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Demystifying the Bundled Payment Initiative

November 4, 2015


America’s healthcare system is on an unsustainable path.  There are well-documented gaps in care and variation in quality.  The federal government projects that from 2014-2024 national health spending will grow at an average rate of 5.8 percent per year, rising from $2.8 trillion to $4.8 trillion.  To put this into perspective, healthcare spending is projected to grow 1.1 percent faster than our gross domestic product per year over the coming decade, accounting for nearly 20 percent of the U.S. economy.1


The Tuomey Saga Has Finally Come to a $72.4 Million End

October 28, 2015


Many have heard of the landmark whistleblower case of U.S. ex rel. Drakeford v. Tuomey Healthcare System, Inc. where Tuomey Healthcare System engaged in part-time employment contracts that violated the Federal Stark Law (Stark) and the Federal False Claims Act (FCA).  This month Tuomey and the federal government reached a $72.4 million settlement, ending the decade-long saga.


Patient Engagement—Theory and Trends

October 21, 2015


The movement towards making it easier for patients to access their health records electronically is a key component of “patient engagement."


Compensating Physicians for Referrals: Hospitals Settle Costly Lawsuits

October 14, 2015


There are good ways in which to accomplish physician-hospital integration, and then there are bad ways.  More specifically, aligning the financial interests of physicians and hospitals can implicate the federal Stark Law, which prohibits paying physicians for referrals.  Two recent settlements entered into between health systems and the Department of Justice show that the government is very serious about enforcing the Stark rules.


Has the IRS Used Salami Tactics to Update Section 501(r)?

October 7, 2015


Under the Patient Protection and Affordable Care Act (PPACA), that was enacted March 23, 2010 and amended by the Health Care and Education Reconciliation Act of 2010, the Internal Revenue Service (IRS) has released new rules for Section 501(c)(3) of the Internal Revenue Code that adds new requirements for hospitals and healthcare organizations to justify their tax-exempt status.


An Updated Healthcare Information Technology (Health IT) Plan

September 23, 2015


On Monday, the U.S. Department of Health and Human Services’ Office of the National Coordinator for Health Information Technology (ONC), outlined their continued vision, goals and strategy for health IT with the release of the Federal Health IT Strategic Plan 2015–2020(Plan).  The Plan’s aim is to improve the health IT infrastructure. However, its focus centers more on patient-centered healthcare than what is needed to  implement strategies that will support the nation’s continued development of a secure health IT and data driven infrastructure.


The Healthcare Industry Should Prepare for Increased HIPAA Oversight and Enforcement with the Release of Two OIG Reports

September 30, 2015


On September 29, 2015, the Department of Health and Human Services Office of Inspector General (OIG) released two reports  aimed at bolstering the action and reaction of the Office of Civil Rights (OCR) with respect to its administering and enforcing the Health Insurance Portability and Accountability Act of 1996 (HIPAA).  In its reports, OCR Should Strengthen Its Oversight of Covered Entities' Compliance With the HIPAA Privacy Standards (Oversight Report) and OCR Should Strengthen Its Followup of Breaches of Patient Health Information Reported by Covered Entities (Followup Report), the OIG identified areas of weakness in the OCR’s review of covered entities’ compliance with the HIPAA Privacy Rule and the OCR’s action and responses to notification of breaches.  The OIG recommends the OCR tighten up its processes to improve its ability to identify areas of weakness in the industry as well as assist it in identifying areas of systemic noncompliance.


Revenue Cycle Integrity Must Precede Data Analytics

September 16, 2015


The transition to value-based payment calls for healthcare systems to rethink and redesign care delivery across services lines.  Service line management is well defined in the healthcare industry as a means to determine which of its diverse services are profitable and how the market share of a given service compares to competing providers.  Service lines are typically limited to a handful of well defined, mutually exclusive categories or groupings of individual services or interventions such as oncology, cardiovascular and orthopedics.  Since no such service line designation exists in standard transactional coding systems or taxonomies, service line is generally assigned based on primary diagnosis codes, procedure codes and other patient attributes such as age, gender or genetic characteristics.


Ten Tips as the Thirty Day Countdown to the ICD-10 Implementation Begins

September 2, 2015


In last week’s Alert we provided you with the Centers for Medicare and Medicaid Services’ (CMS) most recent Guidance regarding the ICD-10 implementation.  This week we want to provide you with some additional insight and tips on ensuring you are ready for the October 1, 2015 effective date.


CMS Issues 13 New FAQs Clarifying its Recent ICD-10 Guidance

August 26, 2015


On July 6, 2015, the Centers for Medicare and Medicaid Services (CMS) and the American Medical Association (AMA) jointly announced efforts to help physicians prepare for the October 1st changeover to ICD-10 diagnosis coding.  The joint announcement indicated that a full year from October 1, 2015, Medicare review contractors will not deny physician claims “based solely on the specificity of the ICD-10 diagnosis code as long as the physician/practitioner used a valid code from the right family.”  Confronted with many requests for a clarification of what constitutes “a valid code from the right family,” CMS issued a longer set of Frequently Asked Questions (FAQs) on July 27, and then revised those FAQs again on July 31.  The short answer is that a “valid” code is one consisting of three to seven characters but “a three-character code is to be used only if it is not further subdivided,” and the right “family” is, as we suspected, CMS-speak for what ICD-9 and ICD-10 call “categories” of codes.


Merger and Acquisition Mania Requires Scrutiny

August 12, 2015


Hospitals merge with other hospitals.


Insurance companies are acquiring hospitals. 


Hospitals are buying, or creating, their own insurance companies.


Insurance companies are acquiring other insurance companies.


The “60-Day Refund Rule” A Federal District Court Defines How Quick is Quick Enough

August 19, 2015


The “60-Day Refund Rule” is a provision applicable to Medicare and Medicaid overpayments that was added as part of the Affordable Care Act (ACA).  The False Claims Act (FCA), as amended in 2009 by the Fraud Enforcement and Recovery Act (FERA), imposes liability on any person who “knowingly or improperly avoids or decreases an obligation to pay or transmit money or property to the government.”  Pursuant to the ACA, an “obligation” carrying liability under the FCA arises when the recipient of an overpayment fails to “report and return” it to the government within 60-days of the “date on which the overpayment was identified.”1


Security Standards Challenges are Universal

August 5, 2015


Last week National Security Agency (NSA) contractor Edward Snowden was back in the news when the White House officially responded to a petition requesting the Obama administration pardon Mr. Snowden for revealing widespread government surveillance on millions of Americans.  Instead of constructively addressing these issues, “Mr. Snowden's dangerous decision to steal and disclose classified information had severe consequences for the security of our country and the people who work day in and day out to protect it,” the White House response reads.1  The official response recommends that rather than disclose sensitive information to the press, Mr. Snowden should have taken the issue up with the proper U.S. government channels:  “Challenge it, speak out, and engage in a constructive act of protest.”


GAO Report Identifies Vulnerabilities in CMS’s Enrollment Process

July 29, 2015


To enroll in Medicare, providers and suppliers must use the Provider Enrollment, Chain and Ownership System (PECOS).  According to CMS, as of December 31, 2014, there were about 1.8 million healthcare providers and suppliers enrolled in PECOS and, in fiscal year 2014, Medicare paid $554 billion for healthcare and related services.1  Moreover, CMS estimates that roughly 10 percent of the monies paid were paid improperly.  Because of such high expenditures and potential for improper payments, the government is continuously looking closely at the program to minimize opportunities for fraud, waste and abuse.  As such, it should come as no surprise that the Government Accountability Office’s (GAO) recent June 2015 report:  Additional Actions Needed to Improve Eligibility Verification of Providers and Suppliers (http://www.gao.gov/products/GAO-15-448) (Report), has identified some areas of vulnerability in the CMS enrollment processes that could be contributing to the 10 percent of improper payments.


Doctors Dealing with the High-Deductible Dilemma

July 22, 2015


Hospitals and physician groups are carefully watching the growing popularity of high-deductible health plans (HDHP) which result in patients taking on more of a financial responsibility for their healthcare.  HDHPs and health savings accounts (HSA) are meant to incentivize consumers to manage the costs of their healthcare.  For 2015, the Internal Revenue Service’s definition of high-deductible is $1,300 for an individual and $2,600 for a family. Maximum out-of-pocket expenditures are $6,450 and $12,900 for individuals and families, respectively.  Many, but not all, HDHPs include preventive care such as annual physicals or immunizations, as a no-cost benefit.


A Busy Breaking News Week for Physicians

July 16, 2015


A few weeks ago, the healthcare industry, along with most Americans, was waiting for breaking news from the Supreme Court regarding the Affordable Care Act (ACA) and several other pending decisions. Since then, the Centers for Medicare and Medicaid Services (CMS) has been rolling out press releases faster than ever. Some of the breaking news like the recent compromise with the American Medical Association (AMA) on ICD-10 is final (or as final as CMS has ever been regarding anything dealing with ICD-10), whereas other announcements concern proposed rule changes. CMS rolled out several significant test balloons in the 800-page Proposed 2016 Medicare Physician Payment and Fee Schedule Rule. These include:


Modify, Not Eliminate, 2-Midnight Rule

July 8, 2015


The 2-midnight rule was effective October 1, 2013 and from the start it was contentious. The Centers for Medicare and Medicaid Services (CMS) has over the past few years attempted to explain, clarify and respond to the ongoing assault from the American Hospital Association (AHA) to eliminate the policy. A week before it was adopted, Rich Umbdenstock, President and CEO, AHA called the regulation fundamentally flawed.1 In the ensuing months, the AHA filed a lawsuit. The CMS offered various settlements and postponement of enforcing the rule.


Two Significant Healthcare Laws Celebrate Anniversaries Despite Their Initial and Ongoing Adversaries

July 1, 2015


On July 30, 1965, President Lyndon B. Johnson signed into law legislation that established the Medicare and Medicaid programs. For 50 years, these two programs have been protecting the health and well-being of millions of American families. Enacted under Title VIII of the Social Security Act, Congress created Medicare for Americans beginning at age 65. Medicare also authorized coverage for Americans who became disabled. The Affordable Care Act (ACA) commonly known as Obamacare, is a United States (U.S.) federal statute signed into law by President Barack Obama on March 23, 2010. The law provides health insurance to any U.S. citizen through newly formed State agencies called insurance exchanges. According to the White House, over 10 million Americans have signed up for coverage under the ACA statute. Both laws were not passed without brisk debates from adversaries lead by politicians, providers of care, and the populist.


False Claims Act and Kickback Cases Prompt New OIG Fraud Alert

June 17, 2015


The number of False Claims Act (FCA) cases predicated on violations of healthcare laws continues to grow as it has in recent years. The $2.3 billion in healthcare fraud recoveries in fiscal year (FY) 2014 marks five straight years the Department of Justice (DOJ) has recovered more than $2 billion in cases involving false claims against federal healthcare programs such as Medicare, Medicaid and TRICARE, the healthcare program for the military. From January 2009 through the end of the 2014 FY, the DOJ recovered $14.5 billion in federal healthcare dollars under the FCA. One area of growth has been FCA cases based on violations of Medicare and Medicaid Anti-Kickback and self-referral laws. The self-referral laws (also known as the Stark Law) generally prohibit hospitals or physicians from referring patients for certain “designated health services” to persons or entities with whom the hospital or physician has a financial relationship. In addition, the Anti-Kickback Statute (AKS) prohibits soliciting or receiving any remuneration in exchange for the purchase or lease of federally funded goods or services. With the increased enforcement under these laws and the growing return on investment for the government for prosecuting such cases, it should come to no surprise that the Office of Inspector General (OIG) has released yet another fraud alert, this time regarding medical directorships.


CMS Finalizes Rules for Medicare Shared Savings Program

June 10, 2015


On June 11th the Centers for Medicare & Medicaid Services (CMS) released the final Rules updating the Medicare Shared Savings Program to encourage the delivery of high-quality care for Medicare beneficiaries and build on the early successes of the program and of the Pioneer Accountable Care Organization (ACO) Model.  The revisions are intended to strike a balance between maintaining the program's rigorous requirements and making sure providers continue to participate.


New Medicare Data Available to Increase Transparency on Hospital And Physician Utilization

June 3, 2015


Perhaps the greatest support for expanded collection and reporting of health data comes from the Patient Protection and Affordable Care Act (ACA) signed into law on March 23, 2010.  The key provisions requiring more transparency of healthcare data are:


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