Washington Health Care Update

July 2, 2010 Authors: Cori Annapolen Goldberg, Mark Faccenda, Selina Coleman

Senator Grassley Requests FCA Compliance Information from Leading Pharmaceutical Companies
On June 28, 2010, Senator Charles Grassley (R-Iowa) sent a letter to 16 leading pharmaceutical companies seeking information by July 20 on their False Claims Act (“FCA”) compliance programs, and more specifically, on how the companies ensure that employees who file complaints will not face retaliation. Senator Grassley is the ranking member on the Senate Finance Committee.
 
In his letters, Grassley asked the companies for examples of current FCA policies and educational materials. Requested documents also include the annual number of allegations received by the company's compliance program, any processes for handling employee complaints or allegations regarding false claims, and any information about whether workers who made allegations then complained of unfair treatment or retaliation following their allegations. Finally, Grassley asked each company whether they had updated their compliance programs since the Fraud Enforcement and Recovery Act was passed in 2009. He announced that his appeal to the pharmaceutical companies is based on what he views as their responsibility “to promote a culture where those who speak up about possible fraud are rewarded rather than retaliated against,” as well as a duty to “safeguard the tax dollars that pay for their products.” For more information, click here. Anne McNamara
 

CMS Announces New Clinical Trial Policy and Risk Management Write-Off Policy Regarding MMSEA §111 Reporting Guidelines
On June 10, 2010, the Centers for Medicare and Medicaid Services (“CMS”) announced a policy alert regarding clinical trials. Specifically, the policy addresses the application to sponsors of clinical trials of the Medicare secondary payer (“MSP”) reporting requirements under § 111 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (“MMSEA”). The new clinical policy states that “[w]hen payments are made by sponsors of clinical trials for complications or injuries arising out of the trials, such payments are considered to be payments by liability insurance (including self-insurance) and must be reported.” The new policy appears to clarify that a trial sponsor’s obligation under the MSP reporting requirements attaches when a payment is made for treatment of injuries or complications experienced in a clinical trial, and not when the promise to pay for such treatment is made in connection with an informed consent form or clinical trial agreement, an issue which has been the subject of debate for more than five years.
 
CMS also announced a policy alert addressing risk management write-offs by providers, physicians, and other suppliers, in addition to non-providers and supplier entities. The alert lists three circumstances in which a write-off or the provision of something of value to lessen the probability of a liability claim or to facilitate or enhance customer good will could constitute a reporting obligation. First, if a provider, physician, or supplier has reduced its charges or written off charges to a Medicare beneficiary as a risk management tool, the provider, physician, or supplier must submit a Medicare claim reflecting the unreduced permissible charges and showing the amount of the reduction/write-off as a payment from liability insurance. They cannot report the write-off or value of property provided as a total payment obligation to the claimant under §111 of the MMSEA. Second, if a provider, physician, or supplier has provided property of value to a Medicare beneficiary as a risk management tool when there is evidence or a reasonable expectation that the individual has sought or may seek medical treatment as a consequence of the underlying incident giving rise to the risk, then the entity must report the write-off or value of the property provided as a total payment obligation to the claimant from liability insurance. However, if the value of the property is less than $5000, it need not be reported under § 111 of the MMSEA. Lastly, if any other entity has reduced its charges or provided property of value to a Medicare beneficiary as a risk management tool when there is evidence or a reasonable expectation that the individual has sought or may seek medical treatment as a consequence of the underlying incident giving rise to the risk, then the entity must report the write-off or value of the property provided as a total payment obligation to the claimant from liability insurance. Again, if the value of the property is less than $5000, it need not be reported. For more information, please click here and here. Although not addressed by CMS in its policy alert, any payment to beneficiaries, whether for risk management reasons or otherwise, can also raise issues regarding improper inducements under the Anti-Kickback Act and Civil Monetary Penalties Law. Cori Annapolen Goldberg
 
 
CMS Issues Proposed 2011 Physician Fee Schedule
On June 25, 2010, CMS issued its proposed Physician Fee Schedule for calendar year (“CY”) 2011. The proposed rule contains a 6.1% reduction in physician reimbursement rates in addition to the 21% reduction already set forth under sustainable growth rate (“SGR”) requirements. The recently adopted Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 maintains through November 30, 2010 physician reimbursement rates at a 2.2% increase over previous levels; however, without further legislative remedy, the reductions proposed by CMS and mandated by SGR could be implemented at that point.
 
In issuing the proposed rule, CMS sought to “expand preventive services for Medicare beneficiaries, improve payments for primary care services, and promote access to health care services in rural areas.” “Beginning in 2011, Medicare will cover an annual wellness visit that will offer an opportunity for the physician and patient to develop a more comprehensive approach to maintaining or improving the patient’s health and reducing risks of chronic disease.” The proposed rule also contains payments giving incentives to certain primary care providers.
Comments regarding the proposed rule must be submitted to CMS by August 24, 2010. More information may be found here. Mark Faccenda
 

CMS Issues Guidance on Outpatient Three-Day Payment Window
On June 25, 2010, CMS issued guidance explaining how hospitals should bill for outpatient services provided within three days of an inpatient admission. When services are provided in hospital outpatient departments on either the day of or during the three days prior to an inpatient admission, this is known as the three-day payment window. The recently passed Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 sought to clarify Medicare’s payment policy for these three-day payment windows. The new guidance and legislative changes carry significant revenue implications, and may also affect the national recovery audit contractor (“RAC”) program. The new policy is effective for services furnished on or after June 25, 2010.
 
Under the new policy, a hospital includes as part of its charges for the inpatient hospital stay all charges for diagnostic services and non-diagnostic services related to the inpatient stay that are provided during the three-day window. The June 25 guidance defines the phrase “other services related to admission” as including “all services that are not diagnostic services (other than ambulance and maintenance renal dialysis services) for which payment may be made by” Medicare that are provided by a hospital to a patient either on the date of that patient’s inpatient admission, or during the three days immediately preceding the date of admission unless the hospital demonstrates that such services are not related to such admission.” No changes were made with respect to the billing of diagnostic services.
 
As a follow up to the June 25 guidance, CMS plans to soon issue instructions advising hospitals how to bill for related therapeutic services provided during the three- or one- day payment window. Until the instruction is issued, hospitals are advised by CMS to include charges for all diagnostic and non-diagnostic services that they believe meet the requirements of the three-day payment window provision. According to CMS, “if a hospital believes that a non-diagnostic service is truly distinct from and unrelated to the inpatient stay, the hospital may separately bill for the service, provided that it has documentation to support that the services is unrelated to the admission.” To access the memorandum, click here. Anne McNamara
 

CMS Claims 32 Percent Savings on DMEPOS Under Competitive Bidding Program
CMS announced that in the first round of the Competitive Bidding Program Medicare beneficiaries will realize an average savings of 32 percent for certain durable medical equipment, prosthetics, orthotics and supplies (“DMEPOS”). The Competitive Bidding program will begin on January 1, 2011, in the following nine areas: Charlotte, Cincinnati, Cleveland, Dallas, Kansas City, Miami, Orlando, Pittsburgh, and Riverside. CMS predicts that the Competitive Bidding program will save the government more than $17 billion over the next ten years. In order to take advantage of the savings, Medicare beneficiaries may have to select a new Medicare contract supplier. Nonetheless, CMS will notify beneficiaries if they must change their supplier. Suppliers who wished to participate in the program submitted bids last year, and CMS will announce the winning contractors in September. Those suppliers who have gross revenues of $3.5 million or less will comprise around 48 percent of the suppliers who will be awarded contracts. Those suppliers who are not awarded contracts may reapply for Round Two in 2011. For addition information, click here. India Brim
 
 
CMS Delays Rejecting Claims of Providers Not in Agency Database
CMS delayed the automatic rejection of claims submitted by providers who are not enrolled in the agency's PECOS database on July, 1, 2020. In an interim final rule, available here, CMS required physicians who order or refer covered services to revalidate their enrollment by July 6. Although CMS later announced that providers would have until January 3, 2011, to revalidate by enrolling online in the Provider Enrollment, Chain and Ownership System (“PECOS”), automatic rejection of claims based on orders from unenrolled physicians was slated to begin next week. The new rule will still take effect on July 6, but CMS explained that it will delay automatically rejecting claims from providers not in the database. CMS did not set a date to begin rejecting these claims – for now, submitted claims will continue to be reviewed and paid as before. According to CMS, this deferral reflects its efforts “to ensure that Medicare beneficiaries continue to receive the health care services and items they need.” To read CMS’s press release, click here. Selina Spinos
 
 
 
UPCOMING EVENTS

July 14-15, 2010: John Kelly will be a speaker at the ACI conference regarding Off-Label Communications, held at The Union League in Philadelphia, PA. He will be moderating a panel discussion entitled "Spotlight on Enforcement: New Trends Triggering Off-Label Investigations." ACI has agreed to provide Fulbright clients with a $200 discount. To receive the discount, please enter use the code 839L10.S when registering. For additional details regarding the event, please click here.