1. April 2012
In This Issue:
Two New OIG Advisory Opinions
OIG Report Criticizes IDTFs
OIG: CMS Must Implement Regulations Governing
Sanctions for Home Health Agency Medicare Violations
Urgent Update Concerning One-Room ASCs
Brach Eichler in the News
HIPAA Corner
FEDERAL UPDATE OIG OKs Arrangement to Operate Website
Displaying Provider Coupons and Ads
OIG Approves GPO Indirectly Owned
The United States Department of Health & Human Services
By Health Care System
Office of Inspector General (OIG) recently issued an advisory
The United States Department of Health & Human Services opinion (Advisory Opinion 12-02) approving an arrangement for
Office of Inspector General (OIG) recently issued an advisory operation of a website that would display coupons and advertising
opinion approving a proposed group purchasing organization from health care providers, suppliers and other entities.
(GPO) arrangement (Advisory Opinion 12-01). Under the Under the proposed arrangement, a corporation would operate a
proposed arrangement, the GPO would be formed as a division website that includes coupons for health care items and services
of an existing limited liability company, which is itself a wholly- and advertising on behalf of individuals and entities operating
owned subsidiary of the governing arm of a national health in the health care industry. The company would contract with
system. The purposes of the GPO would be to, among other physicians and other health care providers and suppliers,
things, utilize the purchasing power of the participants to who would also be subject to “terms of use” as a condition of
obtain discounts and realize efficiencies from suppliers based participation in the website. The terms of use would specify
on collective bargaining power. requirements related to permissible coupons, including a
The OIG concluded that, although the arrangement does prohibition on offering “free service” coupons. Only coupons for
not fit within the Discount Safe Harbor or the GPO Safe a reduced price or a percentage reduction on a designated item or
Harbor, it nonetheless posed little risk of fraud and abuse specific service would be permitted. Coupons could not provide
because of the following: discounts directed only at patient cost-sharing amounts; providers
• he various reporting and notice requirements for distributing
T would be required to give the same discount to third-party payors
excess administrative fees as offered to patients. The company would also sell banner,
pop-up and other advertising on the website to individual and
• ach participant, including an affiliated organization, would
E
institutional providers, as well as drug companies, pharmacies
constitute a separate legal entity
and other entities.
• he parent organization health system and its subsidiaries
T
Although the OIG found that selling advertising space on a
would continue to direct their purchasing volume through
website to health care providers and suppliers that may bill
other, independent GPOs offering better cost values than the
federal health care programs, and posting coupons for health care
proposed GPO
items and services, are two activities that implicate the federal
• he GPO was structured to allow other non-affiliated
T anti-kickback statute, it determined that it would not impose
participants to purchase from the GPO. sanctions because:
For additional information, contact: • he company offering the website is not a health care
T
Joseph M. Gorrell | 973.403.3112 | jgorrell@bracheichler.com provider or supplier
Kevin M. Lastorino | 973.403.3129 | klastorino@bracheichler.com
• ayments from providers and advertisers to the company are
P
not dependent on customer use of the coupons or obtaining
services from the providers
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2. BRACH EICHLER
• he website is publicly accessible; no registration is
T OIG Criticizes CMS for Failure to Publish Regulations
required for use
Governing HHA Sanctions: Urges Action
• here is little risk of overutilization or medically unnecessary
T
care, because the coupons involve no up-front investment The United States Department of Health Human Services Office
by users of Inspector General (OIG) recently issued a report criticizing
Centers for Medicare Medicaid Services (CMS) for not properly
• he coupons would be for a reduced price or percentage
T
fulfilling its obligation to regulate noncompliant home health
reduction that would benefit patients and payors alike
agencies. (0E1-06-11-00401, March 02, 2012.) Under the Omnibus
• he company would give providers and customers information
T Budget Reconciliation Act of 1987 (OBRA), CMS was directed to
necessary to facilitate their compliance with the anti-kickback implement intermediate sanctions for home health agencies out of
discount safe harbor. compliance with Medicare conditions of participation. Intermediate
For additional information, contact: sanctions include civil monetary penalties, payment suspension and
Carol Grelecki | 973.403.3140 | cgrelecki@bracheichler.com appointment of temporary management.
Debra C. Lienhardt | 973.364.5203 | dlienhardt@bracheichler.com Although CMS issued a Notice of Proposed Rulemaking in
1991 in response to OBRA, it never followed through with
implementation and withdrew the notice in 2000. Without
OIG Issues Report: Questionable Billing regulations to implement intermediate sanctions, CMS is left
to pursue the only other alternative penalty: termination from
for Medicare IDTF Services
Medicare. However, as the OIG noted, CMS has rarely used the
The United States Department of Health Human Services termination process and, instead, enforcement has been lackluster.
Office of Inspector General (OIG) issued a report and Thus, OIG urged CMS to make intermediate sanctions a high
recommendations last month regarding questionable Medicare priority, and to complete implementation.
billing practices by Independent Diagnostic Testing Facilities
For additional information, contact:
(IDTFs), a type of provider that offers diagnostic services
Todd C. Brower | 973.403.3103 | tbrower@bracheichler.com
and is independent of physicians’ offices or hospitals.
Lani M. Dornfeld | 973.403.3136 | ldornfeld@bracheichler.com
(OEI-09-09-00380, March 14, 2012.)
The OIG conducted a four-part review of such IDTF claims
among geographic areas — specifically, Core Based Statistical
Areas (CBSAs). The OIG found that (1) twenty high-utilization STATE UPDATE
CBSAs accounted for 10.5% of Medicare Part B payments
for IDTF services despite having only 2.2% of the total Urgent Update Concerning One-Room ASCs
population of beneficiaries; (2) almost four times more
beneficiaries in high utilization CBSAs received IDTF services The New Jersey Department of Health and Senior Services has
than beneficiaries in all other CBSAs; (3) 9% of the IDTFs recently taken the position that one-room surgery centers set up as
that served beneficiaries in high-utilization CBSAs provided general business corporations (i.e., “Inc.’s”) require ASC licensure
90.1% of IDTF services; and (4) high-utilization CBSAs had even if all other criteria for licensure exemption are met (that is,
twice as many claims with at least two questionable characteristics even if the facility in question is limited to one operating room,
as all other CBSAs. owned only by physicians, and used only by its physician owners
or employees). The department’s position is based on Board of
As a result, the OIG recommended that Centers for Medical Examiner rules that do not include “Inc.’s” as permissible
Medicare Medicaid Services (CMS) monitor IDTF claims structures for physician practices. The department argues that if
for questionable characteristics, take appropriate action the entity is not set up as a physician practice, it cannot qualify
when IDTFs submit a high number of questionable claims for the exemption.
and assess whether to impose a temporary moratorium
Upon discovering that a one-room surgery center is set up as
on new IDTF enrollments in CBSAs with high concentrations
an “Inc.,” the department will send a “cease and desist” letter
of IDTFs.
requiring the facility to close and warn that failure to close could
For additional information, contact: subject the center to civil penalties up to $1,000 per day.
John D. Fanburg | 973.403.3107 | jfanburg@bracheichler.com
We have successfully assisted a number of one-room ASCs that
Debra C. Lienhardt | 973.364.5203 | dlienhardt@bracheichler.com
were set up as “Inc.’s” and received “cease and desist” letters to
obtain appropriate corporate designation and avoid penalties.
We have been able to do it in a manner that reduces exposure to
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3. BRACH EICHLER
reimbursement recoupment claims from insurance companies as changes to or discontinue drug or device therapy—in collaboration
much as possible. We have also assisted our clients in changing with physicians. Having proposed these rules before, the State
the corporate designation with Centers for Medicare Medicaid Board of Medical Examiners (BME), together with the Board of
Services. Pharmacy (BOP), have made some changes and have taken another
crack at moving this along.
For additional information, contact:
Mark E. Manigan | 973.403.3132 | mmanigan@bracheichler.com The BME and BOP advocate that jointly developed protocols
John D. Fanburg | 973.403.3107 | jfanburg@bracheichler.com by a physician and pharmacist will help manage a patient’s
medication-related issues and enhance overall well-being. Under
the proposed new rules, before a physician can refer his patient
to a collaborating pharmacist, the physician must have an existing,
Changes to Deficit Reduction Act Certification
on-going relationship with the patient for at least a year, examined
Require Monthly Exclusion Database Checks the patient at least four times or assumed responsibility for
providing management and care of the patient’s condition after
In October 2010, various state agencies including the Office of the
conducting a comprehensive medical history and physical. The
State Comptroller, Medicaid Fraud Division, published a newsletter
joint protocol would give the pharmacist the ability to identify and
governing various background checks that must be completed
manage medication-related problems, make medication changes,
by providers and HMOs. The newsletter advised providers that
order and perform certain tests, and interpret laboratory tests in
they must search various databases concerning licensure and
direct consultation with a physician. Note, however, that payors
exclusions on a monthly basis to ensure employees, contractors or
may decline to cover tests ordered by non-physicians. The rules also
subcontractors are not excluded, unlicensed or uncertified.
provide that the collaborative practice agreement will specify the
Although the newsletter is dated almost 18 months ago and functions and responsibilities, including the scope of practice and
does not carry the force of law, its burdensome requirements did authority, to be exercised by the pharmacist.
not raise concern until recently, with the mailing by the New The proposed rules also contain training and certification
Jersey Office of State Comptroller of the annual form entitled requirements for pharmacists participating in joint protocols.
“Certification of Compliance with Section 6032 of the Federal The BME and BOP are presently soliciting comments to the
Deficit Reduction Act.” (The act requires, among other things, that proposed rules, which are due on May 18, 2012.
health care providers and health care organizations that receive
For additional information contact:
more than $5 million in annual Medicaid funds have compliance
Keith J. Roberts | 973.364.5201 | kroberts@bracheichler.com
policies that inform their contractors that furnish Medicaid health
Joseph M. Gorrell | 973.403.3112 | jgorrell@bracheichler.com
care items or services and their employees about federal and state
anti-fraud and false claims laws and whistleblower protections.)
This year, the State Comptroller is requiring certification that
the provider or facility has a plan in place to complete monthly Brach Eichler In The News
exclusion checks as required by the newsletter. The New Jersey
John D. Fanburg and Joseph M. Gorrell were named New
Hospital Association, agreeing with several of its members, has
Jersey Super Lawyers 2012, a list consisting of only 5% of the
been in discussions with the State Comptroller’s office regarding
lawyers in the state. In addition, Mark Manigan and Isai Senthil
the validity of the newsletter’s overly burdensome requirements,
were named New Jersey Rising Stars 2012. No more than 2.5%
especially in light of the fact the that requirements were issued
of the lawyers in the state are named to the Rising Stars list,
through a newsletter and not the rulemaking procedure. We
which consists of attorneys who are 40 or under, or have been
will continue to monitor this matter and keep you informed.
practicing law for under 10 years.
For additional information, contact: For the second straight year, Mark Manigan was named to
Carol Grelecki | 973.403.3140 | cgrelecki@bracheichler.com NJBIZ’s “Power 50 Healthcare.” According to NJBIZ,
Kevin M. Lastorino | 973.403.3129 | klastorino@bracheichler.com Manigan “continues to grow, as does his influence on health
care policy making. The advocate remains respected on both
sides of the aisle.”
House Calls to Pharmacy Protocols Conor Murphy recently joined the firm’s Health Care
Practice Group.
While physician house calls may largely be a thing of the past,
patients may not have to go to their doctor’s office either when John D. Fanburg will present a “Legislative and Regulatory
it comes to pharmaceutical tinkering. Under new rules recently Update” at the New Jersey State Society of Anesthesiologists 53rd
proposed, pharmacists will be able to dole out—manage and make Annual Spring Meeting on April 21.
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4. BRACH EICHLER
On April 30, Brach Eichler will sponsor “What You Don’t $1.5 million and to implement a corrective action plan to review
Know about the Board of Medical Examiners Can Hurt You: and revise its HIPAA compliance program, conduct regular
Regulations You Need to Know to Protect Your License,” at trainings for employees and perform monitor reviews to ensure
Brach Eichler’s offices at 101 Eisenhower Parkway, Roseland. compliance. This is the first enforcement action resulting from
The program will be moderated by John D. Fanburg, and a breach report required by the Health Information Technology
speakers will include Brach Eichler’s Todd C. Brower, Joseph for Economic and Clinical Health (HITECH) Act Breach
M. Gorrell, Carol Grelecki and Keith J. Roberts, as well as Notification Rule.
Dr. Gregory Rokosz, Senior Vice President for Medical and OCR’s investigation followed BCBST’s November 2009 report
Academic Affairs, Saint Barnabas Medical Center and former that over 50 unencrypted hard drives were stolen from a
President, New Jersey State Board of Medical Examiners. leased facility in Tennessee. The computer drives contained
For more information, contact Alan Levine at alevine@ the protected health information of over 1 million individuals,
bracheichler.com or 973-364-8389. including names, Social Security numbers, diagnosis codes,
Keith Roberts will be a speaker at “PIP Issues for Practitioners,” dates of birth and health plan identification numbers. The
on July 20. government’s investigation revealed that BCBST did not
maintain or implement adequate safeguards to protect
information at the leased facility.
The HITECH Act breach notification rule requires that covered
HIPAA CORNER entities notify the Secretary of HHS and affected individuals
of any breach of unsecured protected health information. If
Department of Health and Human the breach affects more than 500 individuals, notification must
Services Settles With Blue Cross Blue be provided to the media. Breaches affecting fewer than 500
Shield for $1.5 million individuals must be reported to the Secretary on an annual basis.
Since the BCBST breach involved more than 500 individuals,
In mid-March, the Department of Health and Human Services’ BCBST was required to immediately report to the OCR.
(HHS) Office for Civil Rights (OCR) announced it had
For additional information, contact:
reached an agreement with Blue Cross Blue Shield of Tennessee
(BCBST) settling potential violations of HIPAA. As part of the Todd C. Brower | 973.403.3103 | tbrower@bracheichler.com
settlement agreement, BCBST agreed to pay the government Lani M. Dornfeld | 973.403.3136 | ldornfeld@bracheichler.com
Attorney Advertising: This publication is designed to provide Brach Eichler, L.L.C. clients and contacts with information they
can use to more effectively manage their businesses. The contents of this publication are for informational purposes only.
Neither this publication nor the lawyers who authored it are rendering legal or other professional advice or opinions on
specific facts or matters. Brach Eichler, L.L.C. assumes no liability in connection with the use of this publication.
Health Care Practice Group | 101 Eisenhower Parkway, Roseland, NJ 07068 | 973.228.5700
Members
Todd C. Brower | 973.403.3103 | tbrower@bracheichler.com Carol Grelecki | 973.403.3140 | cgrelecki@bracheichler.com
Lani M. Dornfeld | 973.403.3136 | ldornfeld@bracheichler.com Kevin M. Lastorino | 973.403.3129 | klastorino@bracheichler.com
John D. Fanburg, Chair | 973.403.3107 | jfanburg@bracheichler.com Debra C. Lienhardt | 973.364.5203 | dlienhardt@bracheichler.com
Joseph M. Gorrell | 973.403.3112 | jgorrell@bracheichler.com Mark E. Manigan | 973.403.3132 | mmanigan@bracheichler.com
Keith J. Roberts | 973.364.5201 | kroberts@bracheichler.com
Counsel
Richard B. Robins | 973.403.3147 | rrobins@bracheichler.com
Associates
Lindsay P. Cambron | 973.364.5232 | lcambron@bracheichler.com Leonard Lipsky | 973.364.5218 | llipsky@bracheichler.com
Jenny Carroll | 973.364.5223 | jcarroll@bracheichler.com Conor F. Murphy | 973.364.5214 | cmurphy@bracheichler.com
Jordan T. Cohen | 973.403.3144 | jcohen@bracheichler.com Isai Senthil | 973.403.3150 | isenthil@bracheichler.com
Chad Ehrenkranz | 973.364.5234 | cehrenkranz@bracheichler.com Edward J. Yun | 973.364.5229 | eyun@bracheichler.com
Rita M. Jennings | 973.364.5204 | rjennings@bracheichler.com
You have the option of receiving your Health Law Updates via e-mail if you prefer, or you may continue to receive them in hard copy.
If you would like to receive them electronically, please provide your e-mail address to alevine@bracheichler.com. Thank you.
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