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HEADLINES
Wednesday, June 3, 2009

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Journal of Health Care Compliance May/June 2009 Volume 11, Number 3

Reimbursement Advisor

    In addition to regularly featured columns such as HIPAA, auditing and monitoring, and the anti-kickback statute, the May-June 2009 issue of the Journal of Health Care Compliance includes the following articles:

  • Compliance and Governance for Health Care Organizations and Marketing and Sales Activities, written by Gabriel L. Imperato and Marc S. Raspanti, examines the impact of corporate compliance programs, or the lack thereof, on the health care industry.
  • Benchmarking: Maximizing the Benefits of Hotline Data, written by Carrie S. Penman, focuses on using hotline data to help measure compliance program effectiveness and provide meaningful reports to management and board of directors.
  • The Next Evolution of HIPAA Security, written by Kirsten Ruzic Wild, discusses how recent investigations, provide insight into how the government is interpreting the security rule and what security officers, privacy officers, and compliance officers need to do to be prepared.
  • Understanding Compliance Legal Standards as a Key Element in a Compliance Program, written by John E. Steiner, Jr. provides reasons for considering "compliance legal standards" as a critical element in the design, implementation, and administration of a compliance program.

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Receivables Report

The CCH HIPAA Security Guide April 2009 update

  • Business associate liability has been expanded under the American Recovery and Reinvestment Act of 2009 (ARRA) so that business associates become directly subject to certain requirements under the Privacy and Security Rules in the same manner as those requirements apply to covered entities.
  • State Attorneys General are authorized to enforce Privacy and Security rules under ARRA with civil suits that may result in monetary damages on behalf of state residents.
  • New regulations implementing the Patient Safety and Quality Improvement Act of 2005, effective on January 19, 2009, establish a framework by which health care providers may voluntarily report information, on a confidential basis, for the aggregation and analysis of patient safety events.
  • A federal court challenge to a 2004 amendment to the Florida Constitution based on preemption by HIPAA and other federal laws survived a motion to dismiss.
  • Under ARRA, covered entities are required to comply with certain restrictions requested by individuals, despite the existing rule that generally permits covered entities to decline to grant restriction requests.
  • Also under ARRA, notification of breaches of unsecured personal health information is required within 60 days of discovery of the breach.

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Headlines

Senate Committee releases health care reform policy options

The third and final round of policy options for financing reform of America's health care system have been released by the Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Charles Grassley (R-Iowa). The policy options are designed to reduce costs in the health care delivery system and expand quality, affordable health care coverage. Health system savings. The Committee is examining the current health care system for opportunities to reduce waste and inefficiencies and produce savings necessary to finance health care reforms. Options for reducing costs with the current health care system include: (1) ensuring appropriate Medicare and Medicaid payments, (2) capturing productivity gains, (3) reducing geographic variation, and (4) making beneficiary contributions more predictable. Exploring current health care tax expenditures. Several options for modifying the current tax treatment of health-related expenses to eliminate inconsistencies and discourage wasteful health care spending are explored: (1) exclusion for employer-provided health insurance, (2) modify health savings accounts (HSAs), (3) modify or eliminate flexible spending accounts (FSAs), (4) standardize the definition of qualified medical expenses, (5) modify the itemized deduction for medical expenses, (6) modify the special deduction for nonprofit BlueCross BlueShield and similar organizations, (7) modify the FICA tax exemption for students, (8) extend Medicare payroll tax for state and local government employees, and (10) modify the rules pertaining to nonprofit hospitals. Lifestyle tax proposals. Two proposals to promote wellness and healthy choices, and curb activities that increase overall health care costs are proposed: (1) increase taxes on alcoholic beverages and (2) impose an excise tax on sugar-sweetened beverages. Financing Comprehensive Health Care Reform: Proposed Health System Savings and Revenue Options, Senate Finance Committee, May 20, 2009.
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Community benefit standard under scrutiny for nonprofit hospitals

The community benefit standard required for hospitals to be tax-exempt is under increasing scrutiny, practitioners and an Internal Revenue Service (IRS) official recently reconfirmed. The standard, laid out in IRS Revenue Ruling 69-545, has remained virtually unchanged since 1969, Gwen Spencer of PricewaterhouseCoopers LLP in Boston commented, but a recent IRS report on nonprofit hospitals has focused a spotlight on the standard. Spencer and others spoke at a program of the American Bar Association's Center for Continuing Legal Education that focused on the IRS hospital report. The program was moderated by Laura Gabrysch of Fulbright & Jaworski LLP in San Antonio. Spencer noted recent comments by then IRS Exempt Organizations Commissioner Steven Miller that the standard may need to be refined and updated. IRS official Nikole Flax, a program participant, indicated that the report was motivated by a number of concerns: (1) determining how hospitals define and report community benefit; (2) the lack of a standard for community benefit and the lack of uniformity; and (3) determining how to distinguish nonprofit and for-profit hospitals. Even though the IRS has these concerns, Flax noted that the report does not take a position on whether to revise or retain the community benefit standard. In conducting its study, the IRS sent questionnaires to over 500 nonprofit hospitals, but it did not audit any of the hospitals to determine whether they should retain tax-exempt status, Flax said. Currently, hospitals have discretion in how they define and report community benefit, Flax said. They can choose whether to report the amount of uncompensated care based on costs or amounts billed (the IRS will require the use of costs on the revised Form 990 reporting for hospitals). The IRS did not attempt to verify the responses to the questions. Flax pointed out that the responses are based only on operations for 2005 and may not be representative. CCH Washington Bureau, May 18, 2009, reprinted from the CCH Exempt Organizations Reports, Issue No. 418.
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OIG OKs charitable assistance program for advanced diagnostic tests

A nonprofit, tax-exempt, charitable organization's proposed arrangement that would provide financial assistance with cost-sharing obligations associated with certain advanced diagnostic testing owed by financially needy patients, including Medicare and Medicaid beneficiaries, would not result in the imposition of civil money penalties or administrative sanctions under the anti-kickback statute, according to the Office of Inspector General (OIG). The patient assistance program provides financial assistance to financially needy patients who are HIV-positive or have colorectal cancer and require certain costly diagnostic tests related to their medical care. Two aspects of the arrangement require scrutiny: (1) the donor contributions to the organization, and (2) the organization's grants to the patients. Long-standing OIG guidance makes it clear that industry stakeholders can effectively contribute to the health care safety net for financially needy Medicare and Medicaid patients by contributing to independent, bona fide charitable assistance programs. Under a properly structured program, such donations should raise few, if any, concerns about improper beneficiary inducements. Donor contributions. The design and administration of the arrangement places an independent, bona fide charitable organization between donors and patients in a manner that effectively insulates beneficiary decision-making from information attributing the funding of their benefit to any donor. It is unlikely, therefore, that donor contributions influence any patient’s selection of a particular provider, practitioner, supplier, service, or product. There also appears to be a minimal risk that donor contributions improperly influence referrals to any provider, practitioner, supplier, service, or product. Grants to patients. The provision of assistance with cost-sharing obligations for certain eligible, financially needy beneficiaries is not likely to influence improperly any beneficiary’s selection of a particular provider, practitioner, supplier, service, or product. Conclusion. The entity's position as an independent charitable organization between donors and patients and the design and administration of the arrangement provide sufficient insulation so that assistance to patients should not be attributed to any of its donors. Donors are not assured that the amount of financial assistance their patients, clients, or customers receive bears any relationship to the amount of their donations. Donors are not guaranteed that any of their patients, clients, or customers receive any financial assistance whatsoever. OIG Advisory Opinion, No. 09-04, May 11, 2009, Health Care Compliance Letter, ¶500,208.
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Obama signs the Fraud Enforcement and Recovery Act

On May 20, 2009, President Obama signed the Fraud Enforcement and Recovery Act of 2009 (FERA) into law. With regard to health care fraud, FERA amends the False Claims Act (FCA) to correct erroneous interpretations of the law which has allowed subcontractors and non-governmental entities to escape responsibility. The amendments specifically provide that the FCA reaches all false claims submitted to state administered Medicaid programs. FCA implications. FERA amends the FCA to clarify and correct these erroneous interpretations of the law that have required the government to prove that “a defendant must intend that the government itself pay the claim,” for there to be a violation. Under this line of court decisions, even when a subcontractor in a large government contract knowingly submits a false claim to general contractor and gets paid with government funds, there can be no liability unless the subcontractor intended to defraud the federal government, not just their general contractor. A court has also held that liability under the FCA can only attach if the claim is “presented to an officer or employee of the government before liability can attach.” Referred to as the “presentment clause,” the court interpreted this clause to limit recovery for frauds committed by a government contractor when the funds are expended by a government grantee. FERA clarifies that liability under the FCA attaches whenever a person knowingly makes a false claim to obtain money or property, any part of which is provided by the government without regard to whether the wrongdoer deals directly with the federal government; with an agent acting on the government’s behalf; or with a third party contractor, grantee, or other recipient of such money or property. Medicaid implications. As some defendants have argued that recent court decisions restrict FCA liability from attaching to Medicaid claims, the bill clarifies that the FCA reaches all false claims submitted to state administered Medicaid programs. By removing the offending language, which requires a false claim be presented to “an officer or employee of the government,” the bill clarifies that direct presentment is not required for liability to attach. White House Press Release and Fact Sheet, May 20, 2009.
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HHS/DOJ create interagency enforcement team

Attorney General Eric Holder and HHS Secretary Kathleen Sebelius have announced a new interagency effort, the Health Care Fraud Prevention and Enforcement Action Team (HEAT), to combat Medicare fraud. Holder and Sebelius also announced the expansion of Strike Force team operations to Detroit and Houston. The HEAT team will include senior officials from DOJ and HHS who will build upon and strengthen existing programs and invest new resources and technology to prevent fraud, waste and abuse. Efforts will include the expansion of joint DOJ-HHS Medicare Fraud Strike Force teams that have been successfully fighting fraud in South Florida and Los Angeles. The Strike Force team operating in South Florida has convicted 146 defendants and secured $186 million in criminal fines and civil recoveries. The Medicare Fraud Strike Force expanded in May 2008 to phase two in Los Angeles, where 37 defendants have been charged with criminal health care fraud offenses. In the Los Angeles cases, more than $55 million has been ordered in restitution to the Medicare program. The HEAT team also will build on demonstration projects by the HHS Inspector General and CMS that focus on suppliers of durable medical equipment (DME). These projects increase site visits to potential suppliers to prevent imposters from posing as legitimate DME providers. Joint HHS and DOJ Press Release, May 20, 2009.
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On The Front Lines

Federal Funding and Regulation of Health Care Information Technology and Electronic Health Records under the HITECH Act

by Michael A. Dowell, Esq.

The HITECH Act sets forth the a framework for federal policy and the use of stimulus funds to promote the design, development, and operation of a nationwide health information technology and electronic health record (EHR) infrastructure that allows for the electronic use and exchange of information. The Act provides incentives under Medicare and Medicaid for hospitals and physicians that have EHR systems in place. To obtain incentives, providers must demonstrate “meaningful use” of EHRs through the adoption of “qualified” EHRs and the use of “certified” EHR technology. Health care providers should immediately review their internal operations, budgets, and contracts as a first step toward becoming EHR ready. Health care organizations acquiring or updating EHR systems should consult with competent health care law counsel on the legal requirements applicable to their operations. It is also important to obtain vendor contractual commitments that they are certified and will meet the requirements of certification panels and will permit usage in accordance with the federal definition of “meaningful use.”
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