be remedied by aggressive, mandatory price controls by the US government on all health care services – hospitals, nursing homes, physicians, prescription drugs, etc.

Now this already occurs in part.  The government sets prices to be paid by Medicare and Medicaid to providers of care.  However, this has little effect on the majority of the population with private insurance or no insurance.  Each insurance company or managed care entity negotiates fees with providers, but none have the market strength necessary to effect national changes in pricing.

 What if tomorrow the US government set out a mandatory fee schedule for every procedure and prescription drug, so that no provider or manufacturer could charge more than this schedule?  Lind suggests instant cost savings, with no rationing, no limiting access to care, and no “death panels.”

This proposal is similar to the Japanese health system, which is largely fee-for-service and private provider based, with easy access to hospitals and physicians.  The government sets the price for every medical procedure, profitability of categories of providers is monitored, and fees are reduced if a sector becomes too profitable (not that much different from US requirements regarding insurance company medical loss ratios; many insurers recently paid out refunds).  Japan boasts a long-lived and healthy population, with health care spending as a percentage of GDP increasing at a fraction of the increase in the United States.

Of course, such a bold proposal brings to mind dozens of questions regarding the impact of price controls.  In the short term, would acute care hospitals be forced to shut down?  Would older physicians simply close their practices?  Would aspiring physicians choose another profession?  With lower prices, would patients demand even more testing and prescription drugs, reducing or eliminating savings?  Would physicians and hospitals increase volume of services, perhaps with unnecessary procedures, to make up for lost revenue?  Would this be a windfall for health insurers?  Would premiums drop to the point that more Americans could afford health insurance? Would reduced costs translate into greater access to employer sponsored health insurance? Would it spur economic growth and jobs, allowing more people to access employer sponsored health insurance?

Let’s hear your thoughts.