Health Lawyers Weekly:
June 07, 2013 Vol. XI Issue 22
AHA Report Says Hospital Mergers Don’t Harm Competition
Although common perception is that hospital mergers are frequent occurrences, only about 10% of community hospitals, or 551 hospitals, have been part of a merger or acquisition between 2007 and 2012, and the number of hospitals involved in any one of these transactions has been modest, according to a new report from the American Hospital Association (AHA) and the Center for Healthcare Economics and Policy.
The “overwhelming majority” of such transactions “are procompetitive and fully support the twin goals of higher quality and more affordable health care,” the report said.
In 2012, 35% of transactions resulted in an “overlap” of metropolitan statistical areas (MSAs), the report said.
According to the report, almost 90% of such mergers occurred in MSAs with more than five hospitals; only 20 mergers were in areas with fewer than five competitors.
“Hospitals are responding to the call for better coordinated, high-quality care by moving away from a structurally fragmented care system. They are meeting that expectation by building a continuum of care that involves physicians and other caregivers to improve patient care,” said AHA President and CEO Rich Umbdenstock. “Hospitals are collaborating with others ultimately to benefit the patients and communities that hospitals serve.”
AHA Says Proposed Community Health Needs Assessment Requirements More Burdensome Than IRS Estimates
The American Hospital Association (AHA) told the Office of Management and Budget (OMB) in a June 3 letter that the requirements in the recently proposed regulations on community health needs assessments (CHNAs) significantly underestimated the time and resources needed to comply with the rule.
According to AHA, while the IRS in its notice of proposed rulemaking (NPRM) issued April 5 (78 Fed. Reg. 20523) estimated compliance time at 80 hours, charitable hospital organizations subject to the new requirements pegged the figure at as much as 1,000 hours.
“These estimates appear entirely commensurate with the procedures detailed in the proposed regulations,” said the letter, which includes a detailed chart outlining the steps hospitals would have to take to implement the requirements.
The NPRM provides guidance on the CHNA requirements, and related excise tax and reporting obligations, enacted under the Affordable Care Act (ACA). The proposal also clarifies the consequences for failing to meet the new ACA requirements.
The ACA added Section 501(r) to the Internal Revenue Code of 1986 as amended, which contains new requirements for tax-exempt hospitals. Section 501(r)(3) specifically requires a hospital to conduct a CHNA at least once every three years and adopt an implementation strategy to meet the community health needs identified through the CHNA. Section 4959 imposes a $50,000 excise tax on a hospital organization that fails to meet the CHNA requirements for any taxable year.
AHA said the NPRM includes a collection of information (COI) that is subject to review by OMB pursuant to the Paperwork Reduction Act.
According to the letter, while the NPRM improved on previous guidance, “many of the requirements continue to be extremely detailed and in some instances very prescriptive."
AHA said it plans to provide comments directly to the IRS on the NPRM by the July 5 deadline.
Before approving the COI, “AHA urges OMB to evaluate the time commitment and commensurate costs imposed on hospitals.”
AHRQ To Test Consumer Reporting System For Medical Errors
The Agency for Healthcare Research and Quality (AHRQ) plans to implement a consumer reporting system for medical errors that would design and test a system for collecting information from patients about healthcare safety events.
AHRQ’s June 6 Federal Register (78 Fed. Reg. 34101) notice asked the Office of Management and Budget (OMB) to approve the proposed information collection project.
In the notice, AHRQ said it “recognizes that the unique perspective of health care consumers could reveal important information” about safety events that healthcare providers do not report.
AHRQ said it has developed a prototype Consumer Reporting System for Patient Safety (CRSPS), which is designed to collect information from patients about medical errors resulting or nearly resulting in harm.
“The purpose of this project is to test the prototype for its ability to record data from consumers about patient safety events defined as an incident or near miss by the AHRQ Common Formats,” the notice said.
CBO Report Examines Policies Aimed At Dual Eligible Population
In 2009, federal and state healthcare spending for the 9 million dual-eligible beneficiaries totaled more than $250 billion, the Congressional Budget Office (CBO) said in a June 6 report.
So-called “dual eligibles” are people who qualify to receive both Medicare and Medicaid benefits, according to the report, Dual-Eligible Beneficiaries of Medicare and Medicaid: Characteristics, Health Care Spending, and Evolving Policies.
While all dual eligibles qualify for full Medicare benefits, the amount of Medicaid benefits varies—7 million are “full duals” who qualify for full benefits from both programs and 2 million are “partial duals” who qualify "to have Medicaid pay some of the costs they incur under Medicare," the report explained.
Although dual eligible are a varied group, “a sizable share of full duals, more than 40 percent, use long-term services and supports—a far greater percentage than for other Medicare or Medicaid beneficiaries,” the report noted.
CBO reported that many states are working to eliminate differences in financial incentives for Medicare and Medicaid and to improve the coordination and quality of care for dual-eligible beneficiaries. The report went on to detail several such approaches.
The report also noted "the Affordable Care Act (ACA) created new options for addressing financing and quality-of-care issues for dual eligible beneficiaries," including "a three-year demonstration project to integrate Medicare’s and Medicaid’s financing for full duals," Twenty-six states have applied for the demo, CBO said.
“The impact of such policy changes on the federal budget would be likely to depend on multiple factors, such as how payment rates to providers would compare with the rates under current law, whether certain complex services (such as behavioral health care) would be included in overall payment rates or be paid for separately, and whether beneficiaries’ participation in new models for delivering care would be voluntary or mandatory,” according to the report.
The report also examined some legislative options targeting dual eligible, but noted that “[a]nticipating how legislative actions aimed at dual-eligible beneficiaries would be likely to affect the federal budget is difficult—in large part because considerable uncertainty exists about what spending for dual-eligible beneficiaries will be in coming years even without new legislation.”
CMS Complaint Investigation Process Changes—What Every Hospital With Deemed Status Should Know
By Sandra DiVarco, McDermott Will & Emery LLP*
On April 19, 2013, the Centers for Medicare & Medicaid Services (CMS) released a survey and certification memo identifying a change in the survey process for substantiated complaint surveys (the April Letter). The changes identified in the April Letter materially affect what until now has been a fairly predictable and regimented survey cycle structure for complaint surveys of deemed providers described in the CMS State Operations Manual (SOM).
Prior to issuance of the April Letter, the complaint survey process followed a standard cycle. While there were certain additional nuances, the general pattern, in summary, was as follows:
Step 1 – Complaint survey based on allegations (from one or more sources) of noncompliance with the Conditions of Participation (CoPs). If noncompliance with the CoPs was identified, a Form 2567 was issued identifying the alleged deficiencies, deemed status was removed, and the facility was subject to Step 2.
Step 2 – Full survey on all CoPs. If noncompliance with the CoPs was identified during the full survey, a Form 2567 was issued identifying the alleged deficiencies, and the facility was to submit a credible plan of correction (POC) identifying its corrective action plans for the findings of the complaint and full surveys. In addition, CMS or the state agency would identify a threatened termination date for the provider’s provider agreement with CMS, typically 90 days from the date of the survey (in cases of immediate jeopardy, the termination date is 23 days post-survey). Once the POC was accepted, the provider moved on to Step 3.
Step 3 – A revisit or validation survey on the CoPs identified as out of compliance during the complaint and full surveys. If this survey revealed substantial compliance with the identified CoPs, the survey cycle would end. If not, providers generally had one more opportunity to come into compliance before the threat of termination of their provider agreement was acted upon by CMS.
Pursuant to the changes set forth in the April Letter, for deemed providers (including most hospitals in the United States), a substantiated complaint survey no longer guarantees that the hospital enters the survey cycle and undergoes a full survey. Whether or not a full survey is done in these instances is now discretionary, with the CMS regional office (RO) at issue making the call.
Factors considered in determining whether a full survey is appropriate include the manner and degree of noncompliance identified, the provider’s compliance history, recent changes in the provider’s ownership or management, whether the resources to conduct a full survey are available in the timeframe needed, and the length of time since the provider’s last accreditation survey. These changes to the SOM were made effective immediately upon release of the April Letter.
The “discretionary” nature of the new survey process means that after the initial complaint survey, an RO may determine whether a full survey is needed. If a full survey is determined to be unnecessary, the provider is still placed on a 90-day (or 23-day) termination track. Deemed status is removed as in the prior process, and a POC is due in 10 calendar days. After a POC is accepted, a revisit survey could occur within 45 days to determine whether or not the provider has come into compliance. This new process, as summarized, is as follows:
Step 1 – Complaint survey based on allegations (from one or more sources) of noncompliance with the CoPs. If noncompliance with the CoPs is identified, a Form 2567 is issued identifying the alleged deficiencies, deemed status is removed, and a provider may move on to Step 2 or instead be placed directly on a termination track, as determined by the RO, with a POC required within 10 days.
Step 2 – If the RO determines it to be appropriate, a full survey of all CoPs is conducted as was the case in the past, as a result of which a termination date would be identified along with the issuance of a Form 2567 if there is a finding of noncompliance.
Step 3 – Revisit or validation survey (within 45 days of the complaint survey if a full survey is not conducted, otherwise following the current schedule for revisits if after a full survey) for substantial compliance with identified CoPs identified in the complaint and full survey (if conducted).
*Sandra DiVarco is a partner in the law firm of McDermott Will & Emery LLP. Sandy focuses her practice on the representation of hospitals and health systems. She has counseled health care facility and system clients regarding all aspects of health law transactions and health system restructuring, and also has significant experience in assisting clients across the country with regulatory, licensure and accreditation issues, including state-level and CMS survey responses, formulation of successful Plans of Correction, Joint Commission complaint responses and EMTALA/regulatory investigations. She can be reached at email@example.com.
HHS Releases Data Sets, Including Medicare Utilization And Spending Data
The Centers for Medicare & Medicaid Services (CMS) released June 3 for the first time data on Medicare spending and utilization, as well as selected data on hospital outpatient charges, according to a press release.
As part of the Department of Health and Human Services’ Health Datapalooza IV, an annual conference on health data transparency that brings together public and private stakeholders, the Office of the National Coordinator for Health Information Technology (ONC) also released information on the adoption of specific electronic health record (EHR) systems, as well as awardees for new opportunities for building innovative tools from health data, the release said.
The CMS data on hospital outpatient charges includes estimated hospital-specific charges for 30 Ambulatory Payment Classification Groups paid under the Medicare Outpatient Prospective Payment System for Calendar Year 2011. CMS also provides national and state level summaries of the data.
For the first time, CMS made spending and utilization data available in its Geographic Variation Public Use File, which contains demographic, spending, utilization, and quality indicators at the state level (including the District of Columbia, Puerto Rico, and the Virgin Islands), hospital referral region level, and county level, CMS said.
CMS said the data will allow researchers and policymakers to evaluate geographic variation in the utilization and quality of healthcare services for the Medicare fee-for-service population.
CMS also released aggregated data on the prevalence of chronic conditions and multiple chronic conditions as well as utilization and Medicare spending for beneficiaries with multiple chronic conditions for U.S. counties.
“Both data sets will enable researchers, data innovators and the public to better understand Medicare spending and service use, spurring innovation and increasing transparency, while protecting the privacy of beneficiaries,” HHS said in a press release.
In addition, ONC released data from its Regional Extension Centers (RECs) on different brands of EHR products used by 146,000 doctors by state, specialty, and each doctor’s stage in meaningful use attestation, the agency said.
ONC funded 62 RECs with $677 million over the next two years to help more than 100,000 primary care providers adopt and use EHRs, the agency noted.
“A more data driven and transparent health care marketplace can help consumers and their families make important decisions about their care,” HHS Secretary Kathleen Sebelius noted in the release. “The administration is committed to making the health system more transparent and harnessing data to empower consumers.”
Also announced at the Health Datapalooza was a competition for technology developers to improve consumer understanding and use of hospital pricing data launched by the Robert Wood Johnson Foundation (RWJF).
Winners of the RWJF Hospital Price Transparency Challenge will share $120,000 in prize money, according to a press release. The competition consists of two components—one for creating visualizations of the data, and another for developing consumer applications and tools, the release said.
First Circuit Rules First-Filed Complaint Dismissed For Lack Of Particularity Can Bar Later-Filed Action
The first-to-file bar, 31 U.S.C. § 3730(b)(5), can apply to a False Claims Act (FCA) qui tam action alleging an illegal kickback scheme even though the originally filed complaint was dismissed for failing to meet the particularity requirements of Fed. R. Civ. P. 9(b), the First Circuit held May 31.
The appeals court affirmed a U.S. District Court for the District of Massachusetts ruling dismissing the complaint based on the first-to-file bar because the earlier filed action alleged the same “essential facts” as the subsequently filed suit. See United States ex rel. Heineman-Guta v. Guidant Corp., No. 1:09-cv-11927-RGS (D. Mass. July 5, 2012).
The First Circuit agreed the first-filed complaint barred the instant action because the purpose of a qui tam action—to provide the government with sufficient notice of potential fraud—was satisfied, even if the complaint was dismissed on Rule 9(b) grounds.
Relator Heidi Heineman-Guta brought the action against her former employer, defendants Guidant Corp. and Boston Scientific Corp.
She alleged defendants engaged in a scheme involving illegal kickbacks to physicians to promote the sales of their cardiac rhythm management devices in violation of the FCA. The United States declined to intervene in the action. Defendants moved to dismiss the complaint, citing the first-to-file bar.
The district court found a previously filed complaint, United States ex rel. Bennett v. Boston Scientific, disclosed the “essential elements” of the alleged fraud in Heineman-Guta’s complaint, namely, the provision of trips, entertainment, meals, grants, honoraria, and other remuneration as kickbacks to physicians to increase defendants’ market share in cardiac rhythm management devices.
On an issue of first impression, the First Circuit held Section 3730(b)(5) does not require the first-filed complaint to meet the heightened pleading standards of Rule 9(b) to bar the later-filed complaint.
The appeals court affirmed the application of the “essential facts” test to determine whether the first-filed complaint precluded a later-filed complaint under Section 3730(b)(5), rejecting relator’s argument that the Rule 9(b) pleading standard should be used instead.
Section 3730(b)(5) itself makes no mention of Rule 9(b)’s particularity requirements, but rather indicates an action is barred if it is a “related action” that is “based on the facts underlying the pending action.” Applying the rules of statutory construction, the appeals court also noted the significance of Congress referencing the Federal Rules of Civil Procedure in other FCA provisions but not in Section 3730(b)(5).
Relator argued her complaint offered more specific details of the alleged illegal kickback scheme, but the appeals court said if the first lawsuit sufficiently placed the government on notice of the alleged fraud, the provision of additional details would not change the fact that the later-filed action would duplicate the first and be barred under Section 3730(b)(5).
“A later-filed complaint that mirrors the essential facts as the pending earlier-filed complaint does nothing to help reduce fraud of which the government is already aware,” the appeals court observed.
Applying the “essential facts” test, the appeals court held the Bennett complaint unquestionably served to bar the instant action. United States ex rel. Heineman-Guta v. Guidant Corp., No. 12-1867 (1st Cir. May 31, 2013).
First Circuit Revives EMTALA Failure To Screen Claim
On May 29, the First Circuit held a district court erred when it concluded a physician’s medical judgment may substitute for a hospital’s internal protocols for the purposes of meeting the Emergency Medical Treatment and Labor Act's (EMTALA’s) appropriate screening requirements. In so holding, the appeals court reversed the court's grant of summary judgment to a hospital and remanded for further proceedings on the EMTALA screening claim.
On January 4, 2007, plaintiff Hazel Cruz-Vazquez arrived at Mennonite General Hospital’s emergency room (Mennonite) complaining of vaginal discharge and blood spotting but no pelvic pain. She was in her third trimester of her first pregnancy. The on-duty emergency physician, Dr. Brenda Torres-Perez (Torres), performed only a pelvic exam, found Cruz-Vazquez was not dilated, and consulted with Cruz-Vazquez’s obstetrician who advised Torres to administer some medications and discharge the patient in stable condition, all of which Torres did. He discharged Cruz-Vazquez less than two hours after her arrival.
On January 6, Cruz-Vazquez saw her obstetrician who performed another pelvic exam, diagnosed her as suffering from an incompetent cervix, and recommended transfer to another hospital to which Cruz-Vazquez agreed. She transferred “in stable condition” that same morning and underwent a cesarean section. Her baby died on January 7 for unspecified reasons.
Cruz-Vazquez filed a complaint in the U.S. District Court for the District of Puerto Rico alleging Mennonite violated EMTALA by failing to screen her appropriately and failing to stabilize or properly transfer her before she was discharged.
The case followed what the appeals court described as a “tortured” procedural history that included an earlier remand from the First Circuit to the district court. The district court ultimately dismissed Cruz-Vazquez’s complaint, finding it stated facts that were limited to a medical malpractice claim.
The First Circuit vacated the district court’s judgment and remanded the case for trial as genuine issues of material fact existed as to whether Cruz-Vazquez was adequately screened under EMTALA.
Noting EMTALA does not define an appropriate medical screening, the First Circuit cited its decision in Correea v. Hospital San Francisco, 69 F.3d 1184 (1st Cir. 1995), which defined an appropriate medical screening as one “reasonably calculated to identify critical medical conditions that may be afflicting symptomatic patients and provides that level of screening uniformly to all those who present substantially similar complaints. The essence of this requirement being there be some screening procedure, and that it be administered even-handedly.”
In this case, Mennonite stipulated it had a relevant screening protocol for female patients who presented with vaginal bleeding in their third trimester and that it failed to activate that protocol for Cruz-Vazquez. In light of this stipulation, the First Circuit focused on the district court’s failure to see how the case law distinguished between a hospital’s failure to follow a regular screening protocol, as in this case, and a screening protocol that was not followed because no identifiable symptoms triggered the need for such screening or that a screening protocol was followed but resulted in an improper diagnosis.
The First Circuit distinguished Reynolds v. MaineGeneral Health, 218 F.3d 78 (1st Cir. 2000), by pointing out the defendant-hospital’s only standard screening policy was a general one requiring “the taking of all presenting patients’ complete histories.” The Reynolds court held inquiries into a patient’s medical history absent a more detailed hospital policy was insufficient to find the patient received materially different screening from other similarly situated patients. In this case, however, Mennonite’s policy “straightforwardly set forth a series of testing requirements in its 'Gravid with 3rd Trimester Bleeding' protocol for all patients presenting a specific set of symptoms.”
The First Circuit also distinguished Vickers v. Nash Gen. Hosp. 78 F.3d 139 (4th Cir. 1996). In Vickers, hidden conditions in the emergency patient resulted in misdiagnosis followed a few days later by death. The Vickers court held the patient received screening that would have been provided to other similarly situated patients. “Treatment decisions . . . were fundamentally distinguishable from disparate treatment of individuals perceived to have the same condition,” the Fourth Circuit said. In this case, however, Mennonite staff was not blind to any hidden conditions in Cruz-Vazquez, so her evidence pointed not to Mennonite’s failure to properly diagnose based on a faulty screening but rather, a failure to treat her equally to others who were perceived to have the same condition.
The First Circuit refused, however, to grant Cruz-Vazquez summary judgment at this stage of the litigation, noting the evidence was unclear as to whether Torres may have been justified in treating her differently from other patients with like symptoms. “While a treating obstetrician’s medical judgment may inform whether or not a patient was sufficiently ‘like’ other patients that come under a given hospital protocol, it should not be improperly relied on to entirely bypass the hospital’s obligation to equally screen under the statute,” the appeals court cautioned.
Cruz-Vazquez v. Mennonite Gen. Hosp., No. 11-2297 (1st Cir. May 29, 2013).
GAO: Minimum National Standards Needed For Imaging Accreditation
The Centers for Medicare & Medicaid Services (CMS) should issue minimum national standards for accrediting suppliers of advanced diagnostic imaging (ADI) services to ensure safe and high-quality imaging for Medicare beneficiaries, the Government Accountability Office (GAO) found in a report released May 31.
GAO also said CMS needs a framework for overseeing and monitoring the three approved accrediting organizations—the American College of Radiology (ACR), the Intersocietal Accreditation Commission (IAC), and The Joint Commission (TJC).
“CMS has not established specific performance expectations or developed plans for the validation audits of accredited suppliers as described in its regulations,” GAO said, adding “such independent evaluations” are key to determining “whether serious deficiencies are being identified.”
CMS also should set specific expectations for mid-cycle audits and serious care problems, GAO said. While CMS requires accrediting organizations to conduct mid-cycle audits to help ensure compliance over the three-year accreditation cycle, the agency does not set minimum benchmarks for how many mid-cycle audits accreditors should conduct or what they should focus on, the report said.
To help improve the safety and quality of ADI services, which include computed tomography, magnetic resonance imaging, and nuclear medicine, the Medicare Improvements for Patients and Providers Act of 2008 (MIPAA) mandated that imaging suppliers such as physician officers and independent diagnostic testing facilities be accredited starting January 1, 2012, the report noted.
CMS has not established specific accreditation standards for quality and safety and instead has relied on the three accreditation organizations to set their own, giving rise to “significant differences,” GAO said.
“As a result, important aspects of imaging, such as qualifications of technologists and medical directors and the quality of clinical images, are difficult for CMS to monitor and assess,” the report concluded.
CMS concurred with the report’s recommendations and outlined steps in the works to implement them.
While ACR and IAC also concurred with the report’s findings and recommendations, the report noted TJC's comments that GAO lacked the data necessary to determine whether the organizations’ approaches to accreditation are effective.
GAO commented in response that its aim was not to evaluate the accreditation programs, but “to assess the ADI standards currently in use and determine whether CMS has adequate assurance that all accredited suppliers meet a minimum level of quality and safety.”
The report assessed current ADI standards based on a list of nine standards drawn from recommendations of 11 organizations with imaging expertise.
The report is Establishing Minimum National Standards an Oversight Framework Would Help Ensure Quality and Safety of Advanced Diagnostic Imaging Services (GAO-13-246).
Hatch Questions Administration On Rising Cost of Premium Tax Credits
Senate Finance Committee Ranking Member Orrin Hatch (R-UT) pressed the administration to explain the rising cost of premium tax credits under the Affordable Care Act (ACA) in a June 5 letter to Department of Health and Human Services Secretary Kathleen Sebelius and Treasury Secretary Jack Lew.
According to the letter, there was a 107% jump in the cost of the Advance Premium Tax Credit (APTC) between the administration’s fiscal year (FY) 2012 and FY 2014 budget requests.
The tax credits are meant to defray the cost of purchasing health insurance for low income individuals, Hatch said.
“Since the APTC is determined based on income and the price of the second lowest cost silver plan, then the increases can only be attributable to more people accessing insurance through exchanges than was previously estimated or to higher health insurance premiums,” Hatch noted
The letter asked Sebelius and Lew to explain the cost increases to the Committee.
Hospitals Continue To Report Uptick In RAC Activity, AHA Survey Says
Hospitals continue to experience increased Recovery Audit Contractors (RACs) activity, the American Hospital Association (AHA) found in its RACTrac survey for the first quarter of 2013.
According to the survey, the number of medical record requests for survey respondents increased by 53% compared to the cumulative total reported in the third quarter of 2012, while the total number of complex audit denials issued to respondents increased by 42% in comparison to the third quarter of 2012. The majority of hospitals reporting RAC activity are general medical and surgical hospitals, AHA said.
Hospitals responding to the RACTrac survey reported appealing 44% of all RAC denials, with a 72% success rate.
According to AHA, 71% of all hospitals filing a RAC appeal during the first quarter of 2013 reported appealing "short stay" medically unnecessary denials.
Three-fourths of all appealed claims are still in the appeals process, the survey found. According to AHA, 88% of reporting hospitals have experienced at least one delay longer than the statutory limit of 90 days for an administrative law judge determination to be issued.
Looking at costs, AHA said 63% of all hospitals reported spending more than $10,000 managing the RAC process during the first quarter of 2013, 46% spent more than $25,000, and 10% spent over $100,000.
House Approves Legislation To Establish National Drug Traceability System
The House cleared June 3 by voice vote legislation to establish a uniform, national system for tracing pharmaceuticals throughout the distribution supply chain.
The House Energy and Commerce Committee approved the measure on May 15. In a statement, Committee Chairman Fred Upton (R-MI) said the “bipartisan bill strengthens the prescription drug supply chain in order to protect . . . against counterfeit drugs . . . . [and] helps prevent increases in drug prices, avoid additional drug shortages, and eliminate hundreds of millions of dollars worth of government red tape on American businesses that is harming job growth.”
The Safeguarding America’s Pharmaceuticals Act of 2013 (H.R. 1919) would create a uniform national standard to secure the pharmaceutical distribution supply chain by establishing tracing requirements for manufacturers, wholesale distributors, pharmacies, and repackagers based on changes in ownership, according to a Committee summary of the bill.
The legislation also would establish “a collaborative, transparent process between FDA [Food and Drug Administration] and stakeholders in order to better understand how and when to move to unit-level traceability.”
According to the summary, the bill would require FDA to issue a proposed regulation on unit-level traceability in 2027.
The Senate Committee on Health, Education, Labor, and Pensions (HELP) passed a similar measure on May 22. The Drug Supply Chain Security Act, however, calls for moving from a lot-level tracing system to a unit-level tracing system over the course of a decade.
Public Citizen Flags Incomplete Data In OIG Exclusion Reports
Incomplete information in Department of Health and Human Services Office of Inspector General (OIG) exclusion reports provided to the National Practitioner Data Bank (NPDB) may prevent the databank from matching "a query by a healthcare organization or medical board to a report on an OIG-excluded healthcare practitioner or entity," consumer watchdog group Public Citizen said in a June 4 report.
Because up to 50,000 of these exclusion reports may lack sufficient practitioner identifying information to be matched to a query, Public Citizen said in a press release, the NPDB may fail to provide “one of the most critically important pieces of information about a provider, the fact that they were excluded by the OIG from participation in programs such as Medicare and Medicaid,” according to the report, Problems with Office of Inspector General Exclusion Reports Jeopardize Health Care Provider Background Checks.
Public Citizen found only 47% of OIG exclusion reports have ever been disclosed in the more than 22 years since the NPDB was started. In comparison, 71% of state medical/osteopathic board reports were disclosed in this same period, as well as 85% of hospital reports.
“The inadequacy of identifying information in OIG exclusion reports submitted to the NPDB is the most likely explanation for this discrepancy,” Public Citizen said.
The report noted "[a]pparently as a result of Public Citizen's investigation, and in a tacit acknowledgement of serious problems with exclusion reports in the NPDB," OIG's May 13 Special Advisory Bulletin advised healthcare providers to use its List of Excluded Individuals and Entities (LEIE) posted on its website, rather than other databases like the NPDB for checking exclusions.
According to the report, one advantage of the NPDB is that it maintains records of all exclusions and reinstatements; whereas the OIG eliminates exclusion records following a practitioner's reinstatement. Thus, the NPDB "provid[es] more complete background information on health care practitioners and entities," the report said.
The report noted OIG only recently decided to include National Provider Identifiers (NPIs) in its exclusion reports to the NPDB, and only plans to do so for actions taken after 2009.
Public Citizen specifically recommended OIG "immediately improve the quality of its exclusion reports in the NPDB by providing NPIs, and other identifying information, for all exclusion and reinstatement reports, not merely the 16 percent of these that occurred after 2009."
“Making OIG exclusion reports more accessible to users of the NPDB would improve patient safety and program integrity in the health care industry by ensuring that the serious provider problems that caused the exclusion in the first place are known to potential employers such as hospitals or HMOs and to medical boards when they do background checks on these individuals,” said Dr. Sidney Wolfe, director of Public Citizen’s Health Research Group.
“Unless these exclusion reports are available, users of the NPDB, such as hospitals or HMOs, could inadvertently employ an excluded health care provider because the OIG exclusion did not show up when they queried the NPDB,” Wolfe added.
Indiana Appeals Court Says Medical Malpractice Law Does Not Govern Slip-And-Fall Claims
The Indiana Court of Appeals held May 28 that the state's medical malpractice law does not govern a patient’s premises liability claims against a hospital for injuries sustained when he slipped and fell. The appeals court reversed a lower court’s dismissal of the patient’s claims.
Dennis Powell was a patient at Porter Hospital, LLC when he slipped and fell on water or another liquid in the hallway outside of the shower area. Powell and his wife (plaintiffs) later sued the Hospital for premises liability.
The hospital moved to dismiss without prejudice for lack of jurisdiction, arguing Powell was a "high fall risk" patient and his medical condition and treatment at the time of the fall and therefore the matter must be reviewed by a medical review panel under the Medical Malpractice Act.
The trial court dismissed the claims, finding the case fell within the realm of medical malpractice. Plaintiffs appealed.
The appeals court first noted that “[a]lthough the location of the occurrence is indeed one factor to consider in deciding whether it falls within the purview of the Medical Malpractice Act, it is not determinative . . . . there must be a causal connection between the conduct and the nature of the patient and healthcare provider relationship."
Here, the appeals court concluded the plaintiffs' complaint alleged a premises liability claim. The court noted Powell was not even receiving care or treatment at the time of his fall.
According to the appeals court, the hospital's "high risk fall" patient argument “might be relevant to a determination regarding Dennis's comparative fault, but those facts do not establish as a matter of law that the [Medical Malpractice] Act applies.”
Powell v. Porter Hosp., LLC, No. 64A03-1210-CT-413 (Ind. Ct. App. May 28, 2013).
Kaiser Study Finds MLR Provision Saved $2.1 Billion In 2012 With Rebates, Lower Premiums
A new analysis issued June 6 by the Kaiser Family Foundation (Kaiser) found the medical loss ratio (MLR) provision of the Affordable Care Act (ACA) saved consumers an estimated $2.1 billion in 2012.
The MLR provision, which went into effect in 2011, requires health insurers in the individual and small group markets to spend 80% (85% in the large group market) of premium dollars on medical care and quality rather than overhead, including administrative expenses and profits.
While rebates paid to consumers have received the most attention (insurers paid roughly $1.1 billion in rebates last year), the Kaiser analysis noted the requirement also can help lower premiums. The MLR essentially incentivizes insurers to spend more on medical care and less on administrative costs and profits, meaning consumers see a “better value for the premiums they pay,” the analysis said.
“[R]ebates represent only a portion, albeit the most concrete portion, of the MLR rule’s savings to consumers,” but they are “not the whole story for consumers,” the analysis said.
The analysis estimated that 2012 premiums would have been $1.9 billion higher had the MLR requirement not been in place. The study’s authors did acknowledge some limitations to estimating premium savings given the inherent uncertainty of determining how insurers would have set rates in the rule's absence, the effect of other ACA provisions, and potential data flaws, among other things.
According to the study, individual market purchasers have realized the bulk of the MLR’s premium savings, because the “majority of plans sold to small and large businesses were already in compliance with their respective MLR thresholds before the law went into effect.” This was not the case in the individual market, where fewer than half of plans complied with the 80% threshold in 2010, the analysis said.
The Kaiser researchers also cautioned that lower estimated rebates this year, currently expected to be about $571 million across markets, should not be viewed as evidence of lower savings than the previous year, “but rather that insurers are coming closer to meeting the ACA’s MLR requirements” and furthering the goal of introducing better premium value for consumers.
“Perhaps ironically, when the MLR provision is working as intended and insurers set premiums to meet the thresholds, consumers save money but are less likely to get a check in the mail as tangible demonstration of those savings,” the authors observed.
The study is Beyond Rebates: How Much Are Consumers Saving from the ACA’s Medical Loss Ratio Provision?
Most Drugs Dual Eligibles Commonly Use On Part D Formularies, OIG Finds
On average, Medicare Part D plan formularies included 96% of the drugs most commonly used by dual eligibles in 2013, the Department of Health and Human Services Office of Inspector General (OIG) said in a memorandum report issued June 4.
The report, Part D Plans Generally Include Drugs Commonly Used by Dual Eligibles: 2013 (OEI-05-13-00090), is OIG’s third annual report under the reporting mandate in the Affordable Care Act (ACA). OIG said the results of this year’s review were largely unchanged from its findings in 2011 and 2012.
Of the 302 unique formularies used by Part D plans in 2013, 19 included 100% of the 200 commonly used drugs by dual eligibles, the report found.
In addition, 64% of the commonly used drugs were included by all Part D plan formularies, OIG said.
OIG noted Part D plan formularies must include at least two drugs, but not all drugs, in each therapeutic category or class. “Therefore, Part D plan formularies may still meet CMS’s [Centers for Medicare & Medicaid Services’] formulary requirements even if they do not include all of the drugs we identified as commonly used by dual eligibles.”
Nationally, stand alone prescription drug plans and Medicare Advantage formularies had similar average rates of inclusion of the drugs commonly used by dual eligibles at 94% and 96%, respectively, according to the report.
Formularies for Part D plans with premiums below the regional benchmark included on average 95% of the drugs commonly used by dual eligibles, OIG said. The report noted the significance of this figure given that dual eligibles are automatically enrolled in, or annually reassigned to, these plans.
According to the report, 99% of dual eligibles were enrolled in Part D plans that included at least 90% of the most commonly used drugs.
As in the 2011 to 2012 period, OIG found plan formularies increased the number of unique drugs subject to utilization management tools between 2012 and 2013.
On average, formularies applied utilization management tools to 28% of the unique drugs reviewed in 2013, compared to 24% of the unique drugs reviewed in 2012, OIG said.
“This increase in plan formularies’ application of utilization management tools results partially from an increase in the rate at which formularies apply quantity limits to the unique drugs that make up commonly used drugs,” OIG found.
The report made no recommendations, but OIG said it “will continue to monitor the extent to which Part D plan formularies cover drugs that dual eligibles commonly use” as mandated by the ACA.
OIG Finds Most South Florida DME Suppliers Comply With Enrollment Requirements, But More Monitoring Needed
About $1.9 million in Medicaid durable medical equipment (DME) program funds was vulnerable to fraud, waste, and abuse because the Florida Agency for Health Care Administration did not maintain proper oversight through periodic monitoring, the Department of Health and Human Services Office of Inspector General (OIG) found in a recent report.
OIG investigated DME suppliers in Miami-Dade County, FL because of the high level of fraud risk associated with those providers in that area, according to the report, Florida Generally Ensured That Providers Complied With Selected State Durable Medical Equipment Enrollment Requirements (A-04-12-07034).
Of the 71 DME providers OIG visited, 61 complied with the selected Medicaid enrollment requirements, the report said.
Of the ten providers not in compliance, OIG said, six lacked required signage identifying them as DME providers; two either did not meet the business-hour requirements or were not open during posted business hours; and two failed to inform the state agency of address changes.
“As a result of the State agency's lack of periodic monitoring of DME providers, the Medicaid DME program in general and the $1,907,669 that the State agency claimed for these 10 providers were vulnerable to fraud, waste, and abuse,” OIG said.
OIG recommended the state agency (1) terminate, sanction, or recoup Medicaid funds from the non-compliant providers, and (2) include recurring site visits to ensure DME providers meet its enrollment requirements.
Physicians Group Gives Senate Finance Committee Feedback On Physician Payment Reform
The American College of Physicians (ACP) in a May 31 letter to the Senate Finance Committee recommended 19 specific reforms to improve the Medicare physician fee schedule and the fee-for-service (FFS) system to stabilize physician reimbursement and establish a framework for a performance-based payment system once the Sustainable Growth Rate (SGR) formula is repealed.
Under the SGR, physicians face a steep 25% cut in Medicare payment rates in 2014. While Congress continues to override these sizeable reductions on a temporary basis, they have been unable to enact a permanent solution.
In a May 10 letter, Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) asked for input from stakeholders “on policies that specifically affect the Medicare physician fee schedule” and FFS system.
In response to the first question in the letter—what specific reforms should be made to the physician fee schedule to ensure that physician services are valued appropriately—ACP made seven recommendations, including that Congress should: authorize the Department of Health and Human Services (HHS) "to gather data on efficient delivery of services from a representative cohort of practices to inform decisions on [relative value units] RVUs"; "authorize HHS to make payment for services to enhance care coordination, particularly for patients with complex chronic diseases, including payment for work associated with such services that falls outside of a face-to-face visit"; and "eliminate provider-based billing delivered in an outpatient, hospital-system owned practice when the care being provided is not dependent on the hospital facility and its associated technologies."
With respect to utilization, ACP made seven more recommendations, including that Congress "direct HHS to explore alternatives to prior authorization, including creating incentives for use of appropriate use criteria, and exempting practices from prior authorization that are participating in value-based payment programs"; and "authorize HHS to conduct a pilot-test of utilization benchmarking tools to enable physicians to compare their utilization patterns with their peers and make voluntary improvements as appropriate based on such data."
In addition, ACP noted while it supports continuation of the in-office ancillary services exemption under the Stark Law, it recommended “Congress direct the Secretary to monitor utilization of high cost/high frequency testing in practices where physicians own their own facilities, to provide education feedback to outliers, and to encourage more extensive use of specialty-developed appropriate use criteria . . . particularly targeted at practices that are outliers in terms of their utilization of high frequency testing compared to practices that do not have an ownership interest in such facilities.”
Lastly, ACP made five recommendations on how Medicare can most effectively incentivize physician practices to undertake the structural, behavioral, and other changes needed to participate in an alternative payment model.
Those recommendations included: providing "positive and stable annual Medicare payment updates to all physicians"; authorizing "HHS to implement a phased approach to repealing the SGR and progressing to better, value-based payment and delivery models"; and "expanding payment bundles to increase coordination of care and facilitate the adoption of broader payment and delivery system reform."
Sebelius Denies Soliciting Funds From Healthcare Industry For ACA Implementation
Department of Health and Human Services (HHS) Secretary Kathleen Sebelius said at a June 4 hearing of the House Committee on Education and the Workforce that she did not solicit funds from anyone in the health industry for Affordable Care Act (ACA) implementation.
House Energy and Commerce Committee leaders have been investigating recent media reports that Sebelius solicited funds from healthcare executives. According to these reports, the Secretary asked individuals in the private sector to make financial donations to Enroll America, a nonprofit organization run by a former White House aide, to support HHS’ implementation of the ACA.
Under questioning from Representative Tom Price (R-GA), Sebelius confirmed she did solicit funds from two entities—the Robert Wood Johnson Foundation and H&R Block. Sebelius noted neither entity is under HHS regulatory authority.
Sebelius cited statutory authority under Section 1704 of the Public Health Service Act, which she said allows fundraising activities and does not limit such activities to unregulated entities.
The Secretary said she talked to the two entities about a public/private partnership and asked if they would consider making donations to Enroll America. According to Sebelius, such activities are commonplace and previous HHS Secretaries made a similar effort for Medicare Part D outreach.
Under further questioning from Price, Sebelius denied contacting anyone in the pharmaceutical industry about contributing to Enroll America.
Responding to questions from Representative Trey Gowdy (R-SC), Sebelius said she made the calls at the request of Enroll America and that no specific dollar amount was solicited.
Sebelius also said she made three other calls to discuss Enroll America generally to Johnson and Johnson, Ascension Health, and Kaiser Permanente, but did not discuss funding in those calls. She conceded HHS regulates those three organizations but again emphasized her authority to legally solicit funds from private entities under the Public Health Service Act.
In response to the testimony, House Energy and Commerce leaders announced they are expanding their investigation and have sent three new letters to Johnson and Johnson, Ascension Health, and Kaiser Permanente.
The Committee sent letters last month to 15 other organizations asking about HHS fundraising activities.
No Reprieve From Order Requiring FDA To Lift Access Restictions On Two-Pill Version Of Part B
The Second Circuit refused June 5 to stay a lower court order requiring the Food and Drug Administration (FDA) to make the older, two-pill version of the emergency contraceptive known as Part B available without a prescription and without point-of-sale or age restrictions.
In its two-page order, the Second Circuit did agree, however, to grant the government’s motion for a stay pending appeal as to the one-pill version, known as Part B One-Step.
On April 5, Judge Korman of the U.S. District Court for the Eastern District of New York issued the order requiring the FDA to make Part B available over the counter (OTC) without any restrictions within 30 days. Tummino v. Hamburg, No. 12-CV-763 (ERK)(VVP) (E.D.N.Y. Apr. 5, 2013). The court found the decisions of the Department of Health and Human Services and FDA restricting access to Part B “were arbitrary, capricious, and unreasonable” under the Administrative Procedure Act.
The federal government appealed and then moved for a stay pending appeal. The government argued the lower court “exceeded its authority by issuing an order concerning the ‘one-pill product,’” which was not the subject of the Citizen Petition that was the basis of the action before it. The government also contended the court “exceeded its authority, under principles of administrative law and the Federal Food, Drug, and Cosmetic Act (FDCA), by issuing a mandatory injunction . . . rather than remanding to the agency for further administrative action.”
While granting the stay as to Part B One-Step, the Second Circuit found the government “failed to meet the requisite standard” to preserve a temporary stay of the two-pill version.
The appeals court said in the order it would consider the appeal “on an expedited basis.”
FDA approved Plan B for prescription-only use in the United States in 1999. Although the agency received a petition to switch Plan B to OTC status as far back as 2001, FDA only approved Plan B for OTC sale in August 2006, with access restricted to those 18 and older. FDA approved Plan B One-Step in 2009; it is available without a prescription and subject to the same restrictions as the two-pill version.
Plaintiffs in the case are individuals and organizations advocating wider distribution of and access to emergency contraceptives. In 2005, they challenged the FDA’s denial of a Citizen Petition asking the agency to make Plan B available on an OTC basis without age or point-of-sale restrictions.
Most recently, FDA approved April 30 Teva Women’s Health, Inc.’s amended application to market Plan B One-Step for use without a prescription by women 15 years of age and older. FDA made clear its approval did not address the court’s April 5 ruling, noting Teva’s application to market Plan B One-Step for women 15 and older was pending before the ruling.
Tummino v. Hamburg, No. 13-1690 (2d Cir. June 5, 2013).
South Carolina Supreme Court Rejects Hospital’s Bid For Review Of Urgent Care Center’s CON Exemption
On May 29, the South Carolina Supreme Court held an agency’s denial of a hospital’s request for a final review conference regarding a competitor’s exemption from the Certificate of Need (CON) or Non-applicability Determination (NAD) process did not give rise to a final agency decision subject to a contested case hearing before an administrative law court (ALC), and the competitor’s status as a licensed private practitioner did not require a formal, written determination of its exemption.
Plaintiff Amisub of South Carolina is a hospital that conducts business as Piedmont Medical Center (Piedmont) in South Carolina. Piedmont’s competitor, Carolinas Physicians Network (CPN), is a wholly owned subsidiary of Charlotte-Mecklenburg Hospital Authority, d/b/a Carolinas Healthcare System (CHS).
In October 2007, the South Carolina Department of Health and Environmental Control (DHEC) informed CHS by letter that its proposed construction of a medical office building did not require CON review because it was an expense by a healthcare facility for a non-medical project as provided in S.C. Code Ann. Regs. 61-15 § 104(2)(f).
CHS thereafter built its medical office building and on January 12, 2009, CPN opened an urgent care center in that building and classified it as a licensed private practitioner’s office.
A few days earlier on January 5, Piedmont’s counsel (counsel) met with DHEC staff to discuss the center’s opening. On January 16, counsel requested in writing that DHEC immediately require CHS to submit either a non-applicability request or CON application for the urgent care center, pointing to a 2007 letter from CHS to DHEC where CHS assured the agency it would not open an urgent care center without first obtaining a CON or NAD.
On January 28, counsel spoke with DHEC’s CON director by telephone who said DHEC would not require CHS to apply for a NAD or CON for the urgent care center. Two days later, counsel prepared an affidavit summarizing his phone conversation with DHEC’s CON director and stated he had not received anything in writing from DHEC “memorializing its decision to not take any action against CHS for the opening of its urgent care center.”
On February 2, counsel requested a final review by the DHEC Board. On February 4, the Board’s clerk declined the request, stating Piedmont filed its request 464 days after DHEC’s decision was mailed to Piedmont. According to the DHEC Board, any request for review is due within 15 days following notice of decision. This letter, however, referenced DHEC’s October 26, 2007 determination that construction of the medical office building was exempt from CON requirements. The letter did not reference Piedmont’s question about the urgent care center.
Counsel wrote back clarifying it sought review of DHEC’s decision regarding the urgent care center, including the “unwritten decision made in January or February 2009 and communicated to [counsel] verbally on January 28, 2009, as described in [counsel’s] affidavit of January 30, 2009.” Counsel also asked for clarification on whether the DHEC Board’s February 4 letter represented its final decision to deny Piedmont’s request for review. The clerk informed Piedmont the DHEC Board met on February 12 and declined to conduct a final review.
On March 5, Piedmont filed a request with the ALC for a contested case hearing, challenging DHEC’s failure to require CHS to apply for and obtain a CON or NAD. Piedmont argued the physician office exemption under S.C. Code Ann. § 44-7-170 was inapplicable because the urgent care center was marketed as a CHS facility rather than a physician practice and CHS controlled the urgent care center through its wholly owned subsidiary, CPN.
The ALC granted summary judgment to CHS and CPN, stating the urgent care center qualified as a licensed private practitioner’s office that was exempt from CON review.
Piedmont appealed to the court of appeals, which reversed the ALC’s ruling. The South Carolina Supreme Court granted certiorari as to DHEC’s argument that the appeals court erred in finding the ALC had subject matter jurisdiction. The issue before the high court was whether Piedmont’s challenge was properly before the ALC as a contested case.
DHEC argued the ALC did not have subject matter jurisdiction because DHEC did not issue a formal “staff decision” pursuant S.C. Code Ann. § 44-1-60(C), which would have required notice and an opportunity for Piedmont to be heard. Under Section 44-1-60(C), DHEC’s “initial decision involving the issuance, denial, renewal, suspension, or revocation of permits, licenses, or other action of the department shall be a staff decision.” DHEC also contended neither the telephone conversation between DHEC’s director and counsel nor counsel’s affidavit recounting that conversation constituted a staff decision within the purview of Section 44-1-60.
DHEC further argued neither CPN nor CHS sought a CON because in their case, one was not required by law for a licensed private physician’s office, and CPN’s physician’s office status was not one of the 12 exemptions that required written proof of exemption under S.C. Code Ann. Regs. 61-15 § 104. According to DHEC, it never issued a formal staff decision that qualified for a contested case hearing before the ALC as no approval or permission was required by law by way of a CON, NAD, or other formal exemption.
Piedmont countered DHEC’s unwillingness to communicate its staff decision in writing prompted Piedmont to take the unusual step of relying on counsel’s affidavit to memorialize the decision to seek a contested case hearing. Piedmont also maintained this unwritten staff decision became a final agency decision under Section 44-1-60(D) when the DHEC Board denied Piedmont’s request for review in February 2009. Under Section 44-1-60(D), a “department decision” is issued when the staff decision is made. The department decision becomes final 15 days after notice of its decision is mailed to the applicant unless the applicant files with DHEC a written request for final review. The DHEC Board then has 60 days following receipt of the applicant’s request to conduct a final review conference. If it does not, the department decision becomes the final agency decision and the applicant may then request a contested case hearing before the ALC within 30 days after the deadline for the final review conference has passed.
The high court agreed with DHEC that a staff decision had been made pursuant to Section 44-1-60(C) when DHEC granted CHS exemption in 2007 for the construction of its medical office building. The high court held, however, that neither the 2007 exemption nor DHEC’s February 13, 2009 letter declining Piedmont’s request for final review constituted a formal staff decision on the subsequent opening of the urgent care center. The high court also found the phone conversation between Piedmont’s counsel and DHEC’s CON director was not a “staff decision” that fell “within the statutory parameters for a contested case.”
The high court ultimately concluded the appeals court erred in finding DHEC issued a formal staff decision that could be the subject of a contested case hearing before an ALC. The high court pointed out since DHEC was not legally bound to issue a formal, written staff decision given CPN’s status as a licensed private physician’s office that also exempted CPN from the CON process, “there was no corresponding obligation that Piedmont be afforded a contested case hearing before the ALC.” With no formal staff decision that was required by law, there was no staff decision that could be properly subjected to the ALC’s review.
Amisub v. South Carolina Dep’t of Health and Env’t Control, No. 27257 (S.C. May 29, 2013).
- A federal judge sentenced Alan Emmett Bradley, a certified alcohol and drug abuse counselor, to two years in prison and ordered him to pay $151,898 in restitution for defrauding Connecticut’s Medicaid program, Deirdre M. Daly, Acting U.S. Attorney for the District of Connecticut, announced in a press release. According to the release, Bradley submitted claims to Medicaid for individual psychotherapy sessions that did not occur. Bradley pleaded guilty in March to one count of healthcare fraud, the release said.
A jury found physician Eugene Goldman, MD guilty for violating the Anti-Kickback Statute while employed as the medical director at Home Care Hospice Inc. where he referred Medicare or Medicaid patients, according to a June 3 press release issued by the U.S. Attorney's Office for the Eastern District of Pennsylvania. The release said the jury returned guilty verdicts against Goldman on one count of conspiring to violate the AKS and four counts of violating the AKS. According to the release, Goldman received roughly $263,000 in illegal payments from HCH that were disguised as compensation for services performed as the hospice’s medical director, when in fact the payments were for the referral of Medicare and Medicaid patients to HCH.
- U.S. Attorney Daly also announced June 3, along with other federal officials, that Gary F. Anusavice pleaded guilty to healthcare fraud and tax evasion for his role in a $20 million Medicaid fraud scheme involving three dental clinics that he operated in Connecticut while he was excluded from participating in Medicaid and federal healthcare programs. According to a press release, Anusavice lost his dental license in two other states and was excluded from participating in Medicaid and federal healthcare programs since 2008. From 2008 to 2011, the release said, he owned and operated the dental clinics using a licensed dentist as the nominal head on the Medicaid enrollment form. According to the release, Anusavice “actively managed the dental clinics, recruited dentists and oversaw their hiring.” The release also noted a related settlement with the Connecticut Attorney General’s Office in which Anusavice agreed to pay the state $9.9 million, representing treble damages under the Connecticut False Claims Act and restitution under the Connecticut Unfair Trade Practices Act.
- On remand from the Fifth Circuit, United States v. Sharma, Nos. 11-20102, 11-20167, 11-20204 (5th Cir. Dec. 20, 2012), a federal judge ordered Drs. Arun and Kiran Sharma, a married couple, to pay nearly $37.7 million in restitution and forfeiture for defrauding Medicare, Medicaid, and more than a dozen private insurers, U.S. Attorney for the Southern District of Texas , Kenneth Magidson announced June 3 in a press release. The judge previously sentenced Arun to 10 years and Kiran to eight years in prison and ordered them to pay over $40 million in restitution. On appeal, the Fifth Circuit vacated and remanded for recalculation of the restitution order finding the lower court erred in calculating the loss amount. The Sharmas, who operated pain management clinics, previously pleaded guilty to defrauding healthcare insurers by billing for pain injections they never administered.
- U.S. Attorney Sarah R. Saldaña of the Northern District of Texas announced in a May 31 press release that Dallas County Hospital District d/b/a Parkland Health and Hospital System (Parkland) agreed to pay $1.4 million to resolve allegations asserted in a whistleblower action that it violated the federal and Texas false claims acts by submitting, or causing the submission of, improper physical medicine and rehabilitation (PMR) claims between 2007 and 2011. The press release noted Parkland fully cooperated with the investigation and admitted no wrongdoing or liability in agreeing to the settlement. According to the allegations, the claims involved “(1) consultations that were never requested by a patient’s treating physicians and/or lacked medical necessity; (2) services related to the inappropriate supervision of residents and/or lacked medical necessity; (3) up-coded and inflated evaluation and management services; (4) inpatient rehabilitation stays that did not meet billing requirements; and (5) other unreimbursable costs.” The qui tam action was initiated by Lien Kyri, M.D., a former resident, the release said. Parkland also entered into a five-year corporate integrity agreement with the Department of Health and Human Services Office of Inspector General (OIG). "We consider this proposed settlement a fair resolution that allows Parkland to continue moving forward with the improvements we have been making in the areas of quality and patient safety,"said interim Chief Executive Officer Robert L. Smith in a statement.
- A jury convicted Woody Medlock and his wife Kathy Medlock, who formerly owned Murfreesboro Ambulance Service, on various charges arising from a scheme to submit $1.6 million in fraudulent claims to Medicare and Medicaid for reimbursement of ambulance transports of patients to and from dialysis treatments, announced Acting U.S. Attorney for the Middle District of Tennessee David Rivera in a May 31 press release. Evidence and testimony at trial indicated these patients were not eligible for ambulance transportation, the release said. A third defendant, Woody (“Bubba”) Medlock, Jr., was acquitted of similar charges, the release said.
- A federal judge sentenced May 29 Alegria Phankonsy to 51 months in prison and criminal forfeiture of $11.1 million in assets after she pleaded guilty in November 2012 to charges stemming from a fraudulent medical equipment billing scheme, U.S. Attorney for the District of Nevada Daniel G. Bogden announced. According to the indictment described in the release, Phankonsy operated several companies that billed Medicare for medical equipment such as leg prostheses and power wheelchairs that were not ordered by physicians, were not medically necessary, or were not provided at all. Phankonsy used “marketers” to obtain patient Medicare information that was used to submit the fraudulent bills, the release said.
U.S. Court In Florida Vacates 1979 Injunction Barring Disclosure Of Physician Medicare Claims Data
The U.S. District Court for the Middle District of Florida vacated May 31 an injunction issued in 1979 that barred the Department of Health and Human Services (HHS) from disclosing certain Medicare claims data for physicians.
The court found a “significant change in the law” since the injunction was issued—namely an Eleventh Circuit decision that narrowly construed the scope of injunctive relief a court could award for a Privacy Act violation—made its continued prospective application “no longer equitable” pursuant to Fed. R. Civ. P. 60(b)(5).
The Florida Medial Association (FMA), and later the American Medical Association (AMA), initially sought to enjoin HHS' predecessor from releasing further lists identifying physicians or groups of physicians who received a certain level of Medicare reimbursements. HHS made such a disclosure in 1977 and amended its regulations that same year to specifically allow such disclosures.
Among other things, plaintiffs invoked the court’s jurisdiction under the Freedom of Information Act (FOIA) and the Privacy Act. The court in 1979 granted a permanent injunction after finding the disclosure was covered by FOIA Exemption 6, which provides that FOIA “does not apply to matters that are . . . personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy,” and therefore violated the Privacy Act.
The injunction permanently enjoined HHS from disclosing any lists of annual Medicare reimbursement amounts for any years that would individually identify a recertified class of physicians. Florida Med. Ass’n v. Department of Health Educ. & Welfare, 479 F. Supp. 1291 (M.D. Fla. 1979).
Change in Facts, Law
Jennifer Alley, owner of Real Time Medical Data, LLC, which uses Medicare claims data to assist hospitals and other clients with marketing and strategic planning efforts, filed a FOIA request in 2003 with HHS. The request sought data on all Medicare claims paid in 2002 for procedures performed in several states.
HHS provided Alley with some of the information she requested, but refused to release any Medicare Part B outpatient claims data to avoid a “clearly unwarranted invasion of personal privacy” under FOIA Exemption 6, and to avoid running afoul of the 1979 injunction. The district court ordered disclosure of the requested claims data, finding the injunction should be narrowly construed.
In a 2010 decision, the Eleventh Circuit reversed, finding the claims data at issue were covered by the 1979 injunction. The appeals court suggested those attempting to obtain the data could seek modification of the injunction from the issuing court, but could not do so collaterally. Alley v. Department of Health and Human Servs., No. 08-16914 (11th Cir. Dec. 18, 2009).
Before the Middle District of Florida, RTMD, which was allowed to intervene in the instant action, argued the 1979 injunction should be vacated pursuant to Rule 60 because of factual changes since the ruling, including a shift in the balance between physician privacy interests and the public interest in disclosure of Medicare reimbursement amounts. RTMD also noted reduced physician privacy interests in such data given the Affordable Care Act-created program permitting disclosures of Part B data to qualified entities to generate provider performance reports.
Another intervenor in the instant action, Dow Jones and Company, Inc., which publishes The Wall Street Journal, made similar arguments, noting Medicare claims data could be invaluable in identifying fraudulent conduct.
HHS argued, on the other hand, that prospective enforcement of the 1979 injunction was no longer equitable because of a change in the law since the injunction was issued, citing the Eleventh Circuit’s decision in Edison v. Department of Army, 672 F.2d 840 (11th Cir. 1982), which held “the Privacy Act does not authorize injunctive relief against a government agency to prevent it from disclosing information.”
The FMA and AMA both opposed modifying or vacating the injunction.
Privacy Act Prohibited Disclosure
The court first determined that the basis for the 1979 injunction was the judge’s determination that the information at issue fell within FOIA Exemption 6, which meant HHS was permitted, but not required, to withhold disclosure. After finding Exemption 6 did not require disclosure, the judge then turned to a Privacy Act analysis and held disclosure was prohibited without prior written consent pursuant to that statute.
The court’s determination that the Privacy Act was the legal basis for the 1979 injunction was key because plaintiffs argued their complaint challenged a final agency action—i.e., HHS' amendment to its regulations—under the Administrative Procedure Act (APA).
But the court found no suggestion in the 1979 injunction was based on an APA violation, or that the issuing judge even considered the HHS regulation.
In the court’s view, the 1979 injunction was based solely on the determination that the Privacy Act authorized such relief, a conclusion clearly at odds with the Eleventh Circuit’s subsequent interpretation in Edison.
Reverse FOIA Claim
Plaintiffs argued because the proposed disclosure would violate the Privacy Act, it was “not in accordance with the law” and therefore invalid under the APA. They noted courts have held the government can be enjoined from making a disclosure pursuant to a “reverse FOIA action” under the APA.
The problem with this argument, the court said, was the injunction barred “any” and “all” present and future disclosures. The reverse FOIA cases cited by plaintiffs enjoined disclosures of specific information at issue in the particular action.
The APA is not a vehicle for enjoining possible future agency actions, the court observed. “Vacatur of the injunction permits the type of case by case review envisioned by the APA in the future,” the court said.
No Immediate Data Release Foreseen
The court also did not foresee that vacating the injunction would trigger an immediate release of identifiable Medicare claims data. The court noted a policy HHS issued in 1980 that individually identifiable Medicare reimbursement data should not be released based on Exemption 6 of FOIA.
If HHS agreed to disclose the data pursuant to a FOIA request, plaintiffs could at that point bring a reverse FOIA action for review of the agency's decision under the APA, the court reasoned.
Florida Med. Ass’n v. Department of Health, Educ. & Welfare, No. 3:78-CV-178-34-MCR (M.D. Fla. May 31, 2013).
Washington Appeals Court Affirms Dismissal Of Wrongful Death Claims, Finding Plaintiff Failed To Establish Causation
The Washington Court of Appeals affirmed May 28 the dismissal of a decedent’s estate’s wrongful death claims against her healthcare providers and pacemaker manufacturer, finding the estate failed to establish causation.
During an examination of plaintiff Dana Mullan’s pacemaker, her physician faxed information to the pacemaker’s manufacturer St. Jude Medical, Inc., which provided an opinion that Mullan’s pacemaker had approximately five to six months before it needed to be replaced.
One month later, Mullan died. Her estate filed a wrongful death action against her healthcare providers and St. Jude Medical. The trial court granted summary judgment to defendants, and the estate appealed.
On appeal, the court agreed with defendant St. Jude’s argument that no evidence showed any of its acts proximately caused Mullan's death.
St. Jude provided expert testimony indicating its pacemaker was functioning properly and was not the cause of Mullan’s death, the appeals court noted. Although no expert testimony disputed some of St. Jude’s arguments, none asserted that either battery failure or inaccurate information that St. Jude provided to Mullan’s physician was the proximate cause of her death. Accordingly, the appeals court found the trial court did not err is granting St. Jude's motion for summary judgment.
Turning to the healthcare defendants’ motion to dismiss, the appeals court addressed the estate’s breach of promise claim.
The appeals court explained the statute "requires an express undertaking or promise to obtain a specific result or cure through a procedure or a course of treatment." In this case, however, the evidence showed only that Mullan’s healthcare providers told her the results of the pacemaker battery assessment, the appeals court found, noting no evidence the providers “expressly assured or promised Mullan any specific result or outcome through a course of treatment, and as such the breach of promise claim was properly dismissed.”
The appeals court also held the estate failed to show causation, noting no expert testimony supporting a causal link between any nursing negligence and Mullan's death.
Mullan v. North Cascade Cardiology, PLLC, No. 68513-9-I (Wash. Ct. App. May 28, 2013).
Women’s Law Center Challenges Exclusion Of Dependent Pregnancy Coverage
The National Women’s Law Center (NWLC) filed June 4 complaints under a new Affordable Care Act nondiscrimination provision against five institutions for excluding dependent pregnancy coverage in the health plans they offer employees.
According to a NWLC press release, the complaints likely are the first filed under ACA Section 1557, which prohibits sex discrimination in healthcare programs that receive federal funds.
Section 1557 similarly bars discrimination on the basis of race, color, national origin, age, disability, gender identity, and sex stereotypes in health plans, NWLC said.
“When an institution excludes maternity coverage for the female dependent children of its employees, it means that young women on their parents’ plans receive benefits that are less comprehensive than those provided to young adult men,” said Judy Waxman, NWLC Vice-President for Health & Reproductive Rights. “Providing a less favorable set of benefits to employees’ daughters compared to their sons is not only unfair, it is also discrimination on the basis of sex—a violation of Section 1557 of the ACA.”
Per the ACA, the complaints were filed with the Department of Health and Human Services Office for Civil Rights (OCR), which is authorized to investigate and take enforcement action, according to an NWLC fact sheet. Section 1557 “is the first time that federal law has prohibited sex discrimination in health care,” NWLC said.
The institutions identified in the complaints are: Battelle Memorial Institute, in Columbus, OH; Beacon Health System, in South Bend, IN; Auburn University, in Auburn, AL; Gonzaga University, in Spokane, WA; and the Pennsylvania State System of Higher Education (PASSHE), in Harrisburg, PA, the release said.
Wyoming Supreme Court Finds Continuous Treatment Rule Applied To Medical Malpractice Claim
On May 28, the Wyoming Supreme Court reversed the district court’s grant of summary judgment to a defendant hospital, holding a plaintiff’s medical malpractice claim was not time barred because the continuous treatment rule applied.
Plaintiff Ted Nobles was admitted to the intensive care unit (ICU) of Memorial Hospital of Laramie County (Memorial) on December 21, 2007 for acute respiratory failure. On February 19, 2008, Nobles was transferred to Memorial’s transitional care unit (TCU) for further treatment and finally discharged from Memorial on March 15, 2008.
On March 11, 2010, Nobles filed a notice of claim against Memorial with the state’s Medical Review Panel and presented his claim to Memorial alleging he sustained serious injury and damage to his right shoulder, arm, and brachial plexus while being treated at its ICU. Memorial waived review and the Panel authorized Nobles to file his suit against the hospital.
Nobles filed his complaint on June 11, 2010. Memorial filed a motion to dismiss or in the alternative, a motion for summary judgment, claiming Nobles did not timely file his complaint and therefore the action was barred by the statute of limitations for professional negligence under Wyo. Stat. Ann. § 1-3-107(a)(i), which requires a claim or action be filed within two years of the date of the alleged act, error, or omission. The trial court granted the motion.
Reversing, the high court held the “continuous treatment rule” as adopted in Metzger v. Kalke, 709 P.2d 414 (Wyo. 1985), applied in this case. According to the high court, the two-year statute of limitations under Section 1-3-107(a)(i) began when Nobles’ course of treatment for the same or related illnesses or injuries stopped on March 15, 2008 as a result of being discharged from the hospital.
Memorial argued Nobles’ alleged injury occurred while he was being treated in the ICU prior to February 19, 2008 and this was the act that triggered the running of the statute of limitations. The court disagreed, holding the limitations period commenced after Nobles was discharged from Memorial’s TCU on March 15, not when he was transferred to the TCU from the ICU on February 19, as evidence indicated he continued to be treated for the same or related condition (i.e., acute respiratory failure) until his discharge from Memorial on March 15.
Memorial further argued if the continuous treatment rule applied, Nobles’ case qualified for the single act exception that would make the rule inapplicable if a single malpractice act could be pointed to as the source of Nobles’ damage or injury. The court declined to adopt the single act exception as it was difficult to apply, led to confusion rather than predictability, was not widely accepted by other jurisdictions, and was inconsistent with the court’s rulings in similar cases. Nobles v. Memorial Hosp. of Laramie Cnty., No. S-12-0054 (Wyo. May 28, 2013).