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Health Headlines - August 12, 2013

12 Aug 2013

Legislation Introduced in the House Would Amend the False Claims Act – On August 1, 2013, Reps. Howard Coble (R-N.C.) and David Scott (D-Ga.) introduced bipartisan legislation in the House that would amend the federal False Claims Act (FCA) by adding several procedural hurdles that make it more difficult to bring an action against a healthcare provider.  Before even requesting information from a provider in a FCA investigation, the legislation would require the Attorney General to certify that (1) the government agency has examined all regulations, guidelines, and billing instructions relevant to the allegations; (2) such regulations, guidelines, and billing instructions are unambiguous; and (3) the allegations are viable.  The legislation, H.R. 2931, is titled, “Fairness in Health Care Claims, Guidance, and Investigations Act.”

The legislation also would bar an action based on a claim submitted or an overpayment retained with respect to a federal healthcare program if the provider is in “substantial compliance” with a model compliance plan, or if the provider relied in good faith on federal policy, erroneous information provided by an agency, or agency audit findings.  It would raise the plaintiff’s burden of proof from a “preponderance of the evidence” to “clear and convincing evidence.”  Finally, the legislation would require that the amount at issue be material, which is defined as exceeding a proportion (to be established in regulations by the Secretary in consultation with the Secretary of Defense) of the total submitted claims by that healthcare provider during the same calendar year.

In a letter to Rep. Coble dated August 1, 2013, the American Hospital Association immediately expressed its support for the legislation.  A copy of the letter is available here.   H.R. 2931 was referred to the House Committee on the Judiciary upon introduction.   A copy of the legislation is available here.

Reporter, Kate Stern, Atlanta, +1 404 572 4661,

CMS Releases FY 2011 SSI Ratios – CMS has released the FY 2011 SSI data for IPPS hospitals, LTCHs, and IRFs.  This data will be used to determine the disproportionate share adjustment for hospitals and the low-income payment adjustment for IRFs for cost reporting periods beginning in FY 2011.  The change in SSI ratios for IPPS hospitals ranged from -0.30373 to 0.36215 (with one provider receiving a much larger increase of 0.94778).  According to our calculations, the average change across all providers from FY 2010 to FY 2011 is -0.00038.

The FY 2011 SSI Ratios are available from the CMS website by clicking here.  The Medicare Learning Network Matters article discussing the SSI Ratios can be accessed here.

Reporter, Susan Banks, Washington, D.C., +1 202 626 2953,

CMS Releases FY 2015 Hospital Wage Index Development Timetable – CMS has released the Wage Index Development Timetable for FY 2015.  This is the schedule that governs the review and corrections process for hospital wage index values.  According to the Timetable, CMS will release two preliminary wage index files on September 13, 2013, and hospitals must request revisions to their Worksheet S-3 wage data and occupational mix data by November 21, 2013.  This deadline to request revisions occurs earlier than previous years’ deadlines, which typically occurred during the first week of December.

A copy of the FY 2015 Hospital Wage Index Development Timetable is available from the CMS website by clicking here.

Reporter, Susan Banks, Washington, D.C., +1 202 626 2953,

CMS Updates NCD Policies and Procedures – On August 7, 2013, CMS published a notice updating the processes that CMS uses for opening, deciding, or reconsidering National Coverage Determinations (NCDs) for items and services under the Medicare program.  The notice supersedes the 2003 Federal Register notice in which CMS announced its prior procedures for considering NCD requests and issuing NCDs.  The 2013 notice does not alter or amend the regulations governing administrative appeals of NCDs, however.  The King & Spalding Client Alert on the new rule is available by clicking here.

CMS Offers Clarification Regarding Incarcerated Beneficiary Claim Denials – On July 31, 2013, CMS updated its Frequently Asked Questions (FAQs) for all fee-for-service providers related to incarcerated beneficiary claim denials.  Medicare does not cover supplies or services for persons who are incarcerated at the time the services are rendered. 

Effective April 1, 2013, CMS created an Informational Unsolicited Response (IUR) process to identify and perform retroactive adjustments on any previously paid claims that may have been processed and paid erroneously during periods when the beneficiary data in the Medicare Enrollment Database did not reflect the fact that the beneficiary was incarcerated for the date of service.  Following the implementation of the IUR process, CMS identified a significant number of alleged overpayments, released demand letters, and automatically recovered the alleged overpayments.  Subsequently, however, CMS has determined that certain of the incarcerated beneficiary claims may have been denied in error, because the information related to the period of incarceration for certain beneficiaries was not completely accurate.  As a result, CMS is reviewing the data and will make changes to improve the process used to identify periods of incarceration.  CMS is working to identify claims that resulted in recent recovery actions and to correct any inappropriate overpayment recoveries.  Providers are encouraged to appeal any claims that have not been recouped in error to preserve their rights to payment even if CMS is expected to reprocess the claims.

CMS updated its FAQs related to the incarcerated beneficiary claim denial process.  The updated guidance provides:

  • Providers and beneficiaries can appeal the denied claims, including those that are not adjusted by CMS as part of its reprocessing activities.

  • Providers and suppliers should no longer encourage beneficiaries to contact their local Social Security offices in order to have their records updated as a result of this recent issue.

  • Providers should no longer fax information to local CMS Regional Offices; CMS is working to develop processes to resolve the issue.

  • CMS expects the improper claim denials associated with the June and July 2013 incarcerated beneficiaries data will not be resolved prior to October.

  • All claims and accounts receivable will transfer to the incoming MAC if the corrections of recoupments occur after a new MAC has assumed responsibility for a jurisdiction.

  • CMS plans to send a letter to all affected beneficiaries in August 2013 explaining the policy and stating the periods of time during which claims were affected.

Medicare will consider a person to be incarcerated when in prison or jail, but also in a supervised release program, and in certain other situations.  The Medicare Learning Network Matters article (effective April 1, 2013) discussing the IUR process is available here.  CMS’s recently updated FAQs regarding incarcerated beneficiaries are available here.  

Reporter, Juliet M. McBride, Houston, +1 713 276 7448,

ONC Issues EHR Contract Guidance for Providers – On August 2, 2013, the Office of the National Coordinator for Health IT (ONC) issued a notice to the provider community with guidelines for drafting contractual agreements for electronic health record (EHR) products and services.  The guide contains examples of EHR contracts, highlighting particular contractual provisions that providers should bear in mind—indemnification, confidentiality, warranties, liability, dispute resolution procedures, and termination clauses.  In particular, ONC notes that many EHR vendors draft contracts that hold customers (i.e., providers) responsible for all injuries including HIPAA breaches and medical malpractice claims that are caused by the EHR, even if the injuries are the result of bugs or other technical flaws inherent in the EHR product.  ONC’s guide recommends using mutual indemnification clauses, whereby each party assumes liability only for acts that it causes.

The guide is available by clicking here.

Reporter, Christopher Kenny, Washington, D.C., + 1 202 626 9253,

OIG Finds That Medicare Could Save Millions by Strengthening Billing Requirements for Canceled Surgeries – On August 6, 2013, OIG released a report with its findings that in a sampling of 100 hospital inpatient claims involving short-stay, canceled elective surgery admissions, 80 did not meet Medicare’s requirement that the admissions be “reasonable and necessary.”  On the basis of this sample, OIG estimated that Medicare overpaid $38.2 million in Part A payments in CYs 2009 and 2010.

The 80 denied claims in OIG’s 100-claim sample represented overpayments totaling $345,717, for which either (1) a clinical condition was not present on admission; or (2) a new condition requiring inpatient care failed to emerge post-admission.  The $38.2 million extrapolated estimate does not take into account any services related to these admissions that might otherwise have been properly billed under Medicare Part B, potentially reducing this figure.  According to OIG, overpayments occurred because of hospitals’ uncertainty regarding Medicare billing requirements for canceled surgeries and hospitals’ inability to confirm whether admissions were “reasonable and necessary” after surgery cancellations.  OIG also points to CMS’s “too restrictive” billing requirements, which prohibit changing a beneficiary’s status from inpatient to outpatient after discharge.

Accordingly, OIG recommends that CMS:

  • Adjust the 80 sample claims;

  • Clarify in its guidance that a clinical condition requiring admission must be present for hospitals to bill Medicare Part A for cancelled surgery admissions;

  • Assist OIG to resolve the remaining 10,915 non-sampled claims and recover overpayments for these claims; and

  • Instruct Medicare administrative contractors to emphasize to hospitals the need for more robust utilization review of claims involving admissions for canceled surgeries.

CMS generally agreed with OIG’s recommendations, and stated that it will work with OIG to recover overpayments.  A copy of OIG’s Report is available by clicking here.

Reporter, Katy Lucas, Atlanta, +1 404 572 2822,

CMS Seeks Input Regarding Release of Physician Payment Data – On August 6, 2013, CMS published a request for public comments regarding the potential release of Medicare data on payments to physicians.  CMS’s proposed policy on the disclosure of physician payment data is intended to increase transparency and stems from a federal district court ruling in May that lifted a permanent injunction originally issued in 1979 that prohibited the Department of Health, Education, and Welfare (now HHS) from disclosing Medicare reimbursement payments made annually to individual physicians.  CMS is now in the process of evaluating when, and in which circumstances, the public interest in disclosure outweighs the physician’s privacy interest in the information.

CMS makes clear that it does not contemplate the public “disclosure of any information that could directly or indirectly reveal patient-identifiable information,” and specifically seeks input on the following:

  1. whether physicians have a privacy interest in information concerning payments they receive from Medicare and, if so, how to properly weigh the balance between that privacy interest and the public interest in disclosure of Medicare payment information, including physician-identifiable reimbursement data;

  2. what specific policies CMS should consider with respect to disclosure of individual physician payment data that will further the goals of improving the quality and value of care, enhancing access and availability of CMS data, increasing transparency in government, and reducing fraud, waste, and abuse within CMS programs; and

  3. the form in which CMS should release information about individual physician payment if CMS chooses to release it (e.g., line item claim details, aggregated data at the individual physician level).

CMS will accept comments until September 5, 2013.  The request for comments is available here

Reporter, Juliet M. McBride, Houston, +1 713 276 7448,

Medicaid Expansion Plans Not Required to Cover All Drugs  – On July 15, 2013, CMS issued its Final Rule addressing prescription drug coverage for the Medicaid expansion population.  Among other things, the Final Rule defines the scope of the ten applicable “essential health benefits” required for Medicaid expansion plans under the Affordable Care Act, including the minimum requirements for the provision of prescription drugs to these beneficiaries.  For the expansion Medicaid enrollees, states are not required under the Final Rule to cover each “covered outpatient drug” subject to a national rebate agreement.  Instead, states will only be required to cover a minimum of drugs consistent with the applicable “benchmark” plan in the state.  The King & Spalding Client Alert on the new rule is available by clicking here.

A Conversation With A Healthcare Fraud Defense Team:  Current Issues Facing Healthcare Providers – On Friday, August 23, 2013, at 1:00-2:30 p.m. Eastern Time, King & Spalding will host an Atlanta-based Roundtable focused on healthcare fraud and abuse enforcement issues that have arisen in the past year.  The Roundtable is prompted by the increased pace and complexity of government investigations and qui tam suits and evolving areas of interest by regulators. This environment requires careful thought about areas of exposure and opportunities to mitigate risk. Thoughtful and effectively designed compliance initiatives can go a long way in reducing risk, and the panel will discuss lessons learned from recent developments and practical ways to apply this knowledge.

The Roundtable will include the following topics:

  • Trends in Stark enforcement emerging from Tuomey and Halifax.

  • Overview of significant enforcement trends identified from OIG guidance, recent settlements, and CIAs.

  • Discussion of the recent evolution of litigation of False Claims Act cases, including increased assertiveness by relator’s counsel, complicated issues arising from privilege waiver and disclosures during responses to government subpoenas, and the rise of corporate whistleblowers.

  • Outline of the changing nature of quality of care False Claims Act theories, viewed in context of various federal initiatives linking payment to quality.

  • In-person attendance is limited, so please register soon to reserve seats for your organization. You do not have to be a client to attend, and there is no charge.  We are also offering a Webinar option.

You can register to attend in person or by Webinar by visiting  If you are attending in person, lunch will be provided between 12:00 p.m. and 1:00 p.m. if you would like to arrive early for that.  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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