Category — Fraud and Abuse

Today, April 7, 2011, the Centers for Medicare & Medicaid Services (CMS) published the proposed rule on the Medicare Shared Savings Program/Accountable Care Organizations (ACOs).  In addition, CMS and the Office of Inspector General published the notice with comment period regarding waiver designs in connection with the Medicare Shared Savings Program.  Both documents are available in today’s Federal Register.

An analysis of the Medicare Shared Savings Program/ACO proposed rule can be found here and for more information on the ACO fraud and abuse waivers notice, please click here.

On March 31, 2011, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule establishing accountable care organizations (ACOs) under the Medicare Shared Savings Program pursuant to provisions of the Patient Protection and Affordable Care Act (PPACA). CMS and the Department of Health and Human Services (HHS) Office of Inspector General (OIG) also jointly released a notice and solicitation of public comments (the Notice) regarding the waiver of certain federal fraud and abuse laws in connection with the Medicare Shared Savings Program.

Anticipating that the Medicare Shared Savings Program would potentially implicate fraud and abuse laws, Congress included a provision in the PPACA that grants the Secretary of HHS the authority to waive the application of certain fraud and abuse laws “as may be necessary” to implement the program. [1]   The fraud and abuse laws addressed by the proposed waivers are the Physician Self-Referral Law (the “Stark Law”),[2] the federal Anti-Kickback Statute,[3] and a provision of the Civil Monetary Penalties law (CMP Law), the so-called Gainsharing CMP, that prohibits a hospital from making a payment directly or indirectly to induce a physician to reduce or limit services to Medicare and Medicaid beneficiaries.[4] Industry stakeholders have expressed concerns that without such waivers the establishment and operation of ACOs would necessarily involve the creation of financial relationships between physicians and hospitals and other individuals and entities that would otherwise be restricted or prohibited by these laws.

The Notice sets forth three proposed waivers and solicits comments on a number of related issues. To be eligible for waivers from the fraud and abuse laws, an ACO must enter into a formal agreement with CMS to participate in the Medicare Shared Savings Program and the ACO, ACO participants and ACO providers/suppliers would be required to comply with the various ACO requirements found in Section 1899 of the Social Security Act[5] (as promulgated by the PPACA) and the ACO implementing regulations, including the requirements regarding transparency, reporting and monitoring.

The requirements for the proposed waivers are set forth below—

Recent rulemakings and comments from a Centers for Medicare & Medicaid Services (CMS) official provide clues as to how Medicare and Medicaid providers will be required to implement mandatory compliance programs as required under the Patient Protection and Affordable Care Act (PPACA).

As most in the health industry are aware, PPACA includes two separate provisions mandating compliance programs for Medicare and Medicaid providers, generally, and for nursing facilities, specifically.  PPACA § 6401, which applies to all Medicare and Medicaid providers, requires the secretary of the Department of Health and Human Services (HHS) to promulgate “core elements” and set an effective date for compliance programs, presumably through rulemaking, but does not set a deadline for these actions.  This provision also did not provide detailed guidance on the core elements of a mandatory compliance program.  PPACA Section § 6102 applies to Medicare skilled nursing facilities and Medicaid nursing facilities and sets forth eight core elements of a mandatory compliance program.[1]  In a September 2010 proposed rule, HHS indicated that compliance program core elements under PPACA § 6401 will most likely be similar to the core elements for nursing facilities and to the elements of effective compliance described in the U.S. Federal Sentencing Guidelines Manual.  In that proposed rule, HHS also requested suggestions for compliance program elements and comments on the costs and benefits of compliance programs or operations as well as on a reasonable timeline for establishment of a required program.

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On November 10, 2010, the Centers for Medicare & Medicaid Services published a Notice in the Federal Register soliciting comments on Accountable Care Organizations.  The Notice specifically requests that interested parties comment on various areas including the following:

• Policies to ensure that solo and small practice providers may participate in ACOs;
• Beneficiary attribution to the ACO;
• Methods to assess beneficiary experience within the ACO;
• Patient-centeredness criteria for assessment of ACOs;
• Quality measures that should be used in the ACO program; and
• Other payment methodologies should be tested through the Centers for Medicare & Medicaid Innovation

Comments must be submitted to the agency by December 3, 2010.

The Congressional Research Service has released another report, dated November 3, 2010, focusing on the Medicare provisions in the health care reform laws.  This new report, which is entitled Medicare Provisions in the Patient Protection and Affordable Care Act (PPACA): Summary and Timeline, outlines the numerous reform provisions impacting the Medicare program and provides a detailed chart listing the effective dates of such provisions.  Notably, the CRS report highlights the growing tension regarding the treatment of any Medicare savings under the reform law – should the savings be considered to be funding sources for the expansion of health care or should such savings be directed towards shoring up the Medicare program’s trust fund.  Finally, the report addresses findings made by both the Congressional Budget Office and the CMS, Office of the Actuary that some of the Medicare payment reductions are likely not sustainable in the long terms and could actually result in reduced quality of care and access to services.  The 143-page report can be found here.

On Thursday, September 23, 2010, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule outlining how it intends to implement several of the new anti-fraud measures called for under PPACA.  According to CMS Administrator Donald Berwick, these measures are part of the government’s efforts to take a proactive approach to fraud prevention, by preventing improper payments before they are made as opposed to seeking to recoup monies improperly paid.  The proposed rule addresses the following measures:

• Screening for new providers and suppliers, including licensure checks, database checks, unannounced site visits, and, for “high risk” entities such as certain home health providers and durable medical equipment suppliers, criminal background checks;
• $500 application fee for institutional providers;
• Six-month moratorium on enrollment where necessary; and
• Suspension of payments pending “credible” allegations of fraud, which could include complaints to CMS, the Department of Health and Human Services Office of Inspector General, or other law enforcement.

Under PPACA, these new measures are scheduled to take effect March 23, 2011, and will apply to new provider and supplier applicants, as well as renewal applicants.  CMS is accepting comments on the proposed rule through November 16, 2010.

On October 5, 2010, the Centers for Medicare & Medicaid Services, the HHS Office of the Inspector General and the Federal Trade Commission (FTC) will co-host a workshop on issues related to Accountable Care Organizations (ACOs). The workshop will address the legal issues presented by various ACO models.

The deadline for comments to be submitted for inclusion in the workshop is September 27, 2010. Instructions on how to submit comments and how to register for the event are provided in the Federal Register Notice.

A major theme in the Patient Protection and Affordable Care Act (PPACA) of 2010 (Pub. L. No. 111-148)[1] is combating fraud and abuse in the health care industry.  One key provision in PPACA is destined to have a significant impact on the False Claims Act (FCA),[2] which has long been a highly effective tool used by the government to prosecute suspected health care fraud.  Specifically, the massive new health care reform law includes a wholesale rewrite of the public disclosure provision of the statute—a provision that is often invoked by FCA defendants seeking to dismiss qui tam relators.  Although the amendment is not as radical as some legislative proposals introduced in Congress over the past two years, it significantly narrows the circumstances in which defendants can obtain dismissal of qui tam actions that are based on public disclosures.

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On July 2, 2010, CMS issued for display its Proposed Rule entitled “Medicare Program; Proposed Changes to the Hospital Outpatient Prospective Payment System and CY 2011 Payment Rates.”  This Proposed Rule, which is expected to be published in the Federal Register on August 3, 2010, would implement key provisions of the health reform legislation that waive Medicare beneficiary cost-sharing for preventive services, reduce the 2011 hospital fee schedule update payment by 0.25 percentage points, and revise certain physician self-referral and graduate medical education program policies as well as proposing updates to payments and policies for certain outpatient department services.  Comments will be accepted by CMS through August 31st, with the Final Rule expected out on November 1st.  The policies contained in the rules are applicable for services furnished on or after January 1, 2011.

The rule can be found here.

The Centers for Medicare & Medicaid Services (CMS) will delay its requirement that Medicare contractors automatically reject claims for health services, durable medical equipment, prosthetics, orthotics, and supplies, and certain other items and services based on orders or certifications from physicians and other eligible professionals who are not enrolled in the Medicare Provider Enrollment, Chain and Ownership System (PECOS).  The Patient Protection and Affordable Care Act  permits only Medicare-enrolled providers to certify or order such items and services under Medicare Part B.  CMS issued an Interim Final Rule in May 2010 that would have allowed Medicare contractors to automatically reject, starting on July 6, 2010, claims based on orders from providers not enrolled in PECOS.  Due to providers’ reports of problems with enrollment, however, CMS will delay the automatic rejection procedures.  Other provisions of the regulations will go into effect on July 6, 2010.  Providers should not see any change in the processing of submitted claims until the automatic rejection procedures are operational.

Click here for the CMS Press Release.