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HEADLINES
Wednesday,
March 24, 2010
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Journal of Health Care Compliance March/April Volume 12, Number 2
In addition to regularly featured columns such as HIPAA, auditing and monitoring, QIO, and physician compliance, the March/April 2010 issue of the Journal of Health Care Compliance includes the following articles:
- Research Compliance-Is this the Missing Piece in My Compliance Program?, written by Leah Guidry, provides an outline of the various research models that can be used and key issues that should be addressed.
- The HEAT Is On: Prepare Now for Enhanced Government Health Care Enforcement Effort, written by Judith A. Waltz, provides specfic steps health care providers and suppliers can take to prepare for increased DOJ and HHS enforcement.
- Outsourcing: A Cost-Effective Way to Achieve Health Care Compliance, written by Michael A. Dowell, proposes outsourcing as a viable option for organizations that see the need for compliance but have limited resources.
- Independent Review Organizations Must Meet GAO "Yellow book" Standards, written by Thomas E. Herrmann, emphasizes that the GAO "Yellow Book" standards, expressly adopted by the OIG as governing independent review organizations (IROs), must be carefully reviewed and followed by a health care entity in selecting an IRO.
- The Evolution of HIPAA: The Only Constant Is Change, written by Kirsten Ruzic Wild, describes what covered entities need to do now to comply with HIPAA privacy and security rules and what the future holds.
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Health Care Compliance Professional’s Manual Highlights
- Endorsed by the Health Care Compliance Association, the
Health Care Compliance Professional’s Manual, written by experienced compliance practitioners, provides insights on legislative and regulatory matters, offers guidance on applying the laws and regulations, and spells out practical compliance solutions that professionals can put to work right away. The March 2010 quarterly update 23 includes the following revised and new chapters:
- • “Cost Report Compliance,” updated by Lance Loria, CPA, FACHE, FAAMA, offers guidance for effective cost report compliance. The chapter covers baseline evaluations, periodic assessment of controls, organized evidence-based approach, error response and prevention, checklists, and a cost report policy index.
- • “The Federal Sentencing Guidelines: A Practical Overview of Their Background, Intent, and Implications,” revised by Gabriel Imperato, Esq., presents the current view of the application of the sentencing guidelines to the health care industry as they relate to the elements of an effective compliance and ethics program.
- • “The Recovery Audit Contractor Program: What Compliance Officers Need to Know,” a new chapter written by Nancy Freeman, RHIA, MBA, MHA, provides a detailed description of the RAC demonstration project and permanent program, types of reviews; and challenges and strategies for providers preparing for an audit.
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Headlines
RACs identify fraud cases and improper payments
The Centers for Medicare & Medicaid Services (CMS) conducted a
demonstration project from 2005 to 2008 to: (1) detect and correct
past improper payments in the Medicare fee-for-service program, and
(2) provide information to CMS and the Medicare claims processing
contractors that could help protect Medicare trust funds by preventing
future improper payments. The Office of Inspector General (OIG) made
two general findings: (1) recovery audit contractors (RACs) referred
two cases of potential fraud, and (2) CMS did not provide any formal
training to RACs in the demonstration regarding the identification
and referral of potential fraud, yet provided a presentation regarding
fraud to the permanent RACs.
CMS awarded the first RAC contracts in March 2005. The states with the highest Medicare utilization rates—California,
Florida, and New York—were selected for the demonstration. In
2007, CMS expanded the demonstration to Massachusetts, South Carolina,
and Arizona. CMS compensated RACs through contingency fees, which
were a percentage of the amount of improper payments that RACs corrected.
The RACs were responsible for referring claims determined to be potentially fraudulent to the CMS Project Officer, who then forwarded the referrals to the Program Integrity Group at CMS for further review and determination. Once these referrals were forwarded, RACs were prohibited from reviewing or taking further action on these claims. Further, RACs could not collect any contingency fee for claims they referred to CMS that were determined to be fraud.
CMS gave RACs access to the RAC Data Warehouse, which was designed
for numerous coordinating, tracking, and reporting functions. RACs
were prohibited from reviewing claims that had been flagged by other
Medicare contractors and law enforcement agencies in the Warehouse.
Accordingly, RACs were required to compare their list of claims to
be reviewed with the flagged claims in the Warehouse, which included
claims previously reviewed, settled or currently investigated by CMS,
fiscal intermediaries, carriers, durable medical equipment regional
carriers, and quality improvement organizations, among others.
It was recommended that CMS: (1) follow up to determine the outcomes
of the two fraud referrals, (2) implement a database system to track
fraud referrals, and (3) require RACs to receive mandatory training
on the identification and referral of fraud. CMS concurred with all
three recommendations.
OIG Report, No. OEI-03-09-00130, Feb. 2010, Health
Care Compliance Reporter, ¶530,740.
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OIG reports $4 billion in penalties, over 1,000 suites in FY 2009
The Inspector General of the Office of Inspector General (OIG) and the OIG Deputy Inspector General for Investigations testified that in fiscal year (FY) 2009, the OIG's investigations in combating fraud, waste, and abuse resulted in: (1) $4 billion in settlements, court-ordered fines, penalties, and restitution, 75 percent of which involved health care fraud; (2) 671 criminal actions, 515 of which involved health care fraud; (3) over 362 civil actions, 355 of which involved health care fraud; (4) almost $500 million in receivables through recommended disallowances; and (5) the exclusion of over 2,500 providers from federal health care programs.
The OIG identified five principles underlying its strategy for combating fraud, waste, and abuse: (1) scrutinize individuals and entities that want to participate as providers and suppliers prior to their enrollment in the health care programs (for example, prevent sham providers from obtaining Medicare billing numbers and billing for fraudulent claims); (2) establish payment methodologies that are reasonable and responsive to changes in the marketplace and medical practice (for example, avoid reimbursing suppliers for items at rates that are significantly greater than the actual acquisition costs); (3) assist health care providers and suppliers in adopting practices that promote compliance with program requirements (for example, disseminate sector-specific Compliance Program Guidance documents); (4) vigilantly monitor the programs for evidence of fraud, waste, and abuse (for example, use data and technology to detect potential problems as claims are submitted and before they are paid); and (5) respond swiftly to detected fraud, impose sufficient punishment to deter others, and promptly remedy program vulnerabilities (for example, collaborate with the Department of Justice and state law enforcement to respond to fraud).
One of the OIG's special agents in Miami, Florida testified on the efforts of its local Medicare Fraud Strike Force, and specifically described the five steps the Strike Force team follows during individual investigations: (1) analyze and evaluate claims data to identify aberrant billing patterns; (2) obtain Medicare enrollment applications, which identify the registered owners, their financial information, and the authorized medical billing representatives; (3) identify the medical biller who electronically submitted patient information to a Medicare claims contractor for processing and reimbursement (investigators interview the medical biller to determine her or his level of complicity, and identify who provided the billing information); (4) identify and obtain bank information, including the true owner of the fraudulent provider's bank account; and (5) identify the true owner of the clinic or durable medical equipment company, and attempt to interview her or him in furtherance of the investigation.
Testimony of HHS IG, Deputy IG, and OIG Special Agent Regarding Combating Fraud, Waste and Abuse in Medicare and Medicaid, March 4, 2010, Health Care Compliance Reporter, ¶530,744, ¶530,745, ¶530,746, respectively.
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OIG official testifies regarding CMS' Part D oversight
On March 3, 2010, Robert Vito, Regional Inspector General for Evaluations and Inspections, Office of Inspector General (OIG), HHS, appeared before the Senate regarding oversight of the Medicare prescription drug program. Vito testified that CMS' program integrity efforts have been limited in scope and may not be sufficient to protect the program from fraud, waste, and abuse.
Vito identified the following vulnerabilities: (1) CMS relied largely on complaints to identify potential fraud and not all of these complaints were investigated in a timely way; (2) Medicare Drug Integrity Contractors (MEDICs) have relied mainly on external sources to identify fraud, limited data access has hindered their detection efforts, and MEDICs were not given CMS approval to conduct compliance plan audits; (3) OIG's 2006 review found that while all plan sponsors had compliance plans, these plans did not fully address all of CMS' requirements and, in some cases, contained only the broad outlines of a fraud and abuse plan; (4) because CMS has not finalized any audits of Part D plan sponsors' compliance plans, OIG does not know whether this key anti-fraud component is working at the plan level and what improvements can be made; (5) in a October 2008 report, OIG found that 24 of 86 sponsors of stand-alone plans did not identify any potential fraud and abuse incidents, ninety percent of all incidents were associated with only seven plan sponsors, and not all plan sponsors that identified potential fraud conducted inquires, initiated corrective actions, or made referrals for further investigation; and (6) the majority of Part D sponsors' bids in 2006 and 2007 overestimated the cost of providing the benefit.
One of the OIG's special agents in Miami, Florida testified on the efforts of its local Medicare Fraud Strike Force, and specifically described the five steps the Strike Force team follows during individual investigations: (1) analyze and evaluate claims data to identify aberrant billing patterns; (2) obtain Medicare enrollment applications, which identify the registered owners, their financial information, and the authorized medical billing representatives; (3) identify the medical biller who electronically submitted patient information to a Medicare claims contractor for processing and reimbursement (investigators interview the medical biller to determine her or his level of complicity, and identify who provided the billing information); (4) identify and obtain bank information, including the true owner of the fraudulent provider's bank account; and (5) identify the true owner of the clinic or durable medical equipment company, and attempt to interview her or him in furtherance of the investigation.
Vito recommended that CMS: (1) implement a comprehensive program integrity plan that includes mechanisms to ensure oversight and accountability; (2) ensure that MEDICs conduct more rigorous oversight, including data analysis, to detect potential fraud, waste, and abuse; and (3) ensure that plan sponsors are implementing effective compliance plans.
OIG Senate Testimony, March 3, 2010, Health Care Compliance Reporter, ¶530,743.
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On The Front Lines
Profiting from Anesthesia Services: An Analysis of Emerging Compensation Arrangements Between Ambulatory Surgery Centers and Anesthesiologists
by Paul R. DeMuro, CPA, MBA, JD, CHC, Katherine A. Lauer, JD, and Benjamin E. Huston, JD
Increased regulatory pressures along with the tightening of reimbursement levels have strained ambulatory surgical center (ASC) profits over recent years, leading many ASC owners to consider alternative ways to generate more revenue. Two emerging business models involving compensation arrangements between ASCs and anesthesiologists have gained significant traction by allowing ASC owners to capture a portion of the profits from the provision of anesthesia services. As these new business models continue to proliferate, anesthesiologists are facing increased pressure to either participate in these questionable practices or risk losing existing and potential business opportunities.
Since 1982, when Medicare approved reimbursement for ASC services, physician-owners have consistently sought new models to enhance the profitability of their ASCs. While this pursuit has largely benefitted ASCs as well as their patients, it has also led some ASCs to adopt risky and potentially illegal business models in order to remain competitive. For example, in 2007, when changed rules to the ASC payment system resulted in a widening of the gap between hospital and ASC reimbursement rates, a number of ASC owners engaged in questionable joint venture models with hospitals (e.g., the “under arrangements” model) in order to take advantage of the more generous hospital-based payment rates.
Today, many ASCs are exhibiting similar risky behavior as they attempt to tap into the revenue stream of the anesthesia services industry. Two growing trends in compensation arrangements between ASCs and anesthesiologists have shifted a large portion of the revenues generated by anesthesia providers to the ASC and its owners. Under these arrangements, anesthesiologists either are forced to, or offer to, share their professional fees with owners of the ASC in order to obtain the right to provide anesthesiology services at the ASC. These arrangements arise in two basic business models – (1) the “company model,” and (2) suspect compensation arrangements.
While ASC owners have largely welcomed these new models and their resulting increase in profits, many anesthesia groups and other healthcare professionals have expressed concern over the regulatory risks posed by these compensation arrangements. In light of these competing considerations, this article provides a detailed description of these two business models, highlighting the reasons why they have become popular and why they pose risk.
With the continued growth of these types of compensation arrangements, ASC owners and anesthesia providers will have to undergo individualized cost-benefit analyses to determine whether these business models are compatible with their companies' short and long-term goals. However, in the absence of further OIG guidance, both parties should be aware that implementation of either of these models will involve considerable legal risk.
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