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Teaching Hospital Update September 5-9, 2011

Email Alert
September 9, 2011
By Amy Kaufman*

Medicare Fraud Sting Results in Ninety-One Arrests Nationwide

Federal investigators announced Wednesday they charged ninety-one people in eight cities with attempting to bilk Medicare out of $295 million in what Attorney General Eric Holder called the biggest takedown in Medicare task force history.

The cases in the coordinated nationwide strike consisted of billing for services never provided, money laundering, providing kickbacks for Medicare beneficiary numbers, and in one case, threatening Medicare recipients that they would lose their housing if they did not participate in a scheme in Miami. More than 400 agencies participated in the sting.

"Our anti-healthcare-fraud efforts have never been more innovative, collaborative, aggressive, or effective," Holder said. "We are fighting back."

Details from the strike include:

  • Forty-five defendants charged in Miami for $159 million in false billings for home healthcare, mental health services, durable medical equipment (such as electric wheelchairs), physical therapy, and HIV infusion. In one case, the owners of a home healthcare business paid patients kickbacks to say they had received care that had not, in fact, been provided, according to the government.

  • Two people charged in Houston for $62 million in false billings for home healthcare and durable medical equipment. One defendant sold beneficiary information to home health agencies, which then used it to bill Medicare for services the government said they did not provide.

The new cases fall in line with an overall increase in federal healthcare fraud prosecutions reported by USA Today last week: ramped-up efforts by the Obama Administration put healthcare fraud prosecutions on pace so far this year to rise 85% over last year.

Kelly Kennedy, Medicare Fraud Sting Results in Ninety-One Arrests Nationwide, USA Today (Sep. 8, 2011).

Mass. Eye and Ear Receives $11 Million to Study Resistant Bacteria

A team of Harvard researchers is collaborating to examine what makes some bacteria resistant to antibiotics and developing new drugs aimed at controlling bacterial infections, such as those from Staphylococcus aureus.

Dr. Michael Gilmore of Massachusetts Eye and Ear Infirmary will lead the five-year project. The hospital announced today that the effort has earned it the largest grant in its 187-year history, $11 million from the National Institute of Allergy and Infectious Disease. Gilmore's team includes researchers from the Harvard Medical School, Massachusetts General Hospital, Harvard Faculty of Arts and Sciences, and drug developers from Cubist Pharmaceuticals in Lexington and Maryland-based MedImmune. Here's an excerpt from the press release:

'Infections from multidrug-resistant bacteria are leading complications of surgeries, from cataract extractions to knee replacements. Understanding how resistance develops in these strains will help guide the judicious and effective use of antibiotics, and the development of new treatments that will benefit patients and reduce healthcare spending,' said Joan Miller, MD, Henry Willard Williams Professor of Ophthalmology, Chief of Ophthalmology at Mass Eye and Ear and Mass General Hospital, and Chair of Ophthalmology at Harvard Medical School.

Since 2005, drug resistant Staphylococcus aureus has killed more people in the United States than HIV/AIDS, and it has become a leading public health concern. Because resistant staph infections are spread by hand-to-hand contact, workout facilities now provide hand sanitizers and routinely sanitize equipment. An outbreak of methicillin-resistant Staphylococcus aureus infection among the St. Louis Rams brought the problem into sharp public focus . . .

Dr. Gilmore recruited a team of investigators from across the Harvard University landscape, and also from industry, to tackle the problem of developing new drugs to treat these infections. Massachusetts General Hospital scientists and physicians Eleftherios Mylonakis, Fred Ausubel, and David Hooper are pursuing new strategies for discovering and testing drugs using model systems. Harvard Medical School professors Suzanne Walker and Roberto Kolter are using high-throughput robotics to identify potential drugs that target the bacterial cell surface, and its organization. Kolter and Harvard Faculty of Arts and Science professor Richard Losick are exploring new approaches for disorganizing bacterial biofilms, making the microbes easier to treat with new and existing antibiotics. Dr. Keeta Gilmore is responsible for coordinating the moving parts, and for cultivating an atmosphere that promotes synergy between projects. This group converges twice monthly at the Mass. Eye and Ear to discuss progress and coordinate activities.

Chelsea Conaboy, Mass. Eye and Ear Receives $11 Million to Study Resistant Bacteria, Boston Globe (Sep. 6, 2011).

Beth Israel Deaconess Finalizes Contract With New CEO

Beth Israel Deaconess Medical Center this morning signed a contract with Dr. Kevin Tabb to become the hospital's new chief executive office. Tabb, forty-seven, is the chief medical officer of Stanford Hospital and Clinics in California.

He will start his new job Oct. 17, 2011.

"He did blow us all away," said hospital board Chairman Stephen Kay in an interview Tuesday. "He has a very good record at Stanford and has moved up quickly."

Aside from being the unanimous choice of the board, senior managers and physicians also wanted him for the job, Kay said, a rare across-the-board meeting of the minds.

The Globe reported three weeks ago that the hospital was finalizing an agreement with Tabb. He has a fascinating background. He left his family in California at age eighteen to join the Israeli military, and later went to medical school, met his wife, and built a life in that country.

Liz Kowalczyk, Beth Israel Deaconess Finalizes Contract With New CEO, Boston Globe (Sep. 6, 2011).

Adjusting, More MDs Add MBA

Under heavy pressure from government regulators and insurance companies, more and more physicians across the country are learning to think like entrepreneurs.

As recently as the late 1990s, there were only five or six joint MD/MBA degree programs at the nation's universities, said Dr. Maria Chandler, a pediatrician with an MBA who is an associate clinical professor in the medical and business schools at the University of California, Irvine. "Now there are sixty-five," she said.

Mark Pauly, a longtime leader of the healthcare management program at the Wharton School at the University of Pennsylvania, said, "A light bulb went off and they realize that healthcare is a business."

Dr. James Kuo, forty-seven, said he was a third-year medical student at Penn when he decided to go to business school, too. After receiving his MD and MBA degrees, he jumped to a Wall Street job with a large healthcare venture capital firm.

Kuo went on to manage several heathcare funds and later led several small healthcare companies.

Now he is chief executive of Adeona Pharmaceuticals, a company based in Ann Arbor, MI, that is developing innovative medicines for the treatment of serious diseases of the central nervous system.

Milt Freudenheim, Adjusting, More MDs Add MBA, The New York Times (Sep. 5, 2011).

Energy and Commerce to Focus on FDA, Grandfathering

The House Energy and Commerce Committee's Health panel will spend the fall focused on healthcare reform regulations and preparing for a major U.S. Food and Drug Administration (FDA) bill. Energy and Commerce released its fall agenda Tuesday. The Health subcommittee's agenda is mostly focused on FDA—specifically, getting new products to market more quickly. The committee has already begun holding hearings on the policy changes that could accompany a must-pass FDA reauthorization bill next year.

"The. U.S. traditionally has been the leader in the medical device industry employing an estimated 420,000 Americans, but the lack of predictability and consistency at FDA currently force research and development, manufacturing, and new product approvals to Europe, costing American jobs and limiting U.S. patients' access to revolutionary new devices," the committee's agenda states.

It also says lawmakers will focus on "grandfathering" rules under healthcare reform. The law exempts existing plans from some of the law's mandates and limits the types of changes that can be made without sacrificing that exemption. The Obama Administration itself has said that most plans will likely lose their grandfathered status, and House Majority Leader Eric Cantor (R-VA) recently said the rules would be a main target of Republicans' continued opposition to the new law.

Sam Baker, Energy and Commerce to Focus on FDA, Grandfathering, The Hill (Sep. 6, 2011).

Medicare Unveils Bundled Payment Models to Start in 2012

Physicians and hospitals will be collaborating to bid on providing high-quality, low-cost inpatient and post-discharge care to Medicare patients under a new payment option starting in 2012, the Centers for Medicare & Medicaid Services (CMS) said.

Hundreds of interested hospitals and groups of physicians are expected to coordinate patient care under the new bundled payment initiative. Bundling payments is one of several models that physicians in organized medicine have encouraged the Medicare agency to use in place of traditional fee for service.

The Medicare fee-for-service system has been blamed for rewarding volume of care instead of quality. Payment systems should encourage hospitals and physicians to collaborate better on patient care, the Medicare Payment Advisory Commission wrote in a 2008 report. In particular, bundling payments across episodes of care could allow physicians and hospitals to limit the use of low-value services, coordinate patient care, and work together to improve efficiency.

Under the initiative, created by the health system reform law, physicians and hospitals would come up with a plan and submit a bid to participate. Two of the bundled payment models focus on inpatient stays, a third involves post-discharge services only, and a fourth combines inpatient and post-discharge services. The earliest a group submitting a winning bid could get started with the first inpatient-only model is January 2012, said Richard Gilfillan, MD, acting director of the CMS Innovation Center. The other three models require more analysis and would not become active until later in 2012.

Gilfillan estimated that hundreds of groups will participate.

Charles Fiegl, Medicare Unveils Bundled Payment Models to Start in 2012, Am. Med. News (Sep. 5, 2011).

AHLA Teaching Hospital Updates are intended to provide quick summaries of cutting-edge issues of interest to teaching hospitals and their counsel. Additional information and more in-depth coverage on these topics may be available from AHLA Health Lawyers weekly and appropriate AHLA Practice Groups.

*We would like to thank Amy Kaufman, Esquire (Nashville, TN) for providing this week's update.

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