Compliance Center

What's New Archives

As political campaigns heat up, pressure on hospitals to participate will intensify.  Hospitals are advised to consult legal counsel and review the attached IRS fact sheet as well as these materials produced by OHA to help guide political campaign activities:  OHA Guidelines on Participating in Political and Lobbying Activity and OHA Do’s and Don’ts of Political Activity.

February 13, 2006
Cleveland Area Podiatrist Sentenced to Prison for Medicare Fraud

February 10, 2006
Ambulette Service Providers Found Guilty of Defrauding Ohio Medicaid

Twelve defendants have been sentenced after pleading guilty in six separate criminal cases to defrauding the Ohio Medicaid Program.  The defendants admitted to driving Medicaid beneficiaries who did not need or use wheelchairs in Cleveland’s east side and suburbs.  U.S. District Judge James Gwin of Cleveland imposed sentences ranging from 20 months in prison to probation and restitution ranging from $60,000 to $400,000.  The U.S. Attorney for the Northern District of Ohio worked with the Medicaid Fraud Control Unit of the Ohio Attorney General’s Office in the investigations.  Additional investigations are ongoing.

January 13, 2006
Ohio Physician Convicted of Health Care Fraud Resulting in Death

On January 12, 2006, after a five-week trial, a federal jury convicted Jorge Martinez of two counts of health care fraud resulting in death.  Dr. Martinez operated pain clinics in Parma and Boardman where prosecutors said he prescribed drugs such as OxyContin, Zoloft and Valium to patients already addicted to painkillers.  He would then administer injections to the patients, billing Medicare, Medicaid, the Ohio Bureau of Workers Compensation and private insurance for the unnecessary shots.  Under Dr. Martinez’s treatment, two patients died, ages 42 and 35.  Prosecutors said Martinez submitted over $60 million in fraudulent claims.  A U.S. District Court judge in Cleveland will sentence Martinez in March.

December 30, 2005
IRS Names New Director of Exempt Organizations Division

Internal Revenue Service Commissioner Mark Everson recently announced the appointment of Lois G. Lerner as the new director of the IRS’ Exempt Organizations Division effective January 2006.  Lerner previously directed the EO rulings and agreements division, where she guided the EO determinations program, public guidance and technical assistance for IRS agents.  Before joining the IRS, Lerner served as Associate General Counsel for Enforcement for the Federal Election Commission. 

The IRS has announced it is beefing up its Exempt Organizations Divisions, including adding more agents for examinations and audits.

October 5, 2005
Ohio Hospital Accounts Payable Manager Sentenced to Prison for Embezzlement

In addition to restitution of over $2.1 million, Sites was sentenced to 48 months in prison.  The U.S. Attorney’s Office was joined by the FBI and IRS in the investigation.

August 30, 2005
Owners of Ohio Chiropractic Clinics Charged with Health Care Fraud

The U.S. Attorney for the Northern District of Ohio has charged two individuals with fraudulently billing Medicare, Medicaid, the Ohio Bureau of Workers Compensation, TriCare, and private insurers including Anthem and Medical Mutual.  Paul Neumann and Timothy Neumann owned and operated a chain of chiropractic and medical clinics called “MedBack” located in Toledo, Oregon, Bowling Green, Fremont, Findlay, Bryan and Sandusky.  From 1997 to 2000, the clinics submitted false codes and bills for medical services when non-covered chiropractic services were actually performed.  Given the wide range of payors involved, the investigation was a multi-agency cooperative effort by the Federal Bureau of Investigation, the Internal Revenue Service, the U.S. Postal Inspection Service, the Ohio State Medical Board, the Ohio State Chiropractic Board and the Ohio Bureau of Workers’ Compensation.

August 26, 2005
CMS Issues Stark Advisory Opinion
In a rare advisory opinion interpreting the Stark law, the Centers for Medicare and Medicaid Services (CMS) approved the structure of a non-profit, tax-exempt multi-specialty physician group practice. In advisory opinion CMS-AO-2005-08-01, CMS concluded that stock held by physician-shareholders of the non-profit practice does not constitute an ownership or investment interest for purposes of the Stark law.

The group at issue was formed under state corporate law that at one time allowed non-profit entities to issue stock. Although state non-profit corporate law has since changed, the physician group was grandfathered and exists validly under the previous law.  Each of the employed physicians who are eligible to be shareholders purchases one share of stock for $1,000.  The group returns the $1,000 to the physician, without interest, if the physician leaves the practice. The stock ownership entitles the physician a vote on certain matters, but no dividends or profits. Currently, the practice employs more than 700 physicians representing 86 medical specialties.

CMS found this stock arrangement was not an ownership arrangement under Stark because the stock exhibits none of the benefits typical of stock ownership and physicians have no right to distribution of the net income, assets or profits of the practice.  In fact, the articles of incorporation specify that all of the practice’s assets must be distributed to educational, scientific or charitable organizations if the entity were to dissolve.

This opinion marked the first substantive Stark opinion issued by CMS since 1998.  As with all advisory opinions, relevant names and details that may identify the requesting group practice were redacted. Read the opinion at www.cms.hhs.gov/physicians/aop/CMS-AO-2005-08-01.pdf.

July 14, 2005
Congress Looks into States’ Use of Medicaid Contractors

Senator Chuck Grassley (R- Iowa), Chair of the Senate Finance Committee, today announced he is looking into the use of Medicaid contingency-fee consultants by states to increase the federal Medicaid dollars collected by the states.  In a letter to governors, Grassley cites recent testimony by the Government Accountability Office (GAO) that suggested two-thirds of states use consultants on a contingency-fee basis to maximize federal Medicaid reimbursements.  The GAO report concluded the Centers for Medicare & Medicaid Services (CMS) lacked oversight and clear guidance and allowed states to develop creative financing methods that result in increased federal spending.

 Studies of Ohio’s Medicaid program have consistently shown Ohio’s financing methods are appropriate and reasonable.

July 8, 2005
Most State Medicaid Drug Rebate Programs Have Weaknesses

The Office of Inspector General of the U.S. Department of Health and Human Services (OIG) recently issued a report of their multi-state review of the accountability and internal controls of state Medicaid drug rebate programs.  The OIG audited 49 states and the District of Columbia and found problems in all but four states.  (OIG A-06-03-00048.)

 The Medicaid drug rebate program allows Medicaid to receive pricing benefits commensurate with its high volume purchases.  The program is a partnership of CMS, the states and drug manufacturers. Common weaknesses identified in the OIG audit included:

• Unreliable information submitted on the Medicaid Drug Rebate Schedule;
• Improper accounting for interest on late rebate payments;
• Inadequate rebate collection systems; and
• Inadequate dispute resolution and collection processes.

The OIG concluded states’ failures to have appropriate policies and procedures in place were the primary causes of problems.

 The only weakness found in Ohio’s program involved improper accounting for interest on late payments – a problem shared by 26 other states.  Ohio’s report may be found at OIG A-05-03-00042.

July 1, 2005
OIG Finds Medicaid Transfers Incorrectly Coded as Discharges

The Office of Inspector General of the U.S. Department of Health and Human Services (OIG) recently issued report A-05-03-00014 entitled, “Hospital Patient Transfers Paid as Discharges Under State Medicaid Programs.”  Following up on prior years’ audits of Medicare transfers reported as discharges, the OIG conducted similar audits of Medicaid beneficiary claims.

Generally, federal Medicare regulations consider a discharge of a hospital inpatient from one Medicare acute care hospital to another as a transfer if both hospitals are paid under the prospective payment system (PPS).  Medicare payment rules pay the transferring hospital a per diem rate, not to exceed the full DRG payment, and pay the receiving hospital the full DRG payment.  When transfers are incorrectly coded as discharges, both hospitals receive the full DRG payment and overpayments may occur.  Previous OIG audits identified substantial overpayments as a result of incorrect reporting of transfers.  The OIG surmised that state Medicaid programs with payment rules parallel to Medicare’s are vulnerable to similar overpayments.

July 1, 2005
Safe Harbor Proposed for Federally Qualified Health Centers

Today the OIG published a notice of proposed rulemaking concerning a new safe harbor under the federal anti-kickback statute for federally qualified health centers (FQHCs). 

 Section 431 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) created a new safe harbor for certain arrangements involving FQHCs, allowing individuals or entities to make gifts, loans, grants or other benefits to the FQHC.  Congress directed the OIG to establish standards for the safe harbor, taking into account, 1) whether the arrangement results in savings of federal grant funds or increased revenue to the FQHC; 2) whether the arrangement restricts or limits patient freedom of choice; and 3) whether the arrangement protects the independent medical judgment of professionals regarding medically appropriate treatment for patients.

 The proposed safe harbor would protect arrangements from sanctions under the anti-kickback statute if the following standards are met:

1. the remuneration is made pursuant to a signed written agreement that covers all items or services provided to the FQHC;
2. the items or services are medical or clinical in nature or relate to the provision of patient services such as billing or case management services;
3. the agreement sets forth the amount of the items or services and the amount is not conditioned on the volume or value of federal health care program business generated between the parties;
4. the arrangement is expected to contribute to the FQHC’s ability to provide services to a medically underserved population and such contribution is documented;
5. at least annually the FQHC evaluates compliance with the above requirement;
6. there is no referral requirement by the FQHC and its professionals;
7. the individual or entity providing the items or services must accept all referrals from the FQHC, regardless of the patient’s ability to pay;
8. the agreement must not restrict the FQHC’s ability to enter into other agreements;
9. the FQHC must notify their patients of their freedom to choose any willing provider or supplier;
10. the FQHC may require the individual or entity to charge a referred FQHC patient the same rate it charges other patients or a discounted rate; and
11. the agreement must otherwise comply with the FQHC’s federal grant.

 The OIG is accepting comments on the proposed rule, 70 Fed. Reg. 38081, until Aug. 1, 2005.

June 16, 2005
OIG Won’t Sanction Tourist Area EMS Billing Policy

The Office of Inspector General of the U.S. Department of Health and Human Services (OIG) will not impose sanctions on a city that does not collect co-pays or deductibles for city-provided EMS services provided to residents and non-residents. 

 While the OIG has consistently deferred to CMS payment policy that permits waiver of cost-sharing by government-owned and operated providers, those opinions generally have been restricted to residents of the municipality at issue.  In this case, the city is located in a tourist area and proposed to extend their waiver policy to non-residents who used the city’s EMS services.  The city funded its fire department and EMS from local taxes, including those paid by tourists such as hotel room taxes. 

 The OIG again pointed to CMS payment policy to conclude in its advisory opinion, “since Medicare would not require the City (a municipality) to collect cost-sharing amounts from residents, we would not impose sanctions under the anti-kickback statute where the cost-sharing waiver is implemented cy the City categorically for bona fide residents of the City (including City Taxpayers receiving EMS services within City limits). “  Read OIG Advisory Opinion AO-05-10 at oig.hhs.gov.

June 8, 2005
OIG Finds Consecutive Medicare Inpatient Stays Indicators of Poor Quality

The Office of Evaluations and Inspections of the OIG conducted a review of services provided to Medicare beneficiaries with consecutive inpatient stays at hospitals, rehabilitation units, psychiatric units and skilled nursing swing beds in acute care hospitals.  In a report issued June 2005, the OIG found that while the majority of sequences of consecutive stays were medically necessary and appropriate, 20 percent were associated with poor-quality care and/or unnecessary fragmentation of care.  The study also found quality problems within individual stays.

 The OIG hired physicians to review a statistical sample of sequences of three or more individual inpatient facility stays for the same Medicare beneficiary, where the admission date occurs within one day of a discharge.  Some specific quality issues identified by the OIG included failure to treat patients in a timely manner, inadequate monitoring, inadequate care planning and unwarranted transfers between acute care and swing bed stays.  Indicative of the OIG’s recent inclination to associate poor quality with fraud or false claims, the OIG translated the problem admissions into $438 million paid by Medicare for the stays.

 May 27, 2005
Where Have You Gone, OIG Advisory Opinions?
It has been over three months since the OIG issued an advisory opinion. This lull is one of the longest stretches without an opinion since Congress created the process in 1997. Has the health care industry run out of questions or is the OIG staff taking a break? Stay tuned.

May 25, 2005
HHS Inspector General Still Not Confirmed
BNA’s Health Law Reporter reports that the confirmation of Daniel Levinson as the Inspector General of the Department of Health and Human Services (HHS) is being delayed by Democratic Senator Frank Lautenberg of New Jersey. Lautenberg wants HHS to pursue action against former CMS head Tom Scully for pressuring HHS actuary Richard Foster to withhold high cost estimates for the Medicare Part D drug benefit. To date, acting Inspector General Levinson has not taken any action against Scully. The General Accounting Office, in a 2004 report, recommended applying the Consolidated Appropriations Act of 2003 to recover salary payments from Scully, now with the DC law firm Alston & Bird.

May 17, 2005
Ohio Medical Device Salesman Pleads Guilty to Conspiracy
The U.S. Attorney for the Southern District of Florida announced that Anthony L. Jerdine of Pepperpike entered a guilty plea to charges of conspiracy to transport and sell stolen prescription medical devices and obstruction of justice. Jerdine agreed to forfeit $771,398.76 – the amount he received in the course of the scheme.

The Department of Justice reports Jerdine was a sales representative of Ethicon Endosurgery, Inc., a division of Johnson & Johnson. He marketed Ethicon devices to hospitals and other medical facilities in various cities in Ohio. From 1998 to 2000, Jerdine illegally obtained and sold prescription medical devices to another Ohio sales rep, James M. Vogt of International Surgical Supply, Inc. Charges are pending against six other sales reps involved in the enterprise. Read more at www.usdoj.gov/usao.fls.

April 12, 2005
CMS Lax in Collecting CMPs from Nursing Homes
The Office of Inspector General of the Department of Health and Human Services recently released the results of a study analyzing the use of civil money penalties for long-term care facilities. The study relied on data from the Centers for Medicare & Medicaid Services’ (CMS) Long-Term Care Enforcement Tracking System from years 2000 and 2001, its Civil Money Penalty Tracking System, and a set of interviews of the staff at CMS’s regional offices and the Department of Health and Human Services, Department of Appeals Board. Civil Money Penalties (CMPs) are one of eight remedies available to CMS, however they are the most widely used and are often the only enforcement action noncompliant nursing homes experience.

The evaluation resulted in a number of findings pinpointing problems in the imposition, enforcement and collection of CMPs. First, imposition of sanctions remained unpaid after a considerable amount of time; primarily the result of reduction of penalties, delays due to pending appeals, bankruptcy, and inconsistencies in the collection process. Second, CMS does not utilize the full dollar range allowed for CMPs; rather impositions tend toward the lower ends of the allowable range determined by the scope and severity of the violation. Third, process delays substantially extended the time for collection of CMP payments, with appealed cases taking a significantly longer time. Finally, in some cases, collections did not appear to be pursued. Two suggestions were offered to CMS and subsequently accepted: to provide written guidance to CMS staff and states regarding appropriate dollar ranges for individual ratings of scope and severity; and to clarify responsibilities with respect to past due CMPs and conduct an internal process review that would enable CMS and States to streamline CMP processing. CMS has further noted that it has already begun work in compliance with the recommendations. See Nursing Home Enforcement: The Use of Civil Money Penalties. Office of Inspector General, Department of Heath and Human Services. April 2005. OEI-06-02-00720.

March 1, 2005
OIG Issues Opinions on Hospital, Physician Gainsharing Arrangements
The U.S. Department of Health and Human Services Office of Inspector General (OIG) this week issued two advisory opinions stating it would not impose sanctions on certain gainsharing arrangements proposed by hospitals to pay physician groups shares of the cost savings achieved by specific changes in the groups’ cardiology and cardiac surgery practices. The OIG warns that the arrangements implicate the civil monetary penalties and anti-kickback laws; however, the OIG decided not to impose sanctions because of the protections built into each of the gainsharing arrangements. Though the opinion applies only to the particular hospitals in question, these are the fifth and sixth such opinions posted this year, signaling a warming to gainsharing by the OIG. The OIG analyzed the arrangements under the anti-kickback statute and the prohibition against paying a physician to reduce or limit services to his or her patients. It is important to note the OIG did not opine whether the arrangements would be permissible under the Stark physician self-referral laws. To see the advisory opinions, go to: http://oig.hhs.gov/fraud/advisoryopinions/opinions.html#1

November 17, 2004
OIG Recommends CCI Edits for Medicaid
The Office of Inspector General of the Department of Health and Human Services (OIG) recently released the results of an inspection conducted by the OIG’s Office of Evaluation and Inspections. The OIG studied the extent to which state Medicaid agencies use the National Correct Coding Initiative (CCI) edits or similar edits. Automatic CCI edits were put into place by the Centers for Medicare and Medicaid Services (CMS) for the Medicare program in 1996. The initiative was designed to evaluate claims when a provider bills for more than one service for the same beneficiary and the same date of service.

The OIG discovered only seven state Medicaid agencies currently use the Medicare CCI edits for Medicaid claims. However, 40 states use a commercial edit package or some other edit system when processing claims to prevent inappropriate payments. The Health Insurance Portability and Accountability Act requires states to use a uniform national coding system.

The OIG then calculated the amount paid by 39 states for services that would have been denied based on the CCI edits. For 2001 Medicaid claims data, the OIG estimates $54 million was paid for services that would have been denied if CCI edits were in place. By state, amounts varied from $33,000 to over $9 million (Ohio was the highest of the 39 states). Of this amount, nearly half was attributable to code pairs in the “medicine” category, including psychiatry, physical therapy, cardiovascular and pulmonary services. Seventy-five code pairs accounted for 75 percent of the payments.

The OIG recommends that CMS should encourage every state Medicaid agency to use CCI edits. To the extent a state cannot implement all CCI edits, the OIG suggests at a minimum those edits that comprise the largest volume of potential overpayments be employed. CMS concurred with the recommendation and will distribute the OIG report to the regional offices with instructions to work with the states to implement the recommendation.

To read the full report and to see which 75 services CCI edits would have denied, go to http://oig.hhs.gov/oei/reports/oei-03-02-00790.pdf.

November 9, 2004
OIG Studies Provider Responsiveness to CERT Contractor
In a follow-up report, the OIG found progress by CMS in improving provider responsiveness to requests for medical records under the Comprehensive Error Rate Testing (CERT) program. The federal fiscal year (FY) 2003 CERT program experienced a provider non-response rate of eight percent. The OIG reported the FY 2004 non-response rate had improved from two percent in April 2004 to less than one percent by June 2004. The OIG uses results from the CERT program to report the annual Medicare error rate for Medicare fee-for-service paid claims.

The OIG monitored the response rate by providers to requests for medical records and attempted to determine the reasons for non-response. Common reasons for failure to produce records included: the provider did not receive the request, the records had already been produced, and the provider had no access to the records requested. The OIG also discovered other system failures such as the CERT contractor’s use of only one facsimile machine to receive responses and the lack of follow-up telephone contacts to providers.

While CMS was acknowledged for their diligence in eventually obtaining the medical records required, the OIG identified areas for CMS improvement, including: require the CERT contractor perform outreach and education; direct CERT contractors to implement controls to ensure management of medical records; and define CERT and affiliated contractor responsibilities for handling requests sent to incorrect addresses, providers with nonworking telephone numbers and medical records maintained at different addresses.

The 2004 CERT program was the topic of the May 2004 OHA Compliance Telephone Briefing which featured speakers from the CERT contractor, AdvanceMed, and Ohio’s fiscal intermediary, AdminaStar Federal. To read the entire OIG report (A-01-04-00517), go to http://oig.hhs.gov/oas/reports/region1/10400517.pdf.

September 28, 2004
City May Waive EMS Cost-Sharing for Residents
In yet another advisory opinion about city-owned ambulance services, the Office of Inspector General of the Department of Health and Human Services (OIG) stated it would not impose sanctions on the city for “insurance-only” billing for residents. In Advisory Opinion 04-12, the OIG reaffirmed its concerns about potentially abusive waivers of Medicare cost-sharing amounts. However, the OIG acknowledged that Medicare policy allows reimbursement to government-owned providers and suppliers that reduce or waive charges. Therefore, in this situation, the OIG will not sanction a municipality for treating local tax revenue as payment of any otherwise applicable cost sharing amounts due from bona fide residents for the use of the city’s emergency ambulance services.

September 14, 2004
Key Senators Push for Emergency OIG Funding Fix
In a bipartisan letter, U.S. Senate Finance Committee chair Chuck Grassley (R-IA) and the ranking Democrat, Max Baucus (D-MT), urged their colleagues on the Appropriations Committee to direct $25 million to the Office of Inspector General (OIG), the watchdog arm of the U.S. Department of Health and Human Services (HHS).

With increased responsibilities for oversight under the Medicare Modernization Act of 2003 (MMA), the OIG contends it will lack the resources it needs to fulfill all of its statutory duties without additional funding. These duties include auditing of Medicare and Medicaid payments to providers and monitoring the availability of prescription drugs under Medicare. The MMA provided $1 billion to help HHS implement the legislation, with $25 million of that total intended for the Inspector General's office. But Grassley and Baucus explain that a technical drafting error in the MMA prevents any of the new funding from reaching the OIG without additional congressional action. Little opposition to this fix is expected as Congress finalizes the fiscal year 2005 appropriations package later this year.

To view a copy of the Grassley-Baucus press release and letter, visit www.senate.gov/~finance/press/Gpress/2004/prg091404c.pdf.

September 9, 2004
OIG Says Medical Center Can Subsidize Liability Premiums
Hospitals in health professional shortage areas (HPSAs) may have some hope of helping doctors that face skyrocketing medical liability premiums to keep treating patients in their hospitals.

The Department of Health and Human Services’ Office of Inspector General (OIG) in September issued an advisory opinion stating it would not impose sanctions on a medical center in an HPSA for subsidizing medical liability insurance premiums for four community-based obstetricians, even though the arrangement did not meet all of the requirements necessary to fit within the safe harbor. Hospitals have been leery to subsidize doctors’ liability premiums in fear of violating federal anti-kickback statutes and the Stark laws.

While this opinion is binding only on the requesting medical center and does not address the arrangement’s relationship to the limited Stark law exception, it demonstrates the OIG’s willingness to consider obstetrician premium subsidies in HPSAs. To find out if your hospital is in a HPSA, go to www.odh.state.oh.us/odhprograms/visa/j1maps.pdf. The complete OIG opinion can be viewed at www.oig.hhs.gov/fraud/docs/advisoryopinions/2004/ao0411.pdf. To learn more about Ohio’s medical liability insurance crisis and OHA’s initiatives, go to www.ohanet.org/med-mal/.

August 17, 2004
Medicaid Fraud Control Units Annual Report Released
The OIG released its annual report on the performance of State Medicaid Fraud Control Units (MFCU) for federal fiscal year 2003. Forty-seven states, including Ohio, receive federal funding to operate units that investigate and prosecute Medicaid provider fraud and patient abuse and neglect. In FFY 2003, Ohio’s MFCU had 38 staff members, received $2.8 million in federal funds, collected $4.7 million in court-ordered restitutions, fines, civil settlements and penalties and obtained 90 convictions.

The OIG highlights several Ohio enforcement actions as successful Medicaid fraud cases:

• The president of a company that supplied oxygen services in nursing facilities was indicted for Medicaid fraud for billing Medicaid for 24 hours of oxygen services regardless of the amount of oxygen actually used by the residents. The defendant was sentenced to six months imprisonment, 1 year probation and ordered to pay over $22,000 in restitution and court costs.
• A laboratory that supplied free enteral feeding pumps to nursing homes and DME providers around the country counseled the entities to bill both Medicare and Medicaid for the free pumps. Ohio acted as the lead negotiator in recovering over $59 million to state Medicaid programs and $614 overall.
• The owner of a transportation company was convicted for billing Medicaid for scheduled transports that were cancelled before they occurred. The defendant was sentenced to five years probation and ordered to pay $315,000 restitution to Medicaid, a $5,000 fine and $5,000 in investigative costs.

To read the entire annual report, go to: http://oig.hhs.gov/publications/docs/mfcu/MCFU2003.pdf.

July 19, 2004
OIG Audit Says Ohio DSH Program ‘Exemplary’
A recently released Office of Inspector General (OIG) report found Ohio’s oversight and administration of the Medicaid disproportionate share hospital (DSH) program were exemplary. The report, which was performed as part of a multistate initiative requested by the Centers for Medicare & Medicaid Services, also found the calculations of hospital DSH limits and payments under Ohio’s Hospital Care Assurance Program (HCAP) were accurate and consistent with federal requirements. To view the complete report, go to www.oig.hhs.gov/oas/reports/region5/50100058.pdf. (Ryan Biles, ryanb@ohanet.org)

July 14, 2004
CMS Announces Administration Changes
The Centers for Medicare & Medicaid Services (CMS) this week announced changes in its administration. Leslie Norwalk, who had been serving as acting deputy administrator, was named deputy administrator of the agency. In addition, CMS named John Robert Dyer as chief operating officer and Charlene Brown as acting deputy chief operating officer. Brown previously served as deputy director of CMS’ Center for Medicaid and State Operations.

July 13, 2004
Don’t Miss Med Staff Seminar Series
There is still time to register for the second in a series of four telephone briefings, Medical Staff 2004: The Challenges…The Solutions. The second session on July 22 deals with the corrective action process and will address the numerous substantive and procedural issues that arise in dealing with corrective action problems. An outline of the presentation is available at www.bricker.com/LegalServices/Practice/hcare/medicalstaffbrief.asp. OHA encourages registrants to review the outline and submit questions to the presenters at MSQuestions@bricker.com. Questions received prior to July 22 will be considered for inclusion in the briefing. Register for this or the remaining sessions by contacting Kelly Harrison at kellyh@ohanet.org. Find program details or register online at www.ohanet.org/education/education_programs.asp#phone.

July 9, 2004
OHA Comments on Proposed IPPS Rule
OHA this week commented on and made recommendations for specific provisions of the Centers for Medicare & Medicaid Services’ (CMS) proposed 2005 Medicare inpatient prospective payment system (IPPS) rule.
OHA strongly recommended CMS not adopt the proposed changes in the current classification criteria of hospitals-within-hospitals and OHA voiced concern about the effects on hospitals’ Medicare payments of CMS’ proposed adoption of the revised Metropolitan Statistical Areas. In addition, OHA lauded CMS’ effort to address the problem of proving the need to reclassify dominant and single hospitals to other MSAs and offered three potential solutions. OHA also voiced strong opposition to the IPPS Postacute Care Transfer Payment Policy and its possible expansion. To view OHA’s comment letter, go to www.ohanet.org/advocacy/federal/ and look under the “Regulatory Alert” section.
 

July 9, 2004
OHA Comments on Proposed Resident Redistribution
OHA this week sent a letter to the Centers for Medicare & Medicaid Services (CMS) on behalf of Ohio’s teaching hospitals and health systems to comment on the proposed redistribution of unused resident slots. Under the Medicare Modernization Act (MMA), CMS must redistribute direct Graduate Medical Education and Indirect Medical Education resident slots from hospitals not using their full allotment.

OHA asked CMS to consider additional priorities in determining the redistribution of unused residency slots and also requested CMS keep redistributed slots within the geographic area or state from which they were moved. Redistributing slots within the same area would maintain stability in residency programs while fulfilling the intent of MMA. CMS is expected to release the final FY 2005 Medicare Inpatient Prospective Payment System rule by the end of August. To view OHA’s comment letter, go to www.ohanet.org/advocacy/federal/ and look under the “Regulatory Alert” section. (Jonathan Archey, jonathana@ohanet.org)
 

July 7, 2004
OHA To Hold Compliance Phone Briefing
OHA’s Center for Education will hold a phone briefing, Assisting the Medical Staff: Compliance and Practicalities, at 11 a.m. on July 13. The briefing will discuss the financial relationships between hospitals and their medical staff and the compliance issues associated with these relationships.

The briefing is part four of a seven-part series to assist chief financial officers, chiefs of medical staff, physician recruiters, business development directors, planning and marketing practitioners, compliance officers and others in dealing with rapidly-changing compliance issues. For registration and other information, visit www.ohanet.org/education/education_programs.asp. Contact the Center for Education about continuing education hours at 614.221.7614.
 

June 23, 2004
OHA Comments on Stark II, Phase II Regulations
On June 23 OHA sent a comment letter to the Centers for Medicare & Medicaid Services (CMS) regarding the second phase of CMS’ final regulations addressing physician referrals to entities with which they have a financial relationship, which was published in the March 26 Federal Register.

CMS says the interim final regulation is intended to protect beneficiaries and taxpayers from abusive referral patterns, but OHA argues the regulation would cause undue burden on hospitals and interfere with patients’ access to care if modifications are not made. OHA commented on two major issues within the regulation -- the physician recruitment exception and the obstetrical malpractice insurance subsidies exception. Although OHA supports the physician recruitment exception, it requests CMS reconsider its interpretation of income guarantees and include the recruitment of non-physician practitioners in the exception, ensuring patients’ access to care in many communities. In addition, OHA requests CMS revise the exception for obstetric malpractice insurance subsidies in health shortage areas to permit compensation for all physician specialties in all areas.

OHA, in conjunction with Bricker & Eckler, LLP, will hold a related educational program, “The Stark Reality,” July 23 in Dublin. Register for the full-day conference at www.ohanet.org/education/education_programs.asp.

For more information about CMS’ final Stark II, Phase II regulations, go to www.cms.hhs.gov.

Read a copy of OHA's comments.

June 8, 2004
OIG Revises Compliance Guidance for Hospitals
Today the Office of Inspector General for the Department of Health and Human Services (OIG) issued supplemental compliance program guidance for hospitals. The OIG acknowledges many hospitals have already devoted substantial resources to compliance efforts and establishing compliance programs. For those hospitals, the supplemental guidance "may serve as a benchmark or comparison against which to measure ongoing efforts and as a roadmap for updating or refining their compliance plans." Published as a notice open for comments until July 23, the guidance is intended to be used collectively with the original hospital compliance guidance published in February 1998. Please forward comments on the guidance to OHA on or before July 16. The Federal Register notice is available online.

January 30, 2004
CMS Releases HIPAA Provider Identifier Rule
The Centers for Medicare & Medicaid Services (CMS) last week released a final rule establishing the National Provider Identifier as the standard unique identifier for health care providers to use when processing claims and in other transactions. The identifier is expected to improve efficiency and reduce costs by eliminating the need for providers to maintain, track and use multiple identification numbers as assigned by the various health plans they bill. Each provider will be assigned its own identifier number.

The final rule was published in the Federal Register Jan. 23 and goes into effect May 23, 2005. Most providers required to submit standard electronic transactions under the Health Insurance Portability and Accountability Act (HIPAA) must obtain and begin using their National Provider Identifier in standard transactions by May 23, 2007. Small health plans have until May 23, 2008 to comply. Non-HIPAA-covered providers may obtain an identifier, but are not required to. CMS said providers need not apply for an identifier at this time, but will receive information on the application process closer to the effective date.

January 2, 2004
CMS Head Named
U.S. Department of Health and Human Services Secretary Tommy Thompson has named Dennis Smith as interim head of the Centers for Medicare and Medicaid Services following the Dec. 15 resignation of Tom Scully as administrator. Smith will serve as acting administrator until a new administrator is sworn in. For more, see the announcement at www.hhs.gov.

December 10, 2003
Massive Medicare Prescription, Reform Bill Signed Into Law; OHA Seminar Scheduled for Jan 8
This week, President Bush signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003, starting a ten-year, $400 billion update to Medicare that represents the most sweeping set of changes in policy and coverage since the program began in 1966. A copy of the law can be accessed at http://frwebgate.access.gpo.gov/. OHA has also posted a detailed review of the contents with links to key provisions at http://www.ohanet.org/advocacy/federal/default.htm.
Details of the 1100+ page bill will take weeks to sort out, but the new law adds a limited Medicare prescription drug benefit, beefs up Medicare managed care and encourages private health plans to participate and compete with Medicare government contractors, adds to the existing Medicare fraud and abuse protections, and streamlines the Medicare regulatory and contracting processes.

The American Hospital Association reports there are some relatively generous payment updates for hospitals and other Medicare providers including:

• Market Basket Update: A full inpatient update for Fiscal Year (FY) 2004. For FY 05-07, a full update for hospitals that submit data for a set of 10 quality indicators.
• Hospitals not submitting would receive updates of Market Basket minus 0.4%.
• Standardized Amount: Beginning 4/1/04, all hospitals will receive the large urban rate in perpetuity; hospitals are currently receiving the rate due to an extension through 3/31/04.
• Wage Index: The 62% labor share for hospitals with a wage index of less than 1 is effective FY05; all other hospitals are held harmless.
• IME: Indirect medical education payments are increased by $400 million through an adjustment of 6.0% as of 4/1/04, 5.8% for FY05, 5.55% for FY06, and 5.35% for FY07. It reverts to current law, 5.5 %, for FY08 and beyond.
• Medicaid DSH: Eliminates DSH “cliff” in FY04 by increasing state allotments by 16% with allotments frozen until approximately 2010. Also, “low-DSH” allotments increase by 16% per year for each of the next five years, adjusted by CPI thereafter.
• Medicare DSH: As of 4/1/04, increases the Medicare DSH cap from 5.25% to 12% for rural hospitals and urban hospitals with fewer than 100 beds.
• Niche Providers: Provides an 18-month moratorium on new specialty facilities while MedPAC and HHS study the issue; prevents existing facilities from adding investors; grandfathers in existing specialty hospitals and those under development prior to the date the House conference report is filed.

The new law contains many smaller changes to the policies and procedures by which hospitals process and are paid for services to Medicare beneficiaries—including what is hoped to be an end to the application of Medicare Local Medical Review Policies for services delivered in emergency departments. Additional information and effective dates will be released as soon as more is known.

OHA will present a detailed overview of the new law at a special seminar, led by Lawrence Goldberg and Larry Oday, two nationally recognized experts in health care law and Medicare payment policy, and the leaders of OHA’s annual October program on Medicare and Medicaid. Mr. Oday is a partner with the Washington law firm Vinson & Elkins. Mr. Goldberg is the director of national affairs for health care for Deloitte.

Registration materials were mailed this week and posted to OHA’s Web site at http://www.ohanet.org. Or you may call OHA’s Center for Education at (614) 221 7614 for additional information. (Charles Cataline, charlesc@ohanet.org, Jonathan Archey, jonathana@ohanet.org)
 

November 7, 2003
OHA Opposes OIG “Usual Charge” Definition
OHA this week sent a letter to the Office of Inspector General (OIG), U.S. Department of Health and Human Services, opposing proposed amendments to OIG exclusion regulations that redefine the terms “substantially in excess” and “usual charges” as outlined in the Sept. 15 Federal Register. OHA contends that OIG’s proposed methodology would be difficult and expensive for hospitals, outweighing in cost and time any benefit to the Medicare program.

The proposed rule would break down “usual charges,” requiring every hospital to establish an average charge for each of thousands of individual items and services. Several hospitals would be unable to meet this requirement, as many of the qualified employees are busy working to implement the data management changes required by the Health Insurance Portability and Accountability Act (HIPAA). Other hospitals would face the significant costs of managing and auditing this data on an ongoing basis. OHA discouraged OIG from pursuing the proposed amendments and will keep members apprised on the issue.

October 17, 2003
OIG Issues Its FY2004 Work Plan
Each year, the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services publishes a Work Plan outlining the various projects to be addressed during the next fiscal year. The Work Plan serves as public notice of the OIG's audit, investigation and enforcement priorities for the coming year. OHA has issued Bulletin 03-021 summarizing the primary projects affecting hospitals and health systems.

September 22, 2003
OIG Releases ODJFS Audits
The Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services recently issued the final reports of two audits of the Ohio Department of Job and Family Services (ODJFS).

The first report reviews Medicaid fee-for-service payments for beneficiaries enrolled in Medicaid managed care. Through a sample, the OIG found that ODJFS made improper payments and identified a portion subject to refund. The OIG recommended that ODJFS audit the fee-for-service payments not included in the initial audit. ODJFS saw much of the error as the result of the Centers for Medicare and Medicaid Services April 2000 mandate to reinstate individuals who lost eligibility based on the loss of cash benefits and resisted additional auditing.

The second audit reviewed the implementation of the Medicaid drug rebate program and found that ODJFS has adequate controls, policies and procedures in place to keep accurate records and safeguard funds, but recommended improvement in collecting interest for unpaid or late payments and dispute resolution. ODJFS disagreed with the findings, citing that drug manufacturers also hold responsibility in calculating interest payments. To view the reports, visit http://oig.hhs.gov/oas/reading/cms03.html#1.

September 4, 2003
CMS Clarifies EMTALA Regulations
The Centers for Medicare & Medicaid Services (CMS) has issued a final rule clarifying hospitals’ obligations to patients under the Emergency Medical Treatment and Labor Act (EMTALA) of 1986.

Hospitals have advocated clarifications to EMTALA for more than a decade, and are lauding the rule as needed and practical guidance. The rule does not remove the obligation of hospital emergency departments to continue to screen and stabilize patients regardless of the patients’ ability to pay, but clarifies that EMTALA applies only to such emergency settings and cases. According to the rule, once a patient is admitted to the hospital, the hospitals’ EMTALA obligations will be deemed satisfied. After admission, inpatient care regulations will continue to apply.

The final rule continues hospitals' obligation to maintain an on-call list, but gives hospitals discretion for how best to do so given limited staffing resources. In situations of national emergency, hospitals will not be penalized if they are forced to transfer patients (due to overflow, etc.) in a way that would otherwise violate EMTALA

The rule is to be published in the Sept. 9 Federal Register and effective Nov. 10, 2003. See a draft of the rule at http://cms.hhs.gov/physicians/default.asp and also a CMS press release at http://cms.hhs.gov/media/press/release.asp?Counter=837.

August 1, 2003
Hospital Billing and Collection Inquiry Heating Up
Hospitals nationwide are bracing for an increase in patient and news media challenges to their billed charges and debt collection practices as a result of a new Congressional probe. The House Energy and Commerce Oversight and Investigations Subcommittee will launch an investigation later this summer that will question whether hospitals routinely charge uninsured patients far more than they agree to accept from government and private payers. The subcommittee will also look into allegations that hospitals’ debt collection practices often verge on the abusive.

The subcommittee asked 20 hospital systems, representing approximately 1,000 individual hospitals, to submit a highly detailed set of data on their billed charges, charity care and debt collection practices in preparation for an official inquiry, tentatively scheduled for late summer. The proposed Congressional investigation has already sparked the news media’s interest in hospital billing and collection procedures, and additional interest from patient advocacy groups is expected to follow.

The American Hospital Association is recommending hospitals prepare in three ways:

• Review your charging methodology. Explore ways you can educate your patients and your community about charges for routine services and any financial obligation they could incur.
• Review your charity care policies. Be sure they are followed consistently, and that everyone who has any contact with your patients, the public and the news media is well versed on them.
• Review your debt collection policies. Be sure they fit with your hospital’s charity care policies and its mission. Don’t set unrealistic payment plans for low-income and uninsured patients. Be sure any collector with whom you do business follows your hospital’s policies; know how they do business.

AHA is preparing additional information and OHA will follow up with a bulletin next week. Questions on the Congressional inquiry can be directed to Jonathan Archey or Charles Cataline at (614) 221-7614, or jonathana@ohanet.org and charlesc@ohanet.org. Questions about the media inquiries can be directed to Tiffany Himmelreich at the above number or tiffanyh@ohanet.org.

June 12, 2003
Congressional Leaders Warn Governors About Medicaid Fraud
Today the Chairs of the House Energy and Commerce Committee, Billy Tauzin (R-LA), the Health Subcommittee, Michael Bilirakis (R-FL) and the Oversight and Investigations Subcommittee, James Greenwood (R-PA), sent a letter to all 50 governors requesting cooperation in a Medicaid abuse investigation the committees plan to commence. The letter cites a General Accounting Office move placing the Medicaid program on its list of government programs at “high risk” of fraud, waste, abuse or mismanagement. The letter also includes an extensive records and information request ranging from identifying the state’s top ten Medicaid providers to descriptions of the state’s Medicaid Fraud Control Unit. View the letter.

June 9, 2003
CMS Finalizes Inpatient Hospital PPS Outlier Payment Changes
In a final rule published in the June 9 Federal Register, the Centers for Medicare and Medicaid Services (CMS) finalized some controversial changes to the methodology by which it pays inpatient hospital prospective payment system (IHPPS) outliers. A copy of the final rule can be accessed at http://www.access.gpo.gov/su_docs/fedreg/a030609c.html, pages 34493–34515.
CMS initially proposed the changes to combat what it alleged was a deliberate attempt on the part of a group of hospitals to manipulate outlier payments by dramatically raising billed charges over a short period of time. As proposed, CMS would process outlier payments twice, first when a Medicare IHPPS bill is first submitted, using the hospital-specific cost-to-charge ratio in place at that point, and again when a final cost-to-charge ratio is determined for the fiscal period in which that admission occurred. If a second, final claim processing results in a reduced outlier payment—which is likely—the hospital has to return the overpayment with interest.

OHA and the American Hospital Association opposed the plan, stating it penalizes all hospitals for the alleged inappropriate activity of some, by forcing hospitals and Medicare contractors to hold open all Medicare patient accounts with outlier payments until final cost-to-charge ratios can be determined and the bills reprocessed. This can take up to four years, and will undoubtedly raise administrative costs.

Hospitals also opposed CMS’ plan to leave the “outlier threshold” (the point at which billed charges on an individual Medicare account are high enough to qualify for outlier payments) so high, it virtually eliminates many hospitals’ ability to qualify for outlier payment in the first place.

CMS’s final rule states hospitals can avoid outlier overpayments by asking fiscal intermediaries to reduce desk-audited cost-to-charge ratios up front, but it keeps in place the concept of processing outlier payments bills twice. CMS admits that the policy will result in increased administrative expense, but doesn’t offer much help, other than to state it will continue to study the issue. CMS, also refused to lower the current, high cost outlier threshold, stating it will reexamine the issue for federal fiscal year 2004, which begins Oct.1, and if appropriate revise the proposed threshold in the coming FFY 2004 IHPPS final rule.

May 29, 2003
OIG Addresses Hospital-Physician Joint Venture in Advisory Opinion
The Office of Inspector General (OIG) of the U.S. Department of Health and Human Services analyzed an MRI joint venture arrangement between a radiology group and a hospital in Advisory Opinion 03-12. In scrutinizing the venture, the OIG noted that radiologists, unlike other physician specialists, are not referral sources. In addition, the hospital certified that it would take steps to limit its ability to direct or influence referrals to the shared facility. Finally, other safeguards put into place by the parties minimize the risk of fraud or abuse.

May 5, 2003
OIG Issues Compliance Guidance for Pharmaceutical Industry
Compliance program guidance for pharmaceutical manufacturers was posted in the May 5, 2003 Federal Register. Often cited as a segment of the health care community vulnerable to fraud and abuse, the pharmaceutical industry represents the 12th subject of compliance guidance by the Office of Inspector General (OIG) of the U. S. Department of Health and Human Services. Click here to view the guidance.

April 10, 2003
OIG and AHLA Partner to Public Compliance Resource for Board Members
The Office of Inspector General of the U.S. Department of Health and Human Services (OIG) has teamed with the American Health Lawyers Association to publish a corporate responsibility and compliance resource for health care boards of directors. The guide includes information about a director’s or trustee’s fiduciary duty and duty of care, along with suggested questions related to corporate compliance for board members to ask the management team in order to demonstrate appropriate oversight.

Download a copy of the publication.

February 13, 2003
OIG Shoots Down Hospital-Physician Joint Venture ASC
In an advisory opinion posted Feb. 13, the OIG refused to approve a proposed ambulatory surgical center (ASC) joint venture.  (AO 03-5.)   The ASC would be owned 49% by a non-profit hospital and 51% by a multi-specialty physician group.  In analyzing the arrangement, the OIG notes generally, “Surgical center joint ventures that include physician-investors in a position to generate surgical business are susceptible to fraud and abuse.”  Yet, in certain limited circumstances, physician-owned ASCs may be acceptable if they meet the OIG’s carefully tailored criteria of a narrow safe harbor designed “to apply only to physicians who are unlikely to use the investment as a vehicle for profiting from their referrals to other physicians.”  In the proposed arrangement, because few physician-investors will actually use the ASC and the potential for cross-specialty referrals is substantial, the OIG warns the parties may be subject to sanctions under the anti-kickback statute.

February 3, 2003
OHA letter to Office of Inspector General of the Department of Health and Human Services about hospital medical staff priv