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OIG & Cost Sharing for 911 Dispatch Service

April 30, 2012 by

Although a proposed arrangement by a municipal fire department to share certain costs related to dispatch and other services with hospital-based ambulance providers that participate in the local 911 emergency dispatch system could potentially generate prohibited remuneration under the anti-kickback statute if the requisite intent to induce or reward referrals of federal health care program business were present, the Office of Inspector General (OIG) would not impose administrative sanctions under §§1128(b)(7) or 1128A(a)(7) of the Social Security Act (as those sections relate to the federal anti-kickback law, according to an OIG advisory opinion. 

The city’s fire department coordinates the 911 emergency medical services (EMS) system component, which encompasses pre-hospital treatment and transport. The fire department provides the majority of EMS tours in the city through its own ambulances; however, various hospitals also participate as EMS providers in the 911 system on a voluntary basis without separate compensation from the city. The fire department and the hospitals operate separately and separately bill their patients or their patients’ insurers for their services, including Medicare and Medicaid beneficiaries. All EMS ambulances, whether they are operated by the fire department or a participating hospital, are assigned a designated street corner location to which they return after responding to a call. Ambulances are required by state and regional protocols as well as the ambulance agreements to transport patients to the nearest appropriate hospital;EMS crew members may not “steer” or otherwise unlawfully transport patients to the participating hospital that is operating the ambulance.

 According to OIG, the proposed arrangement would implicate the anti-kickback statute because participating hospitals, which are potential referral recipients, would be required to bear a portion of the costs as a condition of providing EMS in the city. Some of the EMS would be reimbursable under the federal health care programs. OIG concluded that the following factors included in the proposed arrangement, in combination, would mitigate the risk of federal health care program fraud or abuse.

  • The proposed arrangement would be part of a comprehensive scheme by the city to manage the delivery of EMS through the fire department, which is legally empowered to direct the provision of the EMS in the city. The fire department certified that it has entered into the ambulance agreements in a manner that conforms to applicable law governing such agreements.
  • The proposed arrangement would be structured so that each hospital’s payment would reasonably approximate its proportionate share of the costs, therefore, the hospitals would not be overpaying the source of the referrals, which represents the typical anti-kickback concern.
  • The amount due from a particular hospital would be determined based on the number of scheduled tours and not on either the number or nature of services it provides during those tours or the number of transports to the participating hospital; therefore, the amounts paid by the participating hospitals would not be tied to the volume or value of referrals between the parties.
  • The proposed arrangement would be limited to EMS, would not involve substantive change in the dispatch procedures already utilized by the fire department on behalf of the city, it would be unlikely to increase the risk of over utilization and also would be unlikely to lead to increased costs to the federal health care programs.
  • The proposed arrangement should not have an adverse impact on competition. Any hospital licensed by the state that obtained an ambulance operating certificate from the state’s Department of Health authorizing the provision of ambulance services in the city could request to participate. If the fire department determined that the additional EMS resources would satisfy an operational need in the area in which the interested hospital was licensed to operate and that such participation would operationally benefit the 911 system, the hospital would be permitted to participate. 

 OIG said it might have reached a different result if the participating hospitals would pay the city or the fire department remuneration not directly related to the provision of the EMS that are the subject of the ambulance agreements such as free or reduced cost equipment.

Filed Under: Anti-Kickback, Centers for Medicare and Medicaid, Fraud & Abuse, HHS, Medicaid, Medicare, Office of Inspector General

Congressional Hearings Question Minnesota Medicaid Managed Care

April 30, 2012 by

On April 25, 2012, the Joint Congressional Committee on Oversight held hearings on the question, “Is government adequately protecting taxpayers from Medicaid fraud?”. The committee heard testimony about alleged provider fraud on a massive scale in Texas and New York but the major focus of the hearing was managed care contracting in Minnesota.

Minnesota Medicaid contracted with four health maintenance organizations (HMOs) to managed the care of beneficiaries. All four were nonprofit entities, but they appear to have been quite profitable. In 2009, the state paid the HMOs $4,400 per Medicaid beneficiary, more than twice the national average. According to the staff report of the joint committee, the four HMOs had a combined surplus of $1.6 billion at the end of 2010.

A witness from the Government Accountability Office (GAO) testified that CMS’ reviews of state rates for managed care are inconsistent As the GAO found in 2010, there are certifications of actuarial soundness as required by statute, but there is no review of the underlying data.

One of the witnesses had been General Counsel to the Minnesota Hospital Association and directed its legislative advocacy program. In 2010, he was assigned to push for legislation to promote transparency and accountability in the state’s publicly funded health programs. The MHA advocated legislation requiring state health programs to meet medical loss ratios, apply Generally Accepted Accounting Principles and undergo independent audits. The Pawlenty administration and the health plans opposed the legislation.

He testified that, in a conference call with the then director of contract management for the Medicaid managed care program, the director stated, “If you can’t keep a secret you have to leave the room, but we have been adjusting the reserve amount for state-only funded programs by making it essentially zero, and increasing the amount for [capitated] federal programs, blending the rate and returning it to the insurers.”  In other words, the agency’s rates underpaid the HMOs for the state-only programs and overpaid them for  the Medicaid program to maximize their federal reimbursement. Late in the 2010 legislative session, in discussions about the impending repeal of the state-funded general assistance medical care (GAMC) program, the witness said that repeal would be a windfall for the HMOs because they had been paid capitated rates for the state programs as a whole. GAMC was eliminated, but the state did not “claw back” the payments attributable to the program.

In January, 2011, a new governor, Mark Dayton, took office. He appointed Lucinda Jessom to the post of Commissioner of the Department of Human Services. In mid-March, UCare, the smallest of the four Medicaid HMOs, announced that it was making a one-time contribution of $30 million toward the state’s budget deficit. In a letter to state legislators, UCare’s president and CEO stated that the payment was “what we consider to be excess operating margin for state public programs.”   The stated reasons for the excess margin included the costs of the discontinued GAMC program which had been born by the Medicaid program. The check would be presented in July.

Such a large “contribution” is highly unusual, and the question arose how it should be treated. If the payment was a refund of excess Medicaid payments, the federal government was entitled to its share of those payments.And it’s the treatment of that contribution that interested the oversight committee. The day before the UCare letter, the DHS Commissioner emailed another staff member about the payment: “In order to have a good chance of keeping all this money, it must be characterized as a donation. If a refund, feds clearly get half. Can you work with Scott on redrafting? Also, I thought we were going to handle this through phone calls.”

Representative Trey Gowdy (R. -S.C.) grilled Commissioner Jessom about the email. Although she argued that the passages were taken out of context, Gowdy would have none of it, claiming that her agency was “trying to keep as much of other people’s money as you possibly can.”  “Don’t you see how this looks?” he asked repeatedly. Congressman Dennis Kucinich (D.-Ohio) also took Jessom to task, asking how she could have reasoned that the UCare payment would not have to be shared with the federal government.

According to the staff report, in July, 2011, Center for Medicaid and State Operations Director Cynthia Mann questioned the state’s contention that the payment was a donation. In March, 2012, Mann’s office asked for more details about the source of the reserve UCare drew on to make the donation and the extent to which the reserve was related to Medicaid payments UCare had received.  On Monday, April 23, the Minnesota agency agreed to pay about $15 million to CMS.

It’s too bad that the agency’s handling of the UCare payment distracted lawmakers from the systemic problem, the payment of excessive rates to Medicaid HMOs. In 2011, the Governor and commissioner negotiated a 1 percent cap on HMO profits from publicly funded plans, and they reported that $73 million would be refunded by the four HMOs. The legislative auditor will scrutinize the HMOs’  finances. A bill to require independent audits failed in 2011 and was not expected to pass this year.

Filed Under: Centers for Medicare and Medicaid, Fraud & Abuse, Government Accountability Office, Health care spending, Medicaid, Medical Loss Ratio, News, State Level

Nebraska to Continue Provision of Prenatal Care for Illegal Immigrants

April 27, 2012 by

Until 2010, Nebraska was one of 15 states that funded prenatal care for illegal immigrants through its Medicaid program. That year, the federal government prohibited the state from using federal Medicaid funds, limiting such coverage to the Children’s Health Insurance Program (CHIP). This ban resulted in the loss of prenatal care for 870 women illegally residing in the state. However, Nebraska lawmakers took a stand last week, voting 30 – 16 to override Governor Dave Heineman’s veto of a bill that would reinstate prenatal care for illegal immigrants at the cost of Nebraska taxpayers.

Governor Heineman and other opponents of the bill point out that during the past two years, in which the state was not paying for the prenatal care, illegal immigrants were obtaining low-cost or free care from charities and churches. The Governor maintains that charity care should remain the status quo, and that “providing preferential treatment to illegals while increasing taxes on legal Nebraska citizens is misguided, misplaced and inappropriate.” Senator John Nelson agreed, stating, “No on is being turned away…They’ve been finding a way.”

Other Senators raised concerns that passage of the bill will make Nebraska a magnet for illegal immigrants who are seeking free prenatal care–especially since no other states surrounding Nebraska provide such services. Additional concerns include opposition from state residents who grapple financially to pay for their own health care and find it unfair to have their tax dollars stretched further to provide health care for illegals.

Strong supporters of the bill included “pro-life” advocates who contend that the measure will protect the interests of unborn babies, which have no control over their circumstances and will be legal citizens upon their birth. Other supporters included professionals in the health care field, who testified that $4 dollars will be saved for every dollar spent on prenatal care since the care will prevent easily avoidable complications upon birth, when the child would be covered by government programs anyway.

Advocates of the bill included the Nebraska Right to Life organization and the Nebraska Appleseed Center for Law in the Public Interest, bringing together some uncommon political allies. Appleseed Center’s public policy director argued that illegal immigrants are “…in our communities and they’re helping contribute to our communities…so we believe providing this kind of prenatal coverage to their children is appropriate.”

Governor Heineman advised lawmakers that they will suffer long-lasting political consequences for voting to override his veto of the bill.

The bill, which is expected to provide care for 1,100 illegal immigrant women and their babies, goes into effect in three months. Lawmakers estimate that the cost will be $1.9 million in federal funds and $560,000 in state tax money.

Filed Under: Centers for Medicare and Medicaid, CHIPRA, Health care spending, HHS, Legislation, Medicaid, News, State Level Tagged With:
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