OIG Announces Proposed AKS and CMP Regulations

On October 3, 2014, the Office of the Inspector General (“OIG”) issued a proposed rule codifying into regulation several statutory changes to the Antikickback Statute (“AKS”) and the Civil Monetary Penalty (“CMP”) Law. Nearly all of these changes broaden permissible arrangements for certain health care and health service providers. The OIG is seeking public comment regarding how to best balance the promotion of beneficial arrangements that enhance the efficient and effective delivery of health care and promote the best interests of patients, while simultaneously avoiding payment arrangements that risk abuse of Federal health care programs or program beneficiaries. Comments about these proposed regulations are due to the OIG no later than December 2, 2014 at 5:00 p.m. EST. The proposed regulations in their entirety are available here. Selected proposed changes are described below.

Antikickback Regulations

1.   Cost-Sharing Waiver Safe Harbors. The OIG proposes to codify as regulations AKS safe harbors for certain cost-sharing waivers determined to be low risk to Federal health care programs.

a.   Safe Harbor for Part D Cost-Sharing Waivers by Pharmacies. A pharmacy waiving Part D cost-sharing for a beneficiary would qualify for the safe harbor when:
(i) the waiver is not advertised or part of a solicitation;
(ii) the pharmacy does not routinely waive the cost sharing; and
(iii) before waiving cost-sharing, the pharmacy either determines in good faith that the beneficiary has a financial need or the pharmacy fails to collect the cost-sharing amount after making a reasonable effort to do so.
Conditions (ii) and (iii) do not apply to a subsidy-eligible individual.

b.   Safe Harbor for Cost-Sharing Waivers for Emergency Ambulance Services. Emergency ambulance providers and suppliers that are paid by Medicare fee-for-service and are owned and operated by a State, a political subdivision, or a Federally recognized Indian tribe would receive AKS safe harbor protection for arrangements when:
(i) the ambulance provider or supplier is the Medicare Part B provider or supplier of the services;                                                                                                        (ii) the waiver is offered uniformly, without regard to patient-specific factors;
(iii) the waiver is not the furnishing of free services paid for by a government entity; and
(iv) the provider or supplier bears the cost of the waiver.

2.   AKS Remuneration Exceptions. The OIG proposes to codify as regulations two recent statutory exceptions to the definition of remuneration.

a.   Medicare Coverage Gap Discount Program Exception. Applicable drugs provided at a discount to applicable beneficiaries under the Medicare Coverage Gap Discount Program would be excepted from the AKS definition of remuneration if the drug manufacturer is a compliant participant in the Medicare Coverage Gap Discount Program.

b.   Local Transportation Services Exception. Excepted from the AKS definition of remuneration would be free or discounted local (no more than 25 miles away) transportation made available by an individual or entity to established patients who are Federal health care program beneficiaries for the purpose of obtaining medically necessary items or services when:
(i) the individual or entity providing the transportation services does not primarily supply health care items and bears the cost of the transportation services;
(ii) the availability of transportation services is not determined in a manner related to the volume or value of Federal health care program business;
(iii) the transportation services are not air, luxury, or ambulance-level services; and
(iv) the transportation services are not marketed or advertised and drivers or others arranging the transportation are not paid per beneficiary transported.

Civil Monetary Penalty Regulations

1.   CMP Remuneration Exceptions. The OIG proposes to codify as regulations recent statutory exceptions to the CMP rule definition of remuneration. The proposed regulations additionally provide proposed definitions of terms intended to help interpret these exceptions. Proposed exceptions to the CMP rule definition of remuneration include:

(a)   Reductions by a hospital of the copayment amount for covered outpatient department services to no less than 20% of the Medicare outpatient department fee schedule.

(b)   Remuneration promoting access to care and posing a low risk of harm to patients and Federal health care programs.

(c)   Retailer rewards programs consisting of coupons, rebates, or other rewards from a retailer offering items or services on equal terms to all members of the public and which are not tied to the provision of other items or services reimbursed in any part by Medicare or an applicable State health care program.

(d)   The offer of certain items or services for free or at less than fair market value after making a good faith determination that the recipient is in financial need and when the items or services are not advertised.

(e)   Certain copayment waivers for the first fill of a covered Part D generic drug for beneficiaries enrolled in the Medicare Prescription Drug Plan or the Medicare Advantage Part D Plan.

2.   Gainsharing Prohibition. The OIG proposes codify the statutory gainsharing prohibition that forbids hospitals from knowingly making a payment to a physician as an inducement to reduce or limit services provided to Medicare or Medicaid beneficiaries under the care of that physician. In doing so, the OIG acknowledges that it seeks to strike a balance that interprets the prohibition broadly enough to protect Federal health care program beneficiaries, and narrowly enough to allow low risk programs that further the goal of delivering high quality health care at a lower cost. Furthermore, in the proposed regulations the OIG acknowledges that it has previously allowed certain gainsharing arrangements through its advisory opinion process and that it seeks comment regarding an interpretation of the statute that permits the implementation of low risk, beneficial gainsharing arrangements.

If you have questions about these proposed regulations, or about fraud and abuse compliance for Federal health care program participants generally, contact Heather E. Baird, or any member of the Benesch Health Care Department.

Changes Coming to Nursing Home Compare

The Centers for Medicare and Medicaid Services (“CMS”) has announced that the Nursing Home Compare Five Star Quality Rating System will soon undergo some changes. The rating system has experienced recent criticism for relying too heavily on self-reported data and CMS is taking action. A facility’s star rating, from one to five stars, is based upon three categories of information, “onsite inspections,” “quality measures,” and “staffing levels.” Currently, the only category that is not self-reported is onsite inspection.

To address potential weaknesses in the current system, CMS will be implementing improvements to Nursing Home Compare. Look for increased numbers of quality measures that are not solely based on self-reported data and also for staffing information that will be electronically collected quarterly and verified against payroll records. Also expect the addition of new quality indicators, such as staffing turnover and retention and rate of antipsychotics use. This revised rating system is intended to provide greater transparency and objectivity for individuals seeking information on Nursing Home Compare.

A fact sheet from CMS summarizing these new improvements is available here.

OANO Releases the 2014 Ohio Nonprofit Sector Report

The Ohio Association of Nonprofit Organizations (“OANO”) recently released the 2014 Ohio Nonprofit Sector Report. This report, which Benesch was pleased to sponsor, provides analyses of recent Form 990 data reported by 501(c)(3) organizations in Ohio with at least $50,000 in revenue. It has a wealth information about the state of, and trends in, the Ohio charitable nonprofit sector including data analysis about the number of organizations serving Ohioans, the different industries in which these organizations operate, expenditure information, as well as aggregate wage and employment information for charitable nonprofit organizations relative organizations in other industries. Continue reading

New Hospice Cost Report Released: Effective for Cost-Reporting Periods Beginning Next Week

On August 29, 2014, the Centers for Medicare and Medicaid Services (“CMS”) released the final version of the new Medicare cost report, Form CMS 1984-14, applicable to freestanding hospice providers. Freestanding hospice providers must use the new form for cost-reporting periods beginning on or after October 1, 2014. It is anticipated that similar rules for provider-based hospices will follow. A copy of the new form and instructions for completing the same are available here:

The revised cost reporting form is substantially expanded, and requires, among other changes, that providers report direct patient care costs based on the level of care that was provided. In order to comply with these new reporting requirements, hospices will need to modify their existing chart of accounts. One such modification is to ensure that all costs associated with each of the four different levels of care be kept in separate general ledger accounts. This represents a substantial expansion of hospices’ obligations to document costs in their accounting records. However, this practice will facilitate completion of the following new worksheets: (A) A-1: Continuous Home Care; (B) A-2: Routine Home Care; (C) A-3: Inpatient Respite Care; (D) A-4: General Inpatient Care.

The forms and instructions were revised in accordance with the statutory requirement for hospice payment reform, as required under the Patient Protection and Affordable Act, and to incorporate data previously reported on Form CMS-339, the Provider Cost Report Reimbursement Questionnaire. The expanded data captured by the new cost report will be used in future years to facilitate payment reform.

For more information on new hospice cost report, or related Medicare reimbursement issues, please feel free to contact Dan O’Brien or any member of our health care practice group for a further discussion.

Ohio: Sex Offender Screening Now Required for Long Term Care Facilities

The required date for screening for sex offenders in Ohio nursing homes, licensed residential care facilities and county homes (“Homes”) has now arrived. As of September 15, 2014, these Homes are required to screen for sex offenders including checking the online Ohio sex offender registry prior to admission. Also, if a registered sex offender is admitted, a care plan must be developed to protect other residents and provide a safe envrionment. The Homes must notify the residents and their sponsors of the sex offender’s admssion and provide a descrption of the safety plan. The Ohio Department is mandated by House Bill 483 to implement regulations regarding to these new requirements but as of this date the regulations have yet to be promgulated. Even without published regulations, Homes are required to comply with the new statute. Watch for updates on the sex offender screening requirements as the Ohio Department of Health issues regulations. The sex offender registry link is located at: http://icrimewatch.net/inden.php?AgencyID-55149

One Of The Country’s Largest Hospital Organizations to Pay $98.15 Million Settlement on False Claims Act Allegations

On Monday, August 4, 2014, The Department of Justice announced that Community Health Systems (“CHS”), the nation’s largest operator of acute care hospitals, agreed to pay $98.15 million to settle nine whistleblower lawsuits alleging that the company violated the False Claims Act between January 2005 and December 2010. The whistleblowers alleged that CHS knowingly billed Medicare, Medicaid, and TRICARE for medically unnecessary inpatient admissions rather than the lower outpatient or observation rates at 119 hospitals. Additionally, allegations were made that services were rendered to patients at one of CHS’s hospitals in Laredo, Texas by a physician who was offered a medical directorship in violation of the physician self-referral law, known as the Stark Law.

Under the settlement, CHS entered into a five-year Corporate Integrity Agreement requiring it to retain independent review organizations to review the accuracy of the claims for inpatient services under federal health care programs, and to engage in significant compliance efforts over the next five years.

The allegations against CHS are particularly notable in light of new regulations such as the two-midnight rule, which took effect October 1, 2013. The two-midnight rule requires that physicians deem a patient’s condition as serious enough to require at least two overnight stays in order to qualify for Medicare reimbursement under inpatient rates. Patients who aren’t formally admitted may remain under outpatient or observation status. Emergency and internal medicine physicians often struggle to get the right designation and status for the patient. The federal government has delayed enforcement of the rule until March 31, 2015 at which time hospitals may face financial penalties if auditors determine the hospital could have met the patient’s needs in an outpatient setting.

For more information on the CHS settlement, the two-midnight rule, the Stark Law, the Anti-Kickback Statute, or related fraud and abuse issues, please feel free to contact Daniel Meier or any member of our health care practice group for a further discussion.

You can find a more extensive discussion about the CHS settlement, the impact of observation status on patients and the two-midnight rule in the following Client Bulletin.

Nursing Home Abuse and Neglect Compliance Trails Federal Requirements

The Department of Health and Human Services Officer of Inspector General (“OIG”) released a report this month titled, “Nursing Facilities’ Compliance with Federal Regulations for Reporting Allegations of Abuse and Neglect.” The report examines reporting practices for abuse and neglect in nursing facilities across the country. The OIG study found:

• 85% of nursing homes reported to the OIG at least one allegation of abuse or neglect in 2012;
• 76% of nursing homes maintained policies that address Federal regulations for reporting both allegations of abuse or neglect, and investigation results (95% of facilities maintained policies that address Federal regulations for reporting allegations of abuse or neglect only);
• 61% of nursing homes had documentation supporting the facilities’ compliance with Federal regulations under Section 1150B of the Social Security Act requiring (a) annual notification of covered individuals about their obligation to report any reasonable suspicion of a crime, and (b) the posting of a notice regarding employees’ rights to file a complaint; and
• 53% of allegations of abuse or neglect and the subsequent investigation results were reported as Federally required.

In light of these statistics, nursing homes should thoroughly review their abuse and neglect policies and practices. A robust and thoughtful abuse and neglect prevention program both protects nursing home residents and the facility. The following considerations may be helpful in reviewing a facility’s compliance with abuse and neglect requirements.

• Existing policies should be accessible, understandable, and implementable for all staff.
• Policies should be reviewed to ensure they are consistent with Federal regulations, especially regarding regulatory requirements for reporting investigation results.
• Staff (including owners, operators, employees, managers, agents, or contractors of nursing facilities) must be educated about their reporting obligations in the event of an allegation of abuse or neglect or when they reasonably suspect a crime has occurred in the facility under Section 1150B. Staff must also be notified about their right to file a complaint under Section 1150B of the Social Security Act.
• Remember to carefully document staff education about rights and responsibilities under Section 1150B.
• Verify policies regarding abuse and neglect are correctly and consistently implemented.

The full OIG report is available here: https://oig.hhs.gov/oei/reports/oei-07-13-00010.pdf.