Upcoming Indiana Case Will Rule on Hospital Billing of Uninsured Patients - On May 10, the Indiana Supreme Court will hear oral arguments in the case of Abby Allen, et al. v. Clarian Health Partners, Inc., in which the plaintiffs allege that the defendant hospital system’s billing of uninsured patients is unreasonable and unenforceable. The two plaintiffs, both uninsured, received medical care from Clarian North Medical Center, part of the Clarian Health Partners system (now Indiana University Health) (“IU Health”) in 2008 and 2009. Prior to receiving medical services, the plaintiffs each signed a contract guaranteeing payment of the hospital’s charges. Plaintiffs filed a complaint against IU Health in 2010 claiming that IU Health’s allegedly unreasonable charges for uninsured patients constitute a breach of contract since the contract was silent as to the hospital’s fees or charges and Indiana law states that, in the absence of a specific arrangement, only a “reasonable charge” will be implied. Both plaintiffs allege that the charges billed by IU Health for uninsured patients are much higher than the payments accepted from insured patients, and are therefore unreasonable.
The trial court dismissed plaintiffs’ suit for failure to state a claim, but the Indiana Court of Appeals reversed on October 12, 2011. Allen v. Clarian Health Partners, Inc., 955 N.E.2d 804 (2011). In its opinion, the Court of Appeals agreed that plaintiffs had stated a proper claim, that the contracts in question were silent and ambiguous as to IU Health’s fees or charges for the services provided, and that Indiana law required that only a reasonable charge be implied in the contract.
The outcome of the case has potential implications for other hospitals in Indiana. The plaintiffs’ attorney has suggested he will target other hospitals for similar practices with a possible class action suit for claims going back over the past decade. A provision of the Patient Protection and Affordable Care Act limits charges of tax-exempt hospital to uninsured patients to “amounts charged for emergency or other medically necessary care” furnished to individuals eligible for assistance under a hospital’s financial assistance policy. However, this provision does not apply retroactively, nor does it bar patients from litigating past billing practices.
Reporter, Adam Laughton, Houston, +1 713 276 7400, alaughton@kslaw.com.
Medicare Strike Force Team Charges 107 Individuals for Approximately $452 Million in False Billing - On May 2, DOJ and HHS announced charges against 107 individuals, including doctors, nurses and other licensed medical professionals, across the country for allegedly participating in Medicare fraud schemes totaling $452 million in false billing. In addition to making arrests, agents executed 20 search warrants in connection with ongoing strike force investigations. HHS also suspended or took other administrative action against 52 providers following a data-driven analysis and credible allegations of fraud.
According to the DOJ press release, the charges are based on a variety of alleged fraud schemes involving various medical treatments and services, such as home health care, mental health services, psychotherapy, physical and occupational therapy, durable medical equipment (DME) and ambulance services. The defendants charged are accused of various healthcare fraud-related crimes, including conspiracy to commit healthcare fraud, violations of the anti-kickback statutes, and money laundering. “Today’s arrests send a strong message to criminals that the consequences of committing Medicare fraud are serious,” said HHS Secretary Sebelius. “In addition to these arrests, we used new authority from the health care law to stop all future payments to 52 health care providers suspected of fraud before they are ever made. Today’s actions are another example of how the Affordable Care Act is helping the Obama Administration fight fraud and strengthen the Medicare program.” According to the press release, the Medicare Fraud Strike Force coordinated across seven cities to bring about these charges: Miami, Baton Rouge, Houston, Los Angeles, Detroit, Tampa and Chicago. The total fraud associated with the raids represented a record for a single fraud takedown in the five-year history of the strike force program.
The joint DOJ and HHS Medicare Fraud Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud using Medicare data analysis techniques. More than 500 law enforcement agents from the FBI, HHS-OIG, multiple Medicaid Fraud Control Units, and other state and local law enforcement agencies participated in the operation. To view a copy of the press release, please click here.
Reporter, Lora L. Greene, New York, +1 212 556 2174, lgreene@kslaw.com.
Senate Committee on Finance Letter Seeks Input from Health Care Community on Prevention of Fraud, Waste and Abuse - In a May 2 letter, Senate Finance Committee Chairman, Max Baucus (D-Mont), and Ranking Member, Orrin Hatch (R-Utah), along with Senators Ron Wyden (D-Ore), Tom Coburn (R-Okla), Tom Carper (D-Del) and Chuck Grassley (R-Iowa), announced an effort to solicit ideas from health care community stakeholders on how to prevent and fight waste, fraud and abuse in the Medicare and Medicaid programs. The open letter to all members of the health care community invites submission of white papers offering “best ideas, built on years of experience and insight,” and specifically seeks recommendations on: (1) program integrity reforms to protect beneficiaries and prevent fraud and abuse; (2) payment integrity reforms to ensure accuracy, efficiency and value; and (3) fraud and abuse enforcement reforms to ensure tougher penalties against those who commit fraud. Submissions are due by June 29. The Senate Finance Committee expects to release a summary document highlighting key proposals later this year. To access the Senate Finance Committee Press Release and the May 2 letter, click here.
Reporter, Kerrie S. Howze, Atlanta, +1 404 572 3594, khowze@kslaw.com.
K&S Roundtable this Wednesday on Medicare Hospital Payment Issues - On Wednesday, May 9, we will be hosting a Roundtable Webinar to discuss CMS’s proposed hospital inpatient PPS rule for fiscal year 2013, including discussion of changes to quality reporting, the effect of immediate jeopardy findings on value-based purchasing payment, proposed penalties for readmissions, coding adjustments reflected in the update factor, and other matters. In addition, the Roundtable will cover emerging Medicare payment issues. CMS has removed the bar on cost report settlements that has stalled the issuance of appealable determinations for years. Accordingly, hospitals are expecting a flood of “notices of program reimbursement,” the determinations that can be used to initiate appeals, commencing as early as mid-May. Hospitals should consider what issues they want to appeal from those cost report settlements. Among potential appeal issues are:
- Inclusion of Medicare Part C days in the SSI fraction in the Medicare DSH formula
- Treatment of “dual-eligible” patients exhausted days of coverage in the Medicare DSH formula
- Medicare bad debts
- Allowability of Medicaid provider taxes
Speakers will include Dennis Barry, Dan Hettich and Susan Banks from our Washington, D.C. office and Greg Etzel from our Houston office.
You do not have to be a client to participate, and there is no charge. You can register to participate in the Webinar by visiting http://www.kslaw.com/HealthcareRoundtable. We hope you will be able to join us.
This bulletin provides a general summary of recent legal developments. It is not intended to be and should not be relied upon as legal advice.
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