Assistant Attorney General Lanny A. Breuer of the Criminal Division of the Department of Justice (DOJ) and U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius announced on December 15, 2009 the expansion of Medicare Fraud Strike Force teams to Baton Rouge, Brooklyn, Tampa in the fifth, sixth and seventh phases of a targeted criminal, civil and administrative effort against individuals and health care companies that fraudulently bill the Medicare program.

Since the inception of Strike Force operations in March 2007 – Miami (Phase One), Los Angeles (Phase Two), Detroit (Phase Three), Houston (Phase Four), and Brooklyn (Phase Five) – the Strike Force has obtained indictments of more than 460 individuals and organizations that collectively have falsely billed the Medicare program for more than one billion dollars. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

During the announcement of the expansion to these three cities, the DOJ also commented on five indictments that were unsealed on December 15th in Miami, Detroit and Brooklyn, following the arrests of twenty-five individuals in Miami, four individuals in Detroit and one in Brooklyn. In addition, Strike Force agents also executed four search warrants at businesses and homes in Coconut Creek, Fla.; Miami and Brooklyn.

The DOJ press announcement also noted that individuals charged in the indictments that were unsealed were accused of various Medicare fraud crimes, including conspiracy to defraud the Medicare program, conspiracy to launder money, money laundering, criminal false claims, making false statements and receiving kickbacks.

According to the DOJ’s charging documents, the defendants participated in schemes to submit claims to Medicare for products and services that were in fact medically unnecessary and oftentimes, never provided. In the Detroit cases, defendants are alleged to have participated in a scheme whereby they paid pay kickbacks to patients who received instructions from the clinic owners and patient recruiters to feign symptoms to justify expensive testing, including nerve conduction studies. In Brooklyn, the two defendants are alleged to have billed Medicare for durable medical equipment, including expensive shoe inserts reserved for diabetes patients, when in fact much cheaper and over-the-counter shoe inserts were provided to beneficiaries who often didn’t need them. In Miami, 15 individuals, including doctors and nurses, are charged in connection with fraudulent claims to Medicare for home health services. In another case in Miami, individuals are charged for their various roles in running a medical clinic that purported to provide injection and infusion treatments to HIV/AIDS patients and submitted fraudulent claims Medicare for such services, which were often medically unnecessary and/or never provided.

Collectively, the DOJ announced that the physicians, company owners, executives and others charged in the indictments are accused of conspiring to submit approximately $61 million in false claims to the Medicare program.
 

In May, 2009, the United States Court of Appeals for the Eleventh Circuit ruled that, among other things, a Florida dermatologist’s failure to produce photographs, which were part of her medical records, in response to a grand jury subpoena constituted obstruction of justice.  The dermatologist had been convicted of health care fraud, filing false claims and obstruction of justice in the trial court.

Subsequent carrier requests in 2001 for photographs went unanswered. Nevertheless, the carrier educated the physician on proper documentation. Billing anomalies apparently continued after that time. A subsequent carrier request for records resulted in a record production, but without photographs. Again, the operative reports appeared to be identical.

In 2002, the Office of Inspector General (OIG), on referral from the carrier, conducted a search warrant at the physician’s practice, but could not locate 300 patient files. In January, 2003, a federal grand jury issued a subpoena for the missing records. A majority of the 300 files was produced, but without photographs. The physician was indicted on charges of health care fraud, filing false claims, and one count of obstruction of justice. The apparent basis for the obstruction conviction was that she had instructed her staff not to produce the photographs to the grand jury as part of her records.

On appeal, the Court of Appeal reasoned that the crime of obstruction of justice applied to the physician’s withholding of the photographs from the grand jury. The obstruction of justice statute prohibits the knowing alteration, destruction, mutilation, concealment, cover-up or falsification of a record with the intent to impede, obstruct, or influence an investigation within the jurisdiction of any department or agency of the United States. The Court did not accept the physician’s argument that the obstruction of justice statute does not extend to judicial proceedings such as a grand jury investigation. The Court reasoned that the prohibition reaches activity “`in relation to or in contemplation of’ any matter `within the jurisdiction of any department or agency of the United States’”. Because the Department of Health and Human Services conducted the investigation and the grand jury subpoenaed records “in relation to or in the contemplation of” the investigation, the obstruction of justice statute applied.

The full case can be found at United States v. Hoffman-Vaile, 568 F.3d 1335 (11th Cir. 5/27/09).
 

In April, 2009, the United States Court of Appeals for the Sixth Circuit decided in reviewing a Michigan case that the representative of a deceased woman could sue a hospital under EMTALA for allegedly releasing her husband after admission to the hospital, when he was then hallucinating, disoriented, and behaving in a threatening manner toward her when he was brought to the emergency department.  Five days after admission, it was decided that the husband should be transferred to a facility for the acutely mentally ill.  However, the transfer did not occur and he was, instead, released seven days after admission.  Ten days later, he murdered his wife.

The trial court decided that regardless of whether or not a non-patient can sue under EMTALA, the suit against the hospital could not go forward because the patient was screened in the emergency room and no emergency medical condition was recognized.  The Court of Appeal reversed this decision and returned the case to the trial court.

The Sixth Circuit reasoned that a non-patient can be an EMTALA plaintiff. The Court stated that “any individual who suffers personal harm as a direct result of a hospital’s EMTALA violation may sue.”   Such an individual is not limited to the patient.  The Court dismissed “an isolated statement in a [congressional] committee report to the contrary.”

On the question of whether the hospital’s EMTALA obligation ends once a patient is admitted, the Court said no.  The patient who presents with an emergency medical condition must be stabilized, not just admitted and tested.  The hospital may not admit and then discharge to avoid its stabilization requirement.  The Court took this position despite the existence of a Centers for Medicare and Medicaid Services (CMS) regulation to the contrary.  The Court reasoned that the CMS regulation does not comport with the language of EMTALA.

This case can be found at Moses v. Providence Hospital and Medical Centers, Inc., 561 F.3d 573 (6th Cir. 4/6/09). A petition for further review was filed with the United States Supreme Court in October, 2009. The Supreme Court apparently has not yet decided whether it will accept the case.
 

On December 1, 2009, the Certification Commission for Health IT (CCHIT) announced that it has certified the first group of Electronic Health Record (EHR) products that meet preliminary federal recommendations for "meaningful use."  The importance of this to health care providers is they are eligible for incentive payments from the Medicare program beginning in 2011 under the stimulus package passed by Congress last spring for providers that become “meaningful users” of certified EHR technology.  However, health care providers are expected to have adopted and actively utilizing a certified EHR in compliance with the “meaningful use” definition or they will be subject to financial penalties under the Medicare program.

Alisa Ray, CCHIT’s executive director, commented that “these first four health IT companies, demonstrating their compliance with the proposed Federal standards, are now able to offer certified products to providers who wish to purchase and implement EHR technology and achieve meaningful use in time for the 2011-2012 incentives. We’ve had about 25 applications in our 2011 programs and inspections are continuing. Look for additional announcements from these early applicants in the upcoming days and weeks.”

The product certified in the CCHIT Certified 2011 Comprehensive program is ABELMed EHR-EMR/PM, Version 11, by ABEL Medical Software Inc.

The Preliminary ARRA 2011 program is a modular, limited certification and inspects technology only against the Federal standards. It offers maximal flexibility for health IT companies, developers and providers in meeting ARRA 2011-2012 certification requirements.  The products certified in the Preliminary ARRA 2011 program are:

• eHealth Made EASY, Version 3, by eHealth Made EASY, LLC, supporting 2 of 27 meaningful use objectives for eligible providers
• eHealth Made EASY - PQRI Made Easy, Version 3, by eHealth Made EASY, LLC, supporting 2 of 24 meaningful use objectives for hospitals
• KIS Track, Version 5.1, by Kaulkin Information Systems, supporting 2 of 27 objectives for eligible providers
• Medios, Version 4.5, by IOS Health Systems, supporting 27 of 27 objectives for eligible providers

CCHIT said it plans to upgrade its criteria and re-evaluate its certification programs after federal officials release a final meaningful use definition in spring 2010.

Additional Information is available on the CCHIT web site. 
 

In the wake of the Fraud Enforcement and Recovery Act of 2009 (FERA), which was enacted by Congress on May 20, 2009 and expands the federal False Claims Act, the Louisiana Department of Health and Hospitals (“DHH”) announced on October 29, 2009, a new fraud initiative against agencies who deliver in-home direct care to Medicaid beneficiaries.  DHH is partnering with the Louisiana Attorney General’s office to audit of all Medicaid in-home direct care providers. DHH will engage the services of six (6) audit firms to perform the audits.  Any potential fraud or abuse identified by the auditors will be reported to the Attorney General for prosecution. Funding for these audits will be provided by a $3,000,000.00 fund created with dollars previously recovered from fraudulent providers.

To read the DHH news release on the Medicaid fraud audits, click here. 
 

The Louisiana Supreme Court has issued two decisions in the past year, Borel v. Young and Warren v. LAMMICO, which are favorable to Louisiana health care providers. In the Warren case, a potential plaintiff waited almost four years from the date of her father’s death to file a wrongful death and survival claim against the health care providers.  The plaintiff had not participated in the Medical Review Panel or filed a lawsuit within either the one and three year prescriptive periods (a.k.a. statute of limitations) required by La. R.S. 9:5628.  The plaintiff’s mother and sister had already filed a timely complaint with the Louisiana Patients’ Compensation Fund, proceeded with a Medical Review Panel, and subsequently filed a lawsuit.  The issue before the Court was whether the new plaintiff could file her own wrongful death and survival claim that would “relate back” to the original, timely claims of her mother and sister.

Te Louisiana Supreme Court followed this same line of reasoning in an earlier decision, Borel v. Young, where it addressed the issue of late-added defendants. In Borel, the plaintiffs attempted to file suit against a new defendant after the prescriptive period had already run by arguing that the defendant was jointly liable with the original defendants and prescription was interrupted under the general Louisiana Civil Code article 2324.  The Court held, as it did in Warren, that the more specific provisions of the Medical Malpractice Act regarding prescription apply to the exclusion of the general code article on the interruption of prescription against joint tortfeasors found in La. C.C. Art. 2324.

With the Warren and Borel decisions, the Supreme Court has now held that for both late-added plaintiffs and late-added defendants, the more specific provisions of the Medical Malpractice Act and La. R.S. 9:5628 regarding prescription apply to the exclusion of any general code articles on the interruption or suspension of prescription in medical malpractice cases.  For example, a patient cannot file suit against a hospital and then wait several years to amend his lawsuit to name the doctor who treated him at the hospital as a defendant.  Also, if a patient dies and leaves a wife and two children, but only the wife and one child decide to file a lawsuit, the second child cannot wait until years after the lawsuit is filed to join in the lawsuit as a plaintiff.

The Office for Civil Rights of the U.S. Department of Health and Human Services issued new federal regulations on August 19, 2009 that requires health care providers, health plans, and other entities covered by the Health Insurance Portability and Accountability Act (HIPAA) to notify individuals when their “unsecured” health information is breached.

The Breach Notification regulations require health care providers and other entities subject to HIPAA to promptly notify affected individuals of a breach, as well as the Department of Health and Human Services (HHS) and the media in cases where a breach affects more than 500 individuals. The regulations also require business associates as defined in the HIPAA regulations to notify the covered entity of breaches by the business associate.

The regulations were issued two days after the Federal Trade Commission (FTC) issued companion breach notification regulations (on August 17, 2009), which apply to vendors of personal health records and certain other entities who are not covered by HIPAA.

To determine when information is “unsecured” and notification is required by the Breach Notification regulations, the OCR also included in the regulations an update to its guidance specifying encryption and destruction as the technologies and methodologies that render protected health information unusable, unreadable, or indecipherable to unauthorized individuals. An important aspect is that entities covered by the Breach Notification regulations issued by OCR and the FTC subject that secure health information as specified by the guidance through encryption or destruction are relieved from the notification requirements in the event of a breach of such information. The OCR stated that the guidance will be updated annually.

These Breach Notification “interim final” regulations are effective 30 days after publication in the Federal Register and include a 60-day public comment period. Additional information may be obtained on the HHS Office for Civil Rights web site.

The Federal Trade Commission (“FTC”) announced on July 29th that the date on which the FTC will begin enforcement of the Red Flag Rules has been further extended to November 1, 2009. The Red Flag Rules, which are contained in regulations promulgated by the FTC under the Fair Credit Reporting Act, 15 U.S.C. § 1681 et. seq., require “financial institutions” and “creditors” to adopt written identity theft prevention programs designed to prevent, detect and mitigate the effects of identity theft. The Red Flag Rules are applicable to any entity that meets the definition of a creditor and maintains covered accounts.

Under the Red Flag Rules, a “creditor” is defined as any entity that “regularly extends, renews, or continues credit, or any entity who regularly arranges for the extension, renewal, or continuation of credit.” For example, hospitals, physicians and other health care providers would be considered “creditors” under the Red Flag Rules if they as a regular business practice do not require all patients to pay for medical goods or services at the time that such goods or services are provided.

The FTC emphasized that this delay in enforcement is limited to the Red Flag Rules and does not extend to the rules regarding address discrepancies applicable to users of consumer reports, or to the rule regarding changes of address applicable to card issuers.

A copy of the FTC’s announcement may be obtained on the FTC’s web site at http://www.ftc.gov/opa/2009/07/redflag.shtm.

This information has been provided for informational purposes only and should not be construed to constitute legal advice.
 

The Louisiana Legislature has adopted House Concurrent Resolution No. 185, authored by Representative Tim Burns.  The resolution urges and requests that the Department of Health and Hospitals and the Deptartment of Insurance, in consultation with the Louisiana State Licensing Board for Contractors, investigate the health risks associated with living in homes that contain drywall imported from China, study the potential homeowners insurance coverage issues, including triggers, endorsements, and exclusions to policies that are related to drywall imported from China, and determine whether such material should be identified as a substandard, unsafe building material.  The resolution goes on to request a report of the findings and recommendations of this study to the legislature prior to the convening of the 2010 regular session.

A copy of the enrolled version of the resolution can be seen here: Download file

In this day and age, everyone communicates by e-mail, on a laptop, desktop, Blackberry or other electronic device. But what about communication between a physician and a patient?  

Is this permissible? Acceptable under existing law and practice? Recommended?

Obviously, any form of communication between a physician and a patient is allowed. So, if you wish to discuss with a patient their history, your impressions, diagnosis, prognosis or other issues relating to evaluation and treatment, you may. However, this form of communication carries with it certain special rules and requirements. Which leads us to our second question.

Acceptable?

Any communication by a physician with a patient should be documented. In the olden days, this may have involved a small spiral notebook with entries made from phone calls received at home and later placed in the patient’s office chart. Now, in the era of electronic communication, the initial consideration is how will this “e-mail” be stored or maintained. Will a copy of the e-mail be printed and placed in the patient’s chart? Will electronic folders for each individual patient be created? Will a dedicated hard drive and back-up system be implemented? There are any number of alternatives in this regard. The bottom line is that an e-mail from the physician to a patient which relates, in any material way, to treatment should be available for review by others involved in the patient’s care and preserved as a contemporaneous documentation of the physician’s evaluation/thought process.

Perhaps, more importantly is that under existing law, in legal cases and in the potential for litigation, there is a duty to preserve electronic data. Accordingly, in the event a physician elects to communicate electronically with a patient, to any degree, about treatment, and that treatment becomes the subject of a medical malpractice claim or lawsuit, then there is an underlying duty to preserve such electronic communications that may have relevance to the litigation. Even more problematic is that this duty to preserve electronic data arises at the time a physician has some “notice” of the potential for a malpractice claim to be filed. Under those circumstances, the physician would have a duty to place a “legal hold” on any electronic data that was created in connection with the patient’s care and treatment. For example, if test results were communicated electronically to a patient, then these e-mails documenting the lab results being sent to the patient would need to be preserved. If the electronic communication was sent by other staff members in a physician’s office, then the physician or office administrator, under existing rules, should notify all such involved parties of the responsibility to preserve the electronic data, known as a “legal hold”.

In the extreme, in a situation in which the physician was unable to locate and produce electronic data upon which that physician relied for the appropriateness of the medical treatment at issue, then there could be evidentiary presumptions against the physician for failing to preserve the electronic data. There also are sanctions for mishandling discovery of electronic data which can be significant. These can involve monetary fines, and even adverse inferences in instructions to juries. Additionally, reconstruction or recovery of electronic data can be expensive and time-consuming.

Recommended?

Electronic medical records systems will continue to develop. The future is electronic medical records and the future is now. However, until these systems are developed and become more of a generally accepted manner of medical practice, it is recommended that electronic communication with patients be kept to a minimum or not employed, unless and until the physician or physician group has a complete system in place to store, save, back-up and search all electronic data related to patient communications. At the very least, the physician or practice manager should consult with information technology and support personnel to best manage this potential exposure.
 

On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (the “ARRA”), the comprehensive economic stimulus package. Among its other provisions, the ARRA includes an extension of the right to elect COBRA coverage, a reduction in COBRA premiums for eligible participants, and new notice obligations for employers.

Reduction of COBRA Premium: In addition to the opportunity to elect COBRA coverage, the ARRA offers a reduction in COBRA premiums for assistance eligible individuals. Assistance eligible individuals can receive a 65% premium reduction subsidy for the cost of COBRA coverage after February 17, 2009 (the day the ARRA was signed). But the premium reduction ends upon the sooner of: the eligibility for other group coverage or Medicare; after 9 months of receiving the reduction; or when the maximum period of COBRA coverage ends, whichever occurs first. Individuals paying reduced COBRA premiums must also inform their plans if they become eligible for coverage under another group health plan or Medicare.

Assistance eligible individuals are those former employees (and members of their families) who were eligible for COBRA at anytime between September 1, 2008 and December 31, 2009, lost their job due to an involuntary termination, and who elect COBRA coverage. Assistance eligible individuals are required to pay only 35% percent of the COBRA premium. Under the ARRA, once the beneficiary pays his or her 35% of the COBRA premium, the COBRA premium is considered paid. The employer, insurer, or health plan then picks up the remaining 65% of the premium, but is allowed a tax credit against certain employment taxes. The credit can only be taken after the 35% premium has been paid. According to the IRS, if the credit claimed is greater than the tax due, the Secretary of the Treasury will directly reimburse the employer, insurer or plan for the excess. The premium reduction only applies to periods of coverage beginning on or after February 17, 2009.

Additional Notice Obligations: Finally, the ARRA requires employers or plan administrators to provide eligible employees and covered family members with notice regarding the special COBRA-election period on or before April 17, 2009. Notice must also be provided regarding the premium reduction for those who had a COBRA-qualifying event between September 1, 2008 and December 31, 2009. This notice must be sent regardless of whether COBRA coverage was elected.

The Employee Benefits Security Administration is working on guidance regarding the ARRA, and the IRS may be able to provide additional guidance. Also, model notices are expected to be issued.
 

A federal appeals court recently ruled that a lower district court erred in granting summary judgment to a hospital in a whistleblower action under the federal False Claims Act that was based on allegations that the hospital’s arrangement with an anesthesia physician group violated the Stark Law and the Federal Anti-kickback Act.

In United States ex rel. Kosenske v. Carlisle HMA, Inc., No. 07-4616 (3rd Cir. Jan. 21, 2009), the 3rd Circuit Court of Appeals found that a hospital failed to meet the personal services exception to the Stark Law because an earlier anesthesia services agreement between the parties did not cover pain management services provided by the anesthesiology practice as a hospital outpatient clinic. The court also found that the agreement did not reflect fair market value for compensation by the hospital to the anesthesiologists that included free office space, supplies, and support personnel.
 

The hospital and the anesthesia practice had entered into an exclusive anesthesia services agreement in 1992. This agreement provided that the hospital shall offer the anesthesiology practice the opportunity to provide exclusive anesthesiology and pain management services at any new location or facility that the hospital obtains, opens, or operates. In 1998, the hospital built a stand-alone facility containing an outpatient ambulatory surgery center and a pain management clinic (“Pain Clinic”). The court noted that the hospital did not charge the anesthesiology practice rent for the space and equipment, or a fee for the support personnel it provided to the practice when they performed pain management services at the Pain Clinic.

A significant aspect of the court of appeals findings is that the court found that the arrangement between the hospital and the anesthesiology practice created a financial relationship for purposes of the Stark Law. The court noted that the practice received numerous benefits as a result of its relationship with the hospital, including the exclusive right to provide all anesthesia and pain management services, and the receipt of office space, medical equipment and personnel. According to the court, these benefits constituted remuneration in-kind from the hospital to the practice. From the hospital’s perspective, the court noted that a physician performing pain management services in an outpatient facility is in a position to generate substantial business for a hospital through the ordering of tests or procedures at a hospital, lab, or other facility.

Another important aspect in this ruling is the court’s comments that “the Stark Law is based on the recognition that where one party is in a position to generate business for the other, negotiated agreements between such parties are often designed to disguise the payment of non-fair-market-value compensation.” The court’s comments were also based overall on a distinction it made between anesthesia services at the hospital and pain management services at a hospital-owned outpatient clinic.
 

The Office of Inspector General ("OIG") issued Advisory Opinion No. 08-22 on December 8, 2008 regarding a proposed arrangement by a non-profit organization to hire two physicians on a part-time basis to perform endoscopies. The part-time physicians would perform the endoscopies at the offices of the non-profit organization, which was formed to employ physicians.

Each of the physicians also have a separate medical practice, at another location, through which each physician will continue to provide and bill for professional medical services furnished to patients outside of the proposed part-time employment relationship. The non-profit organization certified that the physician part-time employees will be its bona fide 3employees within the meaning of 26 U.S.C. § 3121(d)(2) and that it would pay the physicians a salary based on the fair market value of the professional services that would be personally provided by each physician while employed by the organization.

Based on these certifications, the OIG concluded that the salaries paid to these physicians would not constitute prohibited remuneration under the federal anti-kickback statute and that the proposed part-time employment of these physicians satisfied the criteria of the statutory employment safe harbor to the federal anti-kickback statute in section 1128B(3)(B) and 42 C.F.R. § 1001.952(i).

A copy of this advisory opinion is posted on the OIG’s web site at:
http://oig.hhs.gov/fraud/docs/advisoryopinions/2008/AdvOpn08-22.pdf

On October 1, 2008, the Department of Health and Human Services, Office of Inspector General (OIG) released its 2009 Work Plan. The OIG’s Work Plan describes the initiatives and priorities of the OIG for the 2009 fiscal year. The OIG will address these initiatives through audits, investigations, inspections, and health care industry guidance documents, as well as enforcement action under federal, civil and criminal statutes. The following are some of the important 2009 OIG initiatives for hospitals, physicians, and other health care providers:

• Provider-Based Status for Inpatient and Outpatient Facilities: The OIG will determine the potential impact on both the Medicare program and its beneficiaries of hospitals improperly claiming provider-based status for inpatient and outpatient facilities.

• Hospital Ownership of Physician Practices: The OIG will determine whether hospitals have met the Federal requirements to obtain the provider-based designation and access the impact of the increased cost of Medicare as a result of reimbursement under the Hospital Outpatient Prospective Payment System for physician services and provider-based practices. The OIG will also determine the extent to which hospital-owned physician practices without provider-based designation were improperly received reimbursement under the Hospital Outpatient Prospective Payment System.
 

• Inpatient Rehabilitation Facility Payments: The OIG will determine the extent to which coding errors for claims that should have been paid as transfers have resulted in inpatient rehabilitation facilities submitted improper claims under the Medicare payment system for inpatient rehabilitation facilities.
 

• Critical Access Hospitals: The OIG will determine whether critical access hospitals have met the critical access hospital designation criteria in the Social Security Act and Medicare Conditions of Participation, and whether payments made to critical access hospitals were made in accordance with Medicare requirements.
 

• Medicare Secondary Payor: The OIG will access the effectiveness of current procedures in preventing inappropriate Medicare payments for beneficiaries with other insurance coverage. For example, the OIG will evaluate procedures for identifying and resolving credit balance situations, which occur when payments from Medicare and other insurers exceed the provider’s charges or the allowed amount.

• Reliability of Hospital-Reported Quality Measure Data: The OIG will determine whether hospitals have implemented sufficient controls to ensure that their quality measurement data are valid.
 

• Payments for Diagnostic X-rays in Hospital Emergency Departments: The OIG will determine the appropriateness of payments for diagnostic x-rays and interpretations paid by Medicare Part B for diagnostic x-rays performed in hospital emergency departments.
 

• Serious Medical Errors (“Never Events”): The OIG will review the incidences of and payments for serious medical errors, known as “Never Events,” in the Medicare population. The Tax Relief and Health Care Act of 2006 requires the OIG to conduct a study of Never Events, examining types of events and payments by any party; the extent that which the Medicare Program paid, denied payment, or recouped payment for services furnished in connection with such events; and the extent to which beneficiaries paid for such services.
 

• Financial Status of Hospitals in the New Orleans Area: The OIG will review the financial status of hospitals in the New Orleans area in the aftermath of Hurricane Katrina to access the needs of hospitals and options for policymakers as the area rebuilds its health care infrastructure.

The following are some significant areas for physicians:

• Place of Service Errors: The OIG will determine whether physicians properly coded the places of service on claims for services provided in ambulatory surgical centers and hospital outpatient departments, as compared to services provided in a physician’s office.
 

• Evaluation in Management Services During Global Surgery Periods: The OIG will determine whether industry practices related to the number of evaluation and management services provided during the global surgery period have changed since the global surgery fee concept was developed in 1992. Under the global surgery fee concept, physicians bill a single fee for all of their services usually associated with a surgical procedure and related E&M services provided during the global surgery period.
 

• Outpatient Physical Therapy Services Provided by Independent Therapists: The OIG will review outpatient physical therapy services provided by independent therapists to determine if they are in compliance with Medicare reimbursement regulations.
 

• Medicare Payments for Colonoscopy Services: The OIG will determine whether Medicare payments to physicians for colonoscopy services were properly supported, billed, and paid in accordance with Medicare requirements.
 

• Physicians Medicare Services Performed by Non-Physicians: The OIG will examine the qualifications of non-physician staff in physician offices that perform “incident to” services and access whether these qualifications are consistent with professionally recognized standards of care.
 

• Appropriateness of Medicare Payments for Polysomnography: The OIG will examine the appropriateness of Medicare payments for sleep studies. The OIG will also examine the factors contributing to the rise in Medicare payments for sleep studies and access provider compliance with Federal program requirements.
 

• Geographic Areas with a High Density of Independent Diagnostic Testing Facilities: The OIG will review services and billing patterns in geographic areas with high concentrations of independent diagnostic testing facilities. The IDTF is a facility that performs diagnostic procedures and is independent of a physician’s office or hospital.

• Patterns Related to High Utilization of Ultrasound Services: The OIG will review services and billing patterns in geographic areas with high utilization of ultrasound services paid by Medicare.
• Medicare Billings with Modifier GUI: The OIG will review the appropriateness of provider’s use of Modifier GUI on claims for services that are not covered by Medicare.

The following are some of the OIG investigative initiatives involving other types of providers:

• Medicare Payments for Continuous Positive Airway Pressure Devices: The OIG will review the appropriateness of Medicare Part B payments for continuous positive airway pressure (CPAP) devices.
 

• Medicare Payments for Chemotherapy Drug Administration Services: The OIG will review Medicare payments for chemotherapy drug administration services pursuant to the Social Security Act, § 1832, that occur without corresponding chemotherapy administration drug claims.
 

• Ambulatory Surgical Center Payment System: The OIG will examine changes to the revised ambulatory surgical center payment system and the rate-setting methodology used to calculate ASC payment rates.
 

• Physician Referrals for Home Health Agency Services: The OIG will review Medicare payments for home health claims to identify potential aberrant billing by referring physicians.
 

• Skilled Nursing Facility Consolidated Billing: The OIG will review Medicare Part B claims submitted by suppliers for items, supplies, or services provided to beneficiaries during Part A Medicare-Covered skilled nursing facility stays.

A copy of the OIG Work Plan can be downloaded here.

In May of this year, the United States Court of Appeals for the Fifth Circuit absolved Lakeview Regional Medical Center (“Lakeview”) of any liability, and reversed a damage award against it, in a lawsuit that had been brought against Lakeview and a physician group practice by Kadlec Medical Center, a hospital located in the state of Washington. Kadlec sued Lakeview and a physician practice for over $8 million in damages, on the grounds that Kadlec was forced to settle a malpractice lawsuit due to the negligence of an anesthesiologist who was impaired at the time of the malpractice. Kadlec’s claim was that Lakeview and the physician group practice knew of the physician’s impairment when he was on the medical staff of Lakeview, were asked about his performance before he was credentialed at Kadlec, and did not disclose the prior impairment and disciplinary action that had resulted.

Although a federal jury had found Lakeview 25% at fault for its failure to disclose the physician’s problems while on the medical staff due to his impairment, the Fifth Circuit reversed this finding, on the grounds that under Louisiana law, the hospital did not have a duty to disclose information about the physician. This was because the hospital had no special relationship or pecuniary interest in the transaction. The court made clear, however, that had the hospital decided to voluntarily disclose information even absent a legal duty, then its voluntary disclosure would have created a duty to disclose completely and honestly. Because the hospital did not incur the duty, it had no obligation to provide further information regarding the physician.

The import of this decision is that under Louisiana law there may be a duty to speak if one has a special relationship or a pecuniary interest in the transaction at issue. Even if there is no such special relationship or pecuniary interest, a party who voluntarily chooses to respond to an inquiry assumes a duty to respond accurately and completely.

The Kadlec decision should be read very carefully, as it does not appear to provide a “sword” to use against others under the theory that failure to voluntarily give negative information regarding a physician might result in liability. That is not the import of Kadlec. The import of Kadlec is that when asked, a party who has no duty to speak need not speak at all. If the party has a duty to speak, or if the party voluntarily incurs a duty to speak, then the party must do so in such a way as to not mislead, misrepresent, or give less than all pertinent information. This is all that the Kadlec decision stands for.

The Fifth Circuit decision is Kadlec v. Lakeview Anesthesia Associates, 527 F.3d 412 (5th Cir. 2008).
 

In a report issued September 17, 2008, the GAO commented that the Department of Health and Human Services (HHS) has made substantial strides in devising a national plan for protecting the privacy of patients’ electronic personal health information, but that HHS still needs to do more to ensure key privacy principles are fully addressed. The GAO’s remarks were contained in a report issued to the U.S. Senate Committee on Homeland Security and Governmental Affairs of a follow-up study by the GAO regarding the Office of the National Coordinator of Health IT’s efforts to insure the privacy of electronic personal health information exchange within a nationwide health information network.

The GAO noted that the HHS Office of the National Coordinator for Health IT has continued to develop and implement health IT initiatives related to nationwide health information exchange, which are intended to address key privacy principles and challenges. The following examples of initiatives by the Office of the National Coordinator for Health IT were cited by the GAO:

• The Healthcare Information Technology Standards Panel defined standards for implementing security features and systems that process personal health information.

• The Certification Commission for Healthcare Information Technology defined certification criteria that include privacy protections for both outpatient and inpatient electronic health records.

• State-level initiatives (such as the Health Information Security and Privacy Collaboration and the State Alliance for e-Health) have convened stakeholders to identify and propose solutions for addressing challenges faced by health information exchange organizations and protecting the privacy of electronic health information.

The GAO concluded that while the above initiatives are significant to addressing privacy issues and challenges, they fall short of fully implementing the GAO’s previous recommendations. The GAO commented that HHS specifically had not defined, as part of its approach, a process for ensuring that all privacy principles and challenges will be fully and adequately addressed. A copy of this report, GAO-08-1138, is available on the GAO’s web site at www.gao.gov.
 

In a recent case, the Fifth Circuit emphasized the legislative purpose in the Health Care Quality Improvement Act (HCQIA) to improve the quality of health care by protecting physicians who participate in peer review actions, finding they were entitled to immunity from monetary damages.

In Poliner v. Texas Health Systems, -- F.3d -- (5th Cir. 2008), 2008 WL 2815533, an interventional cardiologist sued Presbyterian Hospital and several physicians for damages related to a restriction of his privileges during a peer review investigation. At trial, the jury found in favor of Dr. Poliner on various claims and awarded nearly $90 million in defamation damages and $110 million in punitive damages. The district court reduced the damages to $33 million, including prejudgment interest.
 

At issue were two peer review actions: a temporary abeyance of privileges and a five month suspension of privileges. Dr. Poliner’s privileges were temporarily restricted for fewer than 29 days to investigate concerns about his handling of several cases. Because several cases raised concerns and criticisms, Dr. Poliner agreed to an abeyance or temporary restriction of his cardiac catheterization lab privileges to allow for an investigation as provided by the Medical Staff Bylaws. He was told that his privileges would be suspended if he did not agree to the abeyance. He later agreed to an extension of the abeyance. An ad hoc committee of cardiologists reviewed 44 of Dr. Poliner’s cases and concluded that, in over half of the cases, Dr. Poliner rendered substandard care. The investigation led to a five month suspension of Dr. Poliner’s cardiac catheterization lab privileges and echocardiography privileges.

The Fifth Circuit reviewed the requirements for immunity under HCQIA. A professional review action must be taken: 1) in the reasonable belief that the action was in furtherance of quality health care; 2) after a reasonable effort to obtain the facts of the matter; 3) after adequate notice and hearing procedures are afforded to the physician involved, or after other procedures as are fair under the circumstances; and 4) in the reasonable belief that the action was warranted by the facts known after such reasonable effort the obtain the facts and after meeting the adequate notice and hearing or other fair procedural requirements.

The Fifth Circuit found both peer review actions met the first requirement—the defendants reasonably believed the action was in furtherance of quality health care. The court noted that HCQIA did not require actual improvement of the quality of health care and did not require that the conclusions reached by the reviewers actually be correct. Nor was the good faith or bad faith of the reviewers relevant. The requirement was met if the reviewers could reasonably conclude, based on the information available to them at the time, that the peer review action would restrict incompetent behavior or would protect patients. Because the ad hoc committee of cardiologists reviewed 44 of Dr. Poliner’s cases and concluded he gave substandard care in more than half the cases, the peer review committee had an objectively reasonable belief that restricting Dr. Poliner’s cath lab privileges during an investigation would further quality health.

As to the second requirement for immunity under HCQIA, the appellate court found the defendants made a reasonable effort to obtain the facts. The cases at issue were reviewed by cardiologists, and several physicians also involved in some of the cases were interviewed, as was Dr. Poliner. The court found nothing to suggest the information obtained was so flawed or deficient as to render the defendants’ reliance on the information unreasonable. Although Dr. Poliner contended there was insufficient information to suggest he posed a present danger to patients, as required by the Medical Staff bylaws, the court noted HCQIA required a reasonable effort to obtain the facts—not a perfect effort. The court also stated that HCQIA immunity was not contingent upon or coextensive with compliance with the by laws. Physicians could still seek injunctive or declaratory relief where the bylaws were violated, but they would not be entitled to monetary damages under HCQIA on that basis.

The appellate court also found the defendants satisfied the third requirement for immunity under HCQIA--the adequate notice and hearing requirements. The court found the defendants imposed the restrictions on Dr. Poliner’s privileges after procedures that were fair to him under the circumstances presented, considering the potential danger to patients. Finally, the appellate court concluded the peer review actions were taken in the reasonable belief that the actions were warranted, based on the facts known after a reasonable effort to obtain those facts.

The protection of immunity from monetary damages afforded when HCQIA requirements are met should serve to reassure physicians involved in peer review actions of adequate protection when they participate in this important process.
 

In the September 20, 2008 issue of the Louisiana Register, the Louisiana State Board of Medical Examiners amending the rules governing dispensation of medications. The amended rules now forbid dispensing physicians from dispensing any controlled substance or drug of concern, unless the physician practices at a governmental facility or a licensed abuse or addiction treatment facility, or is engaged in a regulated clinical research project or investigational study.

The Office of Inspector General issued Advisory Opinion No. 08-10 on August 19, 2008 regarding a proposal for a physician group practice to lease a facility owned by the practice on a part-time basis to other physician groups for the groups to provide certain radiation therapy treatments to their patients. The physician group practice that owns the facility had requested this advisory opinion from the OIG on whether the OIG considers the proposed part-time (i.e., block) leases of the facility to other physician groups would generate prohibited remuneration under the Federal anti-kickback statute. 

In exchange for the space, equipment and services, the urologist groups would pay the physician group owner of the facility space rent, equipment rent, personnel expenses, and communication and administrative expenses. Compensation under the leases would be for fixed amounts set in advance and would not vary with the use of the premises, equipment or services. The physician group owner of the facility had certified to the OIG that the leases would be at fair market value pursuant to a fair market value study prepared by an independent third party. 

Currently, the physician group owner of the facility bills the technical and professional components of IMRT services it provides to Medicare beneficiaries under its billing number. Under the proposed block lease arrangement, the professional and technical components of the IMRT would be billed to Medicare using billing numbers assigned to the urologist groups. The urologist groups would pay the amounts owed under the lease agreements to the physician group owner of the facility, regardless of the number of patients they referred to the facility and regardless of whether the urologist group collected fees for the procedure from Medicare or other payors. 

In analyzing the proposed block lease agreements under the Federal anti-kickback statute, the OIG initially commented that the series of agreements that make up the proposed block lease arrangement are in effect a contractual joint venture between the physician group owner of the facility and the urologist groups. The OIG reiterated its concerns with contractual joint venture arrangements that were described in the OIG Special Advisory Bulletin on contractual joint ventures issued on April 30, 2003. 

The OIG commented that the proposed block lease arrangement would have the same characteristics of the contractual joint venture described in the Special Advisory Bulletin. In the Special Advisory Bulletin, the OIG described a health care provider that contracted out substantially the entire operation of a line of business to a potential competitor in return for a the profits of the business as remuneration for the competitor’s federal program referrals. 

Under the proposed block lease arrangement, the OIG commented that the urologist groups would be expanding into a related line of business, IMRT, which is dependent on referrals from the urologist groups. The urologist groups would not actually participate in performing the IMRT, but would contract out substantially all IMRT operations, including the professional services necessary to provide the IMRT.   An important comment by the OIG was that the urologist group would effectively commit little in the way of financial, capital, or human resources to the IMRT and, accordingly, would assume very little business risk. However, the urologist groups would be in a position to insure the success of the business, not only by referring to the facility for IMRT, but by the choice of IMRT over other available therapies for prostate cancer. 

The OIG also described the following elements of the proposed block lease arrangement that were also present in the suspect contractual joint venture described by the OIG in the Special Advisory Bulletin:

               (1)           The physician group owner of the facility is an established provider of the same services that a urologist group would provide under the proposed block lease arrangements;

               (2)           A urologist group would use the premises, equipment and staff of the physician group practice owner of the facility to provide the same services, IMRT, to its own patient base;

               (3)           The aggregate income to the urologist groups under the proposed arrangement would vary with referrals from the urologist groups to the facility;

               (4)           The physician group owner of the facility (and its radiologists) and the urologist groups would share in the economic benefit of the IMRT.

Based on the aspects of the proposed block lease arrangement, the OIG concluded that they were unable to exclude the possibility that the parties’ contractual relationship is designed to permit the physician group practice to do indirectly what it cannot do directly, which is to pay the urologist groups a share of the profits from the IMRT referrals. The OIG further commented that if the intent of the proposed block lease arrangement were to give the urologist groups remuneration through the IMRT to induce referrals to the physician group owner of the facility, the anti-kickback statute would be violated. 

In summary, this advisory opinion is an example of the OIG concluding that an arrangement may generate illegal remuneration in violation of the anti-kickback statute even though all of the agreements (i.e., lease agreements) that make up the arrangement each individually meet a safe harbor to the anti-kickback statute. The illegal remuneration, in part, in this proposed arrangement is the opportunity to generate a fee and a profit that the physician group owner of the facility would be providing to each of the urologist groups under the proposed block lease arrangements.

On June 10, 2008, Michael O. Leavitt, Secretary of the Department of Health and Human Services (DHHS) announced that Louisiana was one of twelve (12) communities chosen to participate in an Electronic Health Records Medicare Demonstration Project. The project will last five (5) years and will provide physicians with financial incentives to use certified electronic health records (EHRs). Incentive payments for the entire 5-year period may reach $58,000 per physician and $290,000 per practice.  

For more information on the EHR Medicare Demonstration Project, refer to the DHHS Press Release found at

http://www.hhs.gov/news/press/2008pres/06/20080610a.html