News & Insights


October 31, 2016

Health Headlines – October 31, 2016

Oncology Practice Agrees to Pay $5.3 Million to Settle Copayment Waiver Case – A New York State hematology-oncology medical practice (the Practice), has agreed to pay $5.3 million to resolve allegations that, over an approximate five-year period, it provided kickbacks to patients in the form of waived copayments, and overbilled federal healthcare programs for certain evaluation and management (E&M) services.  A former billing representative for the Practice filed the lawsuit in April 2014 in the Southern District of New York pursuant to the qui tam provisions of the False Claims Act, and both the United States and State of New York intervened simultaneously with settlement. 

The Practice admitted to certain conduct in the Stipulation and Order of Dismissal (the “Stipulation”), including that it:

1.   routinely waived Medicare beneficiaries’ copayments applicable to E&M codes 99211-99215 (which indicate various degrees of evaluation and management of established patients when making in-office visits for treatment), without an individualized determination of financial hardship or exhaustion of reasonable collection efforts;

2.   billed Medicare for amounts that included the amounts of the waived copayments, resulting in higher reimbursement from Medicare than the Practice was entitled;

3.   overbilled Medicare and Medicaid by billing for E&M services (CPT codes 99211 or 99212) in addition to billing for routine procedures (e.g., chemotherapy, injections or venipuncture) on the same date, even though the Practice had not documented that it provided any significant, separately identifiable services; and

4.   billed Medicare for E&M services (CPT codes 99211 and 99212) without documenting in the medical record that those services were medically necessary and/or actually performed.
With respect to routinely waiving copayments, longstanding guidance from the HHS Office of Inspector General explains that providers may, in individualized circumstances, waive a patient’s copayment based on an individualized determination of financial hardship.  Providers cannot, however, routinely apply the financial hardship exception, and, except in special cases, should make good faith efforts to collect deductibles and copayments.  According to the United States’ Complaint-In-Intervention (the Federal Complaint), the Practice consistently waived copayments without receiving any supporting documentation or additional information from patients, including those who sought frequent medical services from the Practice, who had a high balance, whose insurance did not pay certain amounts or who expressed an inability to pay. 

With respect to E&M billing, as alleged in the Federal Complaint, the CPT codes relevant to certain treatments billed by the Practice, such as the administration of infusions, injections and chemotherapy, already include E&M code 99211, and, therefore, that code cannot be “unbundled” and billed separately.  A higher complexity E&M code can be billed, but only if there is a significant and separately identifiable E&M service that is above and beyond the usual work for the procedure.  According to the Federal Complaint, the Practice separately billed E&M codes 99211 or 99212 for patients who received minor or routine services administered by a nurse, such as B12 injections, blood withdrawals or chemotherapy, but who did not see a physician.  Despite this, the Federal Complaint alleges that the Practice’s physicians would complete and sign progress notes certifying that they had participated in the evaluation and management of these patients for a specified amount of time.     

The Practice will enter into a Corporate Integrity Agreement with the OIG in exchange for a release by the OIG from any administrative action seeking to exclude the Practice from federal healthcare programs.  

For a copy of the Stipulation, please click here.  For a copy of the Federal Complaint, please click here.  For a copy of DOJ’s press release announcing the settlement, please click here

Reporter, Kerrie S. Howze, Atlanta, +1 404 572 3594,

CMS Announces Progress in Shift Toward Alternative Payment Models – This week, CMS announced several important developments relating to provider participation in alternative payment models (APMs).  On October 25, 2016, CMS released a fact sheet summarizing key developments relating to APMs and touting CMS’s progress to date.  CMS also announced that it will  re-open two APMs for Medicare providers in 2018, the Next Generation Accountable Care Organization (ACO) model and the Comprehensive Primary Care Plus model.  Further, CMS announced that in 2017 the Oncology Care Model with two-sided risk will qualify as an Advanced APM model.  

CMS’s fact sheet also emphasizes its progress toward the specific delivery system reform goals it announced in January 2015.  One of those goals was to tie 30 percent of Medicare payments to APMs by the end of 2016.  According to CMS, it met this goal at the beginning of 2016, eleven months earlier than targeted. 

CMS’s announcement comes in conjunction with a conference held by the Health Care Payment Learning & Action Network (LAN), a public-private partnership sponsored by CMS.  According to an October 25, 2016 report released by LAN, nearly 25 percent of Medicare Advantage, Medicaid, and commercial payments are now made through APMs.  HHS Secretary Sylvia Matthews Burwell spoke at the conference, reiterating CMS’s progress toward transitioning to APMs and also lauding State and commercial payors’ efforts to similarly move toward APMs.

Reporter, Isabella E. Wood, Atlanta, + 1 404 572 3527,

U.S. Senate Finance Committee Introduces Draft CHRONIC Care Bill – On October 27, 2016, the U.S. Senate Finance Committee released a discussion draft of a bill that seeks to improve treatment for Medicare beneficiaries with chronic illnesses, with an emphasis on increased payment for home care and telehealth.  

Senators of the bipartisan Chronic Care Working Group (CCWG) – Orrin Hatch (R-UT), Ron Wyden (D-OR), Johnny Isakson (R-GA), and Mark Warner (D-VA) – released a discussion draft of the Creating High-Quality Results and Outcomes Necessary to Improve Chronic Care Act of 2016 (CHRONIC Care Act).  According to the Section-By-Section Summary, the discussion draft seeks to:
  • Extend the Independence at Home Demonstration Program from five years to seven years, increase the number of participating beneficiaries from 10,000 to 12,000, and “allow practices up to three years to receive a shared savings payment before they are terminated from the demonstration”;

  • Expand access to home dialysis therapy by increasing the number of originating sites from where a beneficiary may receive an assessment via telehealth;

  • Allow individuals with end-stage renal disease to enroll in a Medicare Advantage plan;

  • Expand the Medicare Advantage value-based insurance design model to allow plans “in any state to participate in the model during the testing phase to determine whether savings are achieved without negatively impacting quality”;

  • Allow a Medicare Advantage plan “to offer a wider array of supplemental benefits to chronically ill enrollees”; and

  • Expand the use of telehealth services for Accountable Care Organizations (ACOs), for Medicate Advantage plans, and for beneficiaries with stroke.

Also on October 27, 2016, the senators submitted a letter, which details the CCWG’s efforts since the group’s inception in 2015, to the Secretary of HHS and the Acting Administrator of CMS.

Reporter, Brittany Strandell, Atlanta, +1 404 572 2796,

Also In The News

CMS Releases 2017 Final Rule For ESRD Prospective Payment System – On October 28, 2016, CMS released the final rule for the End-Stage Renal Disease (ERSD) Prospective Payment System (PPS) that updates and makes revisions to the ERSD PPS and finalizes policies for coverage and payment for renal dialysis services furnished by an ERSD facility to beneficiaries on or after January 1, 2017.  The rule also sets forth requirements for the ERSD Quality Incentive Program (QIP), including the inclusion of new quality measures beginning with payment year (PY) 2020 and provides updates to programmatic policies for the PY 2018 and PY 2019 ESRD QIP.  The rule is scheduled to be published in the Federal Register on November 4, 2016.  A copy of the unpublished PDF version is available here.

Average Benchmark Premiums Under the ACA Expected to Increase 25 Percent in 2017 – On October 24, 2016, the HHS Office of the Assistant Secretary for Planning and Evaluation issued a research brief confirming the widely-reported sharp increases in premiums expected for 2017.  The research brief shows that across the 39 states using the platform, the average increase in the second-lowest-cost silver plan (the benchmark for premium tax credits) is 25 percent.  The average increases in 2015 and 2016 were only two percent and seven percent, respectively.  The research brief contends that “notwithstanding higher benchmark premium increases than in previous years, the majority of consumers will continue to have access to affordable coverage because they are protected by the combination of financial assistance and the ability to shop.”  The HHS research brief is available here.

Dan Hettich to Speak at November 4 AHLA Webinar on “Stacking” Rural and Wage Index Reclassifications – King & Spalding partner Dan Hettich will be a featured speaker at an American Health Lawyers Association webinar November 4, 2016 (2:00 – 3:30 PM Eastern) titled “Should My Hospital Reclassify as Rural?  The Risks and Rewards of ‘Stacking’ Rural and Wage Index Reclassifications Under CMS’ New Policy.” The webinar will address the following topics: the benefits of stacking reclassifications, including relaxed requirements to qualify for geographic reclassification to an area of choice and reduced disproportionate share hospital threshold to qualify for the 340B Drug Pricing Program if the hospital becomes a rural referral center; which hospitals may qualify to take advantage of reclassifications; and potential risks and unintended consequences.  For more information and to register for this webinar, click here