OIG Issues Advisory Opinion Re: Municipal Payment for Medical Transportation Services
October 15, 2014
Posted by Beth Christian
The OIG has issued an Advisory Opinion regarding a municipality’s use of tax revenues for payment of a stipend to a volunteer ambulance squad to cover the cost of co-payments and deductibles that would otherwise be incurred by residents, as well as the cost of transports provided to residents without insurance coverage. In Advisory Opinion 14-09, the OIG concluded that the arrangement would not constitute grounds for the imposition of civil monetary penalties. The OIG also concluded that while the arrangement could potentially violate the anti-kickback law if the requisite intent to induce or reward referrals were present, the OIG would not impose administrative sanctions in connection with the arrangement. Under the arrangement reviewed by the OIG, the volunteer ambulance squad did not bill residents of the municipality, some of whom were Medicare and Medicaid beneficiaries. The OIG relied on the earlier guidance it had issued within its Compliance Program Guidance for Ambulance Suppliers, which state in pertinent part that:
A city or other political subdivision of a state…may not require a contracting ambulance supplier to waive copayments for residents, but it may pay uncollected, out-of-pocket copayments on behalf of its residents. Such payments may be made through lump sum or periodic payments, if the aggregate payments reasonably approximate the otherwise uncollected cost-sharing amounts.
The OIG found that because the municipality pays the ambulance supplier an annual stipend that the ambulance supplier has certified reasonably approximates out-of- pocket amounts for residents, the non-billing of residents for cost-sharing amounts did not constitute a routine waiver that implicates the anti-kickback statute or the civil monetary penalty law.
Appellate Division Holds That Applicants For A Professional License Need Not Exhibit An Intent To Deceive In Order To Have Their License Application Denied Due To Misrepresentation
October 7, 2014
Posted by Beth Christian
The Appellate Division recently issued a decision in which it found that an applicant’s failure to disclose information on their application for a license could be denied based on a finding that their application contained a misrepresentation, even if the failure to disclose was unintentional. In Matter Of Y.L., an applicant for a license as a massage and bodywork therapist had been arrested on prostitution charges some years prior to her application for New Jersey licensure. The charges were later dismissed. When the applicant applied for New Jersey licensure, she swore that she had never been arrested for any crime or offense. When the licensing board discovered this, the applicant indicated that she had misread the application, that English was not her first language, and that she had not engaged in prostitution. She argued that in order to have her license denied based on misrepresentation, the board was required to show that she had an “intention to deceive.” The Appellate Division rejected her argument, finding that the failure to disclose the information constituted at least negligent misrepresentation, and could be used as a basis to deny her application. The Appellate Division referenced an earlier decision in which a pharmacy applicant’s request to participate in the Medicaid program was denied because the applicant failed to disclose that one of its employees had entered a guilty plea to a drug possession charge. We reported on that development here: http://www.njhealthcareblog.com/2013/08/recent-appellate-division-decision-represents-importance-of-employee-background-checks/ The K.L. decision serves as an important reminder of the need for full and honest disclosure on professional licensure applications.
Beth Christian Receives the 2014 Distinguished Service Award by NJSBA’s Health Law Section
October 3, 2014
Posted by Beth Christian
Beth Christian, a Shareholder in GH&C’s Health Care Practice Group was recently presented with the 2014 Distinguished Service Award by the Health Law Section of the New Jersey State Bar Association. The honor was given to her in recognition of her outstanding service and contributions.
For full press release please click here.
OIG Proposes New Safe Harbors and Other Regulatory Changes
October 3, 2014
Posted by Beth Christian
The HHS Office of Inspector General has published notice of a proposed rule which (if adopted) would modify some of the existing safe harbors to the anti-kickback statue, and add new safe harbors (including a long-awaited safe harbor for free or discounted local transportation services). The proposed rule would also codify civil monetary provisions for gainsharing and would amend the definition of “remuneration” in the existing civil monetary penalty regulations to provide for additional exceptions.
The proposed rule:
- Makes a technical correction to the existing safe harbor for referral services.
- Proposes the addition of a new safe harbor for certain cost sharing waivers, including:
(i) pharmacy waivers of cost-sharing for financially needy
Medicare Part D beneficiaries; and
(ii) waivers of cost-sharing for emergency ambulance services
furnished by State or municipality-owned ambulance services.
- Proposes the addition of a new safe harbor for certain remuneration between Medicare Advantage plans and FQHCs.
- Proposes the addition of a new safe harbor for discounts by manufacturers on drugs furnished to beneficiaries under the Medicare Coverage Gap Discount Program.
- Proposes the addition of a new safe harbor for free or discounted local transportation services to established patients for the purpose of obtaining medically necessary items or services and which meet specified criteria.
- Would exclude the following from the definition of “remuneration” under the civil monetary penalty law:
(i) copayment reductions for certain hospital outpatient
department services;
(ii) certain remuneration that poses a low risk of harm and
promotes access to care;
(iii) coupons, rebates, or other retailer reward programs that meet
specified requirements;
(iv) certain remuneration provided to financially needy individuals;
and
(v) copayment waivers for the first fill of generic drugs.
- Codification of the gainsharing civil monetary penalty rule.
Some of the proposed rule originates from statutory changes set forth in the Affordable Care Act and the Medicare Prescription Drug, Improvement and Modernization Act of 2003. Others go back even farther. The OIG initially announced that public comments would be solicited regarding the provision of free and discounted local transportation services in an August 2002 Special Advisory Bulletin entitled “Offering Gifts and other Financial Inducements to Beneficiaries”. Public comments regarding the proposed rule will be accepted 60 days from the publication of the proposed rule in the Federal Register.
Legislature Expands Health Care Service Firm Licensing Requirements
September 5, 2014
Posted by Beth Christian
Recent amendments to the health care service firm law will require companies providing companion services in New Jersey to become registered as a health care service firm. Currently, entities that place or arrange for the placement of personnel to provide health care or provide personal care services in the personal residence of a person with a disability or a senior citizen aged 60 or older must become registered as a health care service firm. As a result of the amendments to the law, companion service providers will also need to become registered. The term “companion services” is defined in the law as non-medical, basic supervision and socialization services which do not include assistance with activities of daily living and which are provided in the individual’s home. Companion services may include the performance of household chores. In addition, all registered health care service firms will be required to obtain accreditation from an accrediting body that is recognized by the Commissioner of Human Services as an accrediting body for homemaker agencies participating in the Medicaid program. Health care service firms will also be required to submit an audit report with an unqualified opinion and a management letter. The amendments to the law will take effect 18 months after their August 1, 2014 enactment.
OIG Issues Unfavorable Advisory Opinion to Specialty Pharmacy For Support Service Payments
August 18, 2014
Posted by Beth Christian
On August 15, 2014, the OIG issued an unfavorable Advisory Opinion to a specialty pharmacy in connection with the pharmacy’s proposal to pay local retail pharmacies for support services that they provide in connection with patient referrals to the specialty pharmacy. The specialty pharmacy dispensed specialty pharmaceuticals that are often unavailable to retail pharmacies. Under the proposed contractual arrangement, the specialty pharmacy would pay local pharmacies for support services, including accepting new patients and recording their demographic information; recording patient-specific medication history and use and providing ongoing medication assessment; counseling patients on appropriate use of their medications and informing them about the specialty pharmacy’s services; obtaining patient consent to transfer the prescription to the specialty pharmacy; and transmitting the prescription to the specialty pharmacy. The retail pharmacy was paid a “per-fill fee” at the time that the initial prescription was transmitted and upon each subsequent refill.
In evaluating the arrangement which was the subject of Advisory Opinion 14-06, the OIG concluded that the per-fill fees were “inherently subject to abuse” because they were paid only when the support services provided by the retail pharmacy resulted in a referral to the specialty pharmacy. The OIG concluded that there was significant risk that the per-fill fees would represent compensation for the local pharmacies generating business (including federal health care program business), rather than compensation for bona fide, commercially reasonable services. The unfavorable Advisory Opinion graphically illustrates the inherent risks in entering into arrangements where payments to the service provider are only made when a referral is generated.
Medicare Joins New Jersey Medicaid In Mandating Pre-Authorization for Non-Emergency Ambulance Transports
August 7, 2014
Posted by Beth Christian
CMS has announced that it will be transitioning to us of a prior authorization requirement for repetitive non-emergency ambulance transports. New Jersey Medicaid already has a pre-authorization requirement. Under the prior authorization requirement, ambulance suppliers will need submit a request for provisional affirmation of coverage before a non-emergency, repetitive ambulance transport is rendered to a Medicare beneficiary and before a claim for payment may be submitted. A repetitive ambulance service is defined as medically necessary ambulance transport services that are furnished 3 or more times in a 10 day period or at least 1 per week for 3 weeks. Repetitive services typically arise for patients who receive dialysis, wound care or cancer treatment. New Jersey is one of 3 states where the pre-authorization program will be initially implemented.
Appeals Courts Issue Conflicting Decisions Regarding Health Care Exchange Subsidies Under the ACA
July 23, 2014
Posted by Beth Christian
Yesterday, two different federal appeals courts issued conflicting decisions regarding the provision of premium subsidies under the Affordable Care Act to individuals who access health insurance coverage in states that use the federal exchange. A three judge panel of the U.S. Court of Appeals for the D.C. Circuit ruled that language of the Affordable Care Act unambiguously restricted the subsidies to insurance purchased on exchanges “established by the State,” and vacated an IRS regulation which had extended the subsidies to insurance purchased through the federal exchange. Several hours later, the U.S. District Court for the Fourth Circuit issued a decision which reached the opposite conclusion concerning the validity of the IRS regulation, finding that the regulation constituted a “permissible exercise of the agency’s discretion. These two important rulings create a conflict between two federal appeals courts, and are likely to lead to a review of the issue by the United States Supreme Court.
OIG Issues Special Fraud Alert Concerning Laboratory Payments to Referring Physicians
June 25, 2014
Posted by Beth Christian
Earlier today, the OIG issued a Special Fraud Alert concerning laboratory payments to referring physicians. The OIG identified 2 different types of payment arrangements that may be viewed as problematic under the Anti-Kickback law: blood specimen collection, processing and packaging arrangements and registry payments.
The OIG described specimen processing arrangements as payments from laboratories to physicians for certain specified duties, which may include blood specimen collection and centrifuging, maintaining the specimens at a particular temperature, and packaging the specimens so that they are not damaged in transport. The OIG indicated that payments are typically made to referring physicians on a per-specimen or per-patient-encounter basis, and often are associated with expensive or specialized tests. The concern raised by the OIG is that since Medicare (and other third party payors) allow nominal payments in certain circumstances for specimen collection and for processing and packaging specimens for transport to a laboratory, payment by the laboratory to the physician amounts to unlawful remuneration because the physician is effectively being paid twice for the same work. The OIG also raised concerns that such payments may be made in amounts which exceed fair market value, although the OIG cautioned that such payments may be suspect if one purpose of the arrangement is to induce or reward referrals of Federal health care program business “regardless of whether the payment is fair market value for services rendered.”
The OIG identified the following characteristics specimen processing arrangements that may be suspect:
- Payment exceeds fair market value for services actually rendered by the party receiving the payment.
- The payment is for services for which payment is also made by a third party, such as Medicare.
- Payment is made directly to the ordering physician rather than to the ordering physician’s group practice, which may bear the cost of collecting and processing the specimen.
- Payment is made on a per-specimen basis for more than one specimen collected during a single patient encounter or on a per-test, per-patient, or other basis that takes into account the volume or value of referrals.
- Payment is offered on the condition that the physician order either a specified volume or type of tests or test panel, especially if the panel includes duplicative tests (e.g., two or more tests performed using different methodologies that are intended to provide the same clinical information), or tests that otherwise are not reasonable and necessary or reimbursable.
- Payment is made to the physician or the physician’s group practice, despite the fact that the specimen processing is actually being performed by a phlebotomist placed in the physician’s office by the laboratory or a third party.
The OIG also noted that payment arrangements can be problematic even if they are structured to carve out work performed on specimens from non-Federal health care program beneficiaries.
The OIG also raised concerns about payments for registry maintenance and observational outcomes databases. Under these arrangements, which often involve patients presenting with specific disease profiles, laboratories pay a physician for certain specified duties, including submitting patient data to be incorporated into the registry, answering patient questions about the registry, and reviewing registry reports. While the OIG found that such payments may be appropriate in certain limited circumstances, such payments may induce physicians to order medically unnecessary or duplicative tests, including duplicative tests performed for the purpose of obtaining comparative data, and to order those tests from laboratories that offer registry arrangements in lieu of other, potentially clinically superior, laboratories.
The OIG identified the following as being characteristics of potentially suspect registry arrangements:
- The laboratory requires, encourages, or recommends that physicians who enter into registry arrangements to perform the tests with a stated frequency (e.g., four times per year) to be eligible to receive, or to not receive a reduction in, compensation.
- The laboratory collects comparative data for the registry from, and bills for, multiple tests that may be duplicative (e.g., two or more tests performed using different methodologies that are intended to provide the same clinical information) or that otherwise are not reasonable and necessary.
- Compensation paid to physicians pursuant to registry arrangements is on a per patient or other basis that takes into account the value or volume of referrals.
- Compensation paid to physicians pursuant to registry arrangements is not fair market value for the physicians’ efforts in collecting and reporting patient data.
- Compensation paid to physicians pursuant to registry arrangements is not supported by documentation, submitted by the physicians in a timely manner, memorializing the physicians’ efforts.
- The laboratory offers registry arrangements only for tests (or disease states associated with tests) for which it has obtained patents or that it exclusively performs.
- When a test is performed by multiple laboratories, the laboratory collects data only from the tests it performs.
- The tests associated with the registry arrangement are presented on the offering laboratory’s requisition in a manner that makes it more difficult for the ordering physician to make an independent medical necessity decision with regard to each test for which the laboratory will bill (e.g., disease-related panels).
The OIG found that concerns also arise when a physician is selected to collect data for a registry on the basis of their prior or anticipated referrals, rather than their specialty, sub-specialty or other relevant attribute. The OIG also noted that “Even legitimate actions taken to substantiate such claims, including, for example, retaining an independent Institutional Review Board to develop study protocols and participation guidelines, will not protect a registry arrangement if one purpose of the arrangement is to induce or reward referrals.”
The laboratory market is a very competitive one. The issuance of the referenced Special Fraud Alert, as well as recent large scale investigations and criminal indictments involving laboratory and physician relationships (including the Biodiagnostic Laboratory Services LLC investigation here in New Jersey: https://tinyurl.com/cf5djfw) demonstrates that the OIG has turned an increased focus on relationships between laboratories and physicians.
Appellate Division Holds that Nurse who Refused Flu Vaccine was Improperly Denied Unemployment Benefits
June 10, 2014
Posted by Beth Christian
Efforts by health care related employers to mandate flu vaccination for all of their employees appears to have suffered a setback in New Jersey. Last week, the Appellate Division issued its decision in Valent v. Board of Review, Department of Labor and Hackettstown Community Hospital and reversed the denial of unemployment benefits for a nurse who was fired after she refused to undergo flu vaccination. The Hospital had issued a mandatory flu vaccination directive, which required vaccination by all employees unless there was a documented medical or religious exemption request submitted by an employee. A nurse who was employed full time at the Hospital refused to be vaccinated for the flu, but did not allege an exemption based on medical or religious grounds. Thereafter, the Hospital terminated the nurse’s employment based upon her refusal to be vaccinated. When the nurse applied for unemployment compensation benefits, the Hospital opposed her application. After her claim for unemployment benefits was denied, the nurse sued the Department of Labor and the Hospital, alleging that allowing a religious-based exemption and not a secular one violated the plaintiff’s constitutionally protected right to freedom of expression under the First Amendment of the Constitution.
The Appellate Division held that the nurse should have been awarded unemployment compensation benefits. The court found that by exempting employees who can produce religion-based documentation, the Hospital employer’s flu vaccination policy was not exclusively driven by health-related concerns. The Appellate Division found that denying the nurse’s application to receive unemployment benefits based only on her unwillingness to submit to the employer’s religion-based policy violated the nurse’s rights under the First Amendment. The Appellate Division also found that the employer did not produce evidence showing that the nurse’s refusal to comply with its flu vaccination policy for purely secular reasons adversely impacted the Hospital or otherwise undermined the nurse’s ability to perform her job duties. Therefore, the employer did not prove that the nurse was guilty of misconduct which would have disqualified her from receiving unemployment compensation benefits.
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