OIG Issues New Self-Disclosure Protocol for Hospitals

The Department of Health & Human Services, Office of Inspector General (the “OIG”) issued an open letter to health care providers on April 24, 2006, which encouraged hospitals to use the self-disclosure protocol to resolve civil monetary penalty liabilities. The open letter also announced the new self-disclosure protocols (“SDP”). The SDP is to serve as an avenue for resolving physician self-referral and anti-kickback statute violations. The letter also stated that, under certain circumstances, the OIG would impose lesser penalties on providers that use the SDP. The letter is available at http://www.ig.hhs.gov/fraud/openletters.html. For more information on the SDP, please contact Tom Hess.

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Deficit Reduction Act of 2005

On February 8, 2006, President Bush signed the Deficit Reduction Act of 2005 (the “DRA”) into law. The DRA significantly modifies several Medicare and Medicaid provisions. Among other things, the new law accomplishes the following:

The DRA extends the specialty hospital moratorium to later this year.
The DRA authorizes certain gainsharing demonstration projects to test and evaluate gainsharing arrangements between hospitals and physicians.
The DRA provides for an exception of certain caps imposed by the Medicare and Medicaid programs on benefits for outpatient physical therapy, speech-language pathology, and occupational therapy services furnished by providers other than hospitals.
Under the DRA, “capped rental” durable medical equipment items rented after January 1, 2006 may be rented for up to 13 months. In addition, beneficiaries will be given the opportunity to purchase power-driven wheelchairs on a lump-sum basis at the time they receive the wheelchair. After the rental period is completed, the title to the durable medical equipment transfers to the Medicare beneficiary.
The DRA imposes a 36-month limit on the amount of time that oxygen equipment may be rented. Again, after the rental period ends, the oxygen equipment is transferred to the Medicare beneficiary.
The DRA increases the penalty for hospitals that do not submit quality of care data.
The DRA eliminates the 4.4 percent reduction in payments for physicians’ services that went into effect on January 1, 2006. Payment will remain frozen at the 2005 level.
The DRA limits payments for certain procedures performed in ambulatory surgery centers.
The DRA limits reimbursement for the technical component of certain imaging services.
Every entity that receives at least $5 million in Medicare payments annually is required to establish fraud and abuse policies by January 1, 2007.

For more information on the DRA, please contact Tom Hess or Priya Bathija.

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Another Tool to Eliminate Part D Hassles

Many Medicare beneficiaries are turning to their doctors for guidance in choosing the program that will provide them with the drugs they need and for authorizations and exceptions to plan formularies. Fortunately, there are resources that help physicians assist patients from a clinical standpoint and on Medicare Part D in general.

The latest resource is a one-page form developed by the American Medical Association (the “AMA”) on which doctors can request prior authorizations and exceptions to plan formularies for patients. This form is available at: http://www.ama-assn.org/go/medicarerx. The document requires the doctor to give identifying information about the physician and beneficiary, the patient’s medical diagnosis and recommended drug therapy, and the reasons why the doctor believes a covered drug will be harmful or less effective. The AMA, health plans and Centers for Medicaid and Medicare are heavily promoting the form and believe that it will help both physicians and patients cut unnecessary paperwork and get prescriptions faster.

For a more comprehensive list of the Medicare Part D resources available to physicians please see our guide to Medicare Part D Resources which is available at http://www.bdblaw.com/new/H&MReporterVol2Iss2.asp, or visit the CMS website at www.cms.hhs.gov. For more information on Medicare Part D, please contact Shila Nalawadi or Priya Bathija.

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Changes for Imaging Joint Ventures

The Stark laws, which govern physician self-referral for Medicare and Medicaid patients, are going to become a major obstacle for physicians who have invested in imaging joint ventures. As of January 1, 2007, both nuclear medicine and PET scans will be officially added to the designated health services list, which could cause investors to face hefty fines.

In order for physician-investors to continue referring patients under imaging joint ventures, they must ensure that the arrangements fall under a Stark exception. If physician-investors are unable to restructure under such an exception, they will be forced to sell their interest in the venture. Physician-investors should be cautious when selling entities in which they have a working financial relationship, because they are still in danger of violating Stark. One way to avoid such a violation is to fall under the isolated transaction exception.

If physician-investors refuse to fall under either exception they can no longer refer Medicare or Medicaid patients to the imaging centers they own. This will require physicians to monitor their referrals much more closely. Physician-investors must also realize that they could still be violating Stark by referring a patient whose private insurance company covers the service, if that patient has Medicare listed as a secondary payer. Physician-investors may also be in trouble if either the private insurer or state laws similar to Stark prohibit self-referrals.

As a result of these pending changes, physician-investors in imaging centers should evaluate whether they are in compliance with the Stark exceptions or if more procedures should be in place before referring patients to imaging centers. For more information on physician investment in imaging centers or the Stark exceptions mentioned above, please contact Don Antrim or Joe Feltes.

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Ohio Merit Rule is Challenged

A case pending before an Ohio Appeals Court may determine the fate of Ohio’s merit rule. Ohio Rule of Civil Procedure 10(d) requires that all medical liability complaints be accompanied by an affidavit of an expert witness verifying the viability of the action. The expert is to be a medical expert in the same field as the alleged negligence who has reviewed the medical record.

The purpose of Rule 10(d) was to reduce the number of frivolous medical negligence lawsuits. While Ohio law has always required plaintiffs to have a medical expert testify in a case about the standard of care, this affidavit helps to determine at the outset whether there is a reasonable basis for the case to proceed.

The pending Ohio Court of Appeals decision has the potential to both minimize the effect of the rule and erode its importance.[1] The court will ultimately decide whether the trial court erred in allowing a plaintiff to file a medical liability case without properly filing the required certificate of merit. If the court allows the plaintiff to file in the absence of an already existing exception to the rule, the law will fail to fulfill its purpose.

The court has yet to make a final determination in the case. However, the court’s interpretation of the rule has the potential to seriously affect the scope of medical negligence lawsuits.

For more information on the impact of this case on the merit rule, or the merit rule itself, please contact Philip Howes.

[1] Banfield v. Bordelt (Mahoning County Court of Appeals)

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Competitive Acquisition Program for DME

CMS recently filed a proposed rule that will phase in a competitive acquisition program (CAP) for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) under Medicare Part B. The new rule will eventually require CMS to move from the use of fee schedules to competitively bid contracts. This new rule will apply to certain items of durable medical equipment (DME), enteral nutrition, and off-the-shelf orthotics. The proposed rule will also change the Medicare payments for oxygen equipment and certain rented DME enacted in the Deficit Reduction Act of 2005. If enforced, the new rule will also establish a fee schedule for home dialysis supplies and equipment that are still paid on a reasonable charge basis.

Under this proposed rule, suppliers in a competitive bidding area would submit bids for selected items, and CMS would use these bids to establish Medicare payment amounts for these items. The proposed rule allows suppliers whose bids are lower than the Medicare payment amounts to offer a rebate to beneficiaries, lowering their costs for acquiring the DME items they need. The rule also requires that beneficiaries who live in a certain competitive bidding area will be permitted to obtain DMEPOS only from contracted suppliers. This provision also applies to beneficiaries who permanently reside outside of a competitive bidding area but visit that area to obtain their DMEPOS.

Although the CAP is not projected to be completely operational until after 2009, it will be implemented in several metropolitan areas by 2007. For more information on the development of the proposed rule, and its applicable geographic and equipment-specific exemptions, contact Priya Bathija.

Thomas Hess, Buckingham Columbus^SM, was re-appointed to the Board of Examiners of the Nursing Home Administrators (BENHA) by Governor Taft. Also, Mr. Hess was interviewed by Columbus Business First. The interview involved, in part, the difference between marketing of and soliciting for legal services and what is ethically permissible.

August - Stephen P. Griffin, Buckingham Canton^SM, will be presenting to the Medical Faculty of The Ohio State University Medical Center. His topic is on "Giving Testimony in a Malpractice Case, at the Request of the Attorney General's Office." On October 18, Mr. Griffin will also be speaking at the Physician Insurers Association of America (PIAA) Claims/Risk Management Workshop at The Hershey Hotel. His topic is about a case he defended in Summit County Common Pleas Court having to do with "Chronic Pain Management."

Joe Feltes, Buckingham Canton^SM, spoke at the Ohio State Bar Association's Annual Convention. His topic was "Spam I Am (Not): Adventures and Misadventures Involving E-mail and the Internet. What It Means to Us and Our Clients!" Mr. Feltes also presented with Christopher S. Humphrey, Buckingham Canton^SM, at the Akron General Medical Center's Grand Rounds on "Pay-for-Performance."

Mark Frasure, Buckingham Canton^SM, and Thomas Hess, Buckingham Columbus^SM, spoke at a Lorman Education Services seminar in Akron, Ohio. Their topic was “Management of Medical Records in Ohio.” Mr. Hess also presented at an Ohio Health Care Association training seminar in Columbus, Ohio. His topic was "Advance Directives."

G. Brenda Coey, Buckingham Canton^SM, presented a seminar on "Three Major Issues Impacting Long-Term Care Providers: Falls, Wounds, and Elopement" at Menorah Park Center for Learning.

Richard Milligan, Buckingham Canton^SM, was a guest speaker at Bill Emley’s Stark County Bar Association’s installation luncheon, speaking on Ethics and Professionalism. Joining him on the panel of speakers was the Honorable Sara Lioi of the Stark County Court of Common Pleas; Jonathan Coughlan, Disciplinary Counsel for the Supreme Court of Ohio; Jonathan Marshall of the Board of Commissioners on Grievances & Discipline; and Denise Platfoot Lacey, secretary of the Supreme Court Commission on Professionalism.

Ronald Wilt and Robin Bravchok, Buckingham Cleveland^SM, gave a presentation for the Northeast Ohio Ultrasound Society in Independence, Ohio. Mr. Wilt discussed "Recent Changes in Malpractice Laws, Including a Case Law and Legislative Update." Ms. Bravchok's topic was "Basic HIPAA Issues."

If you are interested in obtaining information on upcoming seminars or would be interested in having speakers from BDB make a presentation to your organization, please contact: Lorna J. Henderson, Client Relations Administrator, at 800.686.2825 ext. 86473 or lhenderson@bdblaw.com.