Washington Health Care Update

September 10, 2010 Authors: Mark Faccenda, Selina Coleman


CMS, FTC to Hold ACO Workshop
The Centers for Medicare and Medicaid Services (“CMS”) and the Federal Trade Commission (“FTC”) have indicated that they will jointly hold a workshop open to healthcare industry stakeholders to address issues associated with the implementation of the accountable care organization (“ACO”) program. The ACO program, created under the Patient Protection and Affordable Care Act (“PPACA”) and beginning on January 1, 2012, will feature organizations of hospitals, physicians and other providers, or combinations thereof, agreeing “to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it.” “Topics to be covered during the day-long workshop [include] the antitrust, physician self-referral, anti-kickback, and civil monetary penalty laws related to ACOs.”

The workshop will be held on October 5, 2010 at CMS’s Baltimore, MD headquarters. More information regarding the workshop may be found here. A Federal Register notice regarding the workshop and proposed rulemaking regarding the ACO program are expected to be forthcoming. More information regarding the ACO program may be found here. Mark Faccenda

OIG Issues Advisory Opinion Permitting Sleep Clinic Arrangement
On September 8, 2010, the U.S. Department of Health and Human Services Office of Inspector General (“OIG”) issued Advisory Opinion No. 10-14, permitting an arrangement between a corporation and a hospital under which the corporation proposed to provide “equipment, technology, supplies, and staff necessary to operate a sleep testing facility” at the hospital. While OIG recognized that the arrangement “could potentially generate prohibited remuneration under the anti-kickback statute if the requisite intent to induce or reward referrals of Federal health care program business were present, [OIG would] not impose administrative sanctions.” OIG indicated its interest in applying “[c]areful scrutiny” because “sleep testing services may be particularly susceptible to the risk of overutilization, and because the [proposed arrangement] involves a ‘per-click’ fee structure, which is inherently reflective of the volume or value of services ordered and provided.”

Ultimately, however, OIG recognized that the proposal lacked potential hazards found in other agreements to provide services under arrangements. The protections permitting OIG to approve the arrangement include (1) compensation at fair market value, (2) ownership of the supplier corporation by neither the hospital nor any physicians, (3) a proposal by the corporation to not offer any “supplemental services, such as marketing” to the hospital, and (4) no durable medical equipment, including continuous positive airway pressure (“CPAP”) devices, would be provided by the corporation “to the [hospital], [hospital] patients, or patients tested at the sleep testing facility, directly or indirectly, in connection with the [proposed arrangement.]” Also deemed acceptable was the corporation’s proposal to charge and collect from the hospital per-click fees “regardless of whether the [hospital] ultimately receives reimbursement from the patient or any third-party payor, including Federal health care programs.” The full text of Advisory Opinion No. 10-14 may be found here. Mark Faccenda

ONC Authorized Testing and Certification Bodies Announced
The Office of the National Coordinator for Health Information Technology (“ONC”) authorized the Certification Commission for Health Information Technology and the Drummond Group Inc., effective September 3, 2010, as the first technology review bodies that are authorized to test and certify electronic health record (“EHR”) systems for compliance with the standards and certification criteria that were issues by the U.S. Department of Health and Human Services earlier this year. These organizations have been authorized to perform Complete EHR and/or EHR Module testing and certification. Certification by one of these entities will signify to eligible professionals, hospitals, and critical access hospitals that an EHR technology has the capabilities necessary to support their efforts to meet the goals and objectives of meaningful use. For more information, see the ONC website, here. Lara Parkin

The Health IT Beacon Community Program Adds Two New Communities
On September 2, 2010, two new communities were added to the U.S. Department of Health and Human Services’ Beacon Community Program. They are Greater Cincinnati HealthBridge, Inc. (Cincinnati, OH) and Southeastern Michigan Health Association (Detroit, MI). The Beacon Community Program seeks to demonstrate how health IT-enabled improvements in health care quality, efficiency, and population health are possible, sustainable, and replicable in diverse communities across America. The program includes average three-year awards of $15 million to diverse communities with above-average electronic health record adoption rates and, in most cases, experience with information exchange. Beacon Communities will be evaluated on the extent to which patients receive measurably better care at a lower overall cost. For more information about the Beacon Community Program, please see the Beacon Community Program website, here. Lara Parkin

AHA Says False Claims Act Investigations Target Innocent Billing Errors and Mistakes
According to the American Hospital Association, new investigations under the False Claims Act (“FCA”) are targeting Medicare billing errors, mistakes, and non-culpable overutilization, which the AHA claims was not the intent of recent legislation. In a September 7, 2010 letter, available here, the AHA expressed concern “that aggressive FCA investigations are being initiated upon the discovery of evidence of a mistake or overutilization, making FCA enforcement through negotiated ‘settlement' a self-fulfilling prophecy.” While recent amendments to the FCA give the Department of Justice (“DOJ”) more authority to investigate possible violations, the AHA asserts that the law does not apply to mere billing errors or mistakes.

The AHA specifically expressed concern about the government’s investigation of kyphoplasty, a medical procedure to relieve back pain by stabilizing collapsed vertebrae. In 2008, the DOJ reached a $75 million settlement with a kyphoplasty manufacturer, Kyphon Inc., to resolve allegations that the company misled doctors and hospitals about the medical necessity of admitting a patient after a kyphoplasty procedure. The DOJ is now investigating hospitals for FCA violations involving kyphoplasty, alleging that hospitals overcharged Medicare by unnecessarily admitting patients after these procedures. According to the AHA letter, the government's form letters to hospitals use “the threat of FCA liability as an audit tool.” The AHA is concerned with the government’s treatment of these potential overpayments as FCA cases. The AHA has requested a meeting with the government, and has asked the government to review its ongoing investigations and clarify its oversight authority. Selina Spinos

D.C. Circuit Grants Administrative Stay of Order Prohibiting Federal Funding of Stem-Cell Research
On September 9, 2010, the United States Court of Appeals for the D.C. Circuit granted an administrative stay of the order recently issued by Judge Lamberth that would have a broad impact on the federal funding of embryonic stem-cell research. Judge Lamberth’s August 23, 2010 order preliminarily enjoined the federal government from implementing guidelines that would permit federal funding of projects that use embryonic stem cells, on the basis that the funding of any research “in which a human embryo is destroyed” is prohibited by federal law. In response to the order, the Department of Justice requested Judge Lamberth to grant a stay of the injunction pending resolution of the appellate proceedings. However, on September 7, 2010, Judge Lamberth denied the request. Thereafter, the Department of Justice filed an emergency motion for stay with the D.C. Circuit Court of Appeals. The D.C. Circuit granted an administrative stay, noting that “the purpose of this administrative stay is to give the court sufficient opportunity to consider the merits of the emergency motion for stay and should not be construed in any way as a ruling on the merits of that motion.” To read Judge Lamberth’s August 23, 2010 granting the preliminary injunction, click here. To read the D.C. Circuit’s September 9, 2010 order granting an administrative stay, click here. Peter Leininger

September 27-28, 2010: John Kelly will be a speaker at the ACI conference regarding Government Investigations for Life Sciences, held at The Union League in Philadelphia, PA. He will be participating in a panel discussion entitled "Developing a Critical Action Plan ." ACI has agreed to provide Fulbright clients with a $400 discount. To receive the discount, please contact Dana Rossi here. For additional details regarding the event, please contact Christen Dammer here.