Archives for February 2013

From the Contributor’s Corner: Biggest Mistakes With Sanction Screening

With the Office of Inspector General (OIG), CMS, and State Medicaid Agencies all calling for increased and more frequent sanction screening, it is not surprising that providers responded by placing more emphasis on their efforts.  This has become a costly effort, whether done internally or contracted out to a vendor.  Furthermore, in some cases, particularly with hospitals, there are cases where this effort may have gone too far.   It is increasingly common for organizations to screen individuals and entities unnecessarily and in some cases, it is counter-productive or worse.

The most common examples are excessive screening (1) against the General Services Administration (GSA) System for Award Management (SAM) [formerly the Excluded Parties List System (EPLS)] and (2) of physicians who refer patients to the hospital, but are not employed by or do not have staff privileges at the hospital.

General Services Debarment Data

For the GSA database, there are several difficulties associated with sanction screening:

  • The design/purpose of the GSA data is for government agency use only.
  • Relatively few health care providers are a Federal government agency, or a grantee.
  • GSA provides no guidance as to how to resolve a potential hit.
  • GSA data lacks identifiable information for easy verification, whereas the OIG List of Excluded Individuals/Entities (LEIE) sanction screening has verification tools to assist with possible hits.
  • Many administrative debarments are only advisory and can be waived by agency heads.
    • There is no explanation where to draw the line in the sanction screening of contractors and vendors, and even smaller hospitals may have many thousands of them .
    • GSA “hits” are common, but legitimate ones are very uncommon.
    • Confirmed GSA hits provide little ground for terminating a contract, yet can’t be ignored.
    • Technical difficulties for GSA transition from EPLS to SAM have complicated it use.

Screening of Physicians

The screening of physicians who are not on staff or do not have staff privileges at a hospital is another problem. Neither CMS nor the OIG call for such screenings.  There are many problems in trying to screen these physicians, including:

  • There may be thousands of different physicians from time to time referring a patient to a hospital where they have no personal contact; the cost of screening all of these and trying to resolve potential hits can be an expensive proposition.
  • Often, the physician who refers a patient to a hospital may not be from the area, may be personally unknown, or may have never referred a patient before and may not do so again.  It is very common for retired persons who spend much of their time in the winter in Florida or other warmer area to be referred by a local physician to the patient’s home area hospital.
  • It is not unreasonable for the hospital receiving the patient to screen the doctor in advance of providing a service, and the hospital will not have any identifiable data on that physician.
  • If there is a confirmed “hit” against the LEIE, there is little the hospital can do about it, other than write  to them not refer anymore patients.
  • If a sanctioned physician referral is made and the hospital knows about it, it is not entitled to payment by Medicare or Medicaid.


  • In both types of situations described above, the best practice is to only screen those that you must and not try to do more than is required.
  • It is difficult to see the logic in screening the local paper and ink supplier, florist, local newspaper, groundskeeping service, etc.  If an organization decides to screen against the GSA debarment data, then make a decision as to where to draw the line regarding who should be in the mix.  The most sound practice for screening against the GSA debarment list would be to have a policy that requires screening any and all individuals and entities that provide medically-related products or services.  Filtering out those that do not meet that criterion would eliminate the great majority of vendors and contractors that are not relevant to health care, while maintaining the spirit of screening against debarments.
  • Trying to screen referrals from physicians who are not employees, on staff, or known to the hospital is not a good practice for the reasons noted above.  Since there is no requirement or obligation to do such screenings, serious consideration should be given to avoiding them.
  • If there are physicians unaffiliated with the hospital that are referring frequently, consideration might be to screen them.  If anyone is found on the sanction list, they should be notified that they must cease referring patients or the OIG would be notified.

Richard P. Kusserow served 11 years as the DHHS Inspector General and currently is CEO of the Compliance Resource Center (CRC) that includes Sanction Screening Services (S³) and Strategic Management Services (SMS) that have been providing specialized compliance advisory services since 1992. For more information, see or call him directly at (703) 535-1411.

Connect with Richard Kusserow on Google+ or LinkedIn.

Copyright © 2013 Strategic Management Services, LLC.  Published with permission.

Missouri’s Controversial Law on Contraceptives and Health Insurance

Back in 2001, Missouri, like many states, enacted a law that required most health plans that covered prescription drugs to cover contraceptive drugs and devices approved by the Food and Drug Administration. [2001 HB 762, enacted June 21, 2001]. Mo. Rev. Stat. section 376.1199 allowed purchasers of group plans whose religious or moral beliefs opposed contraception to exclude coverage. Group policies had to include a conspicuous notice to individual plan members stating: (1) whether the plan included or excluded coverage of contraceptives; (2) that if the group purchaser had included contraceptive coverage, the individual could request a policy without it; (3) if the employer or group purchaser had excluded coverage, the carrier must allow the individual to purchase contraceptive coverage at an additional premium. The employer was not to know which choice the employees made. And the policy could not exclude contraceptive drugs or devices prescribed for purposes other than preventing pregnancy.

Apparently, the national controversy over the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) generally, and the preventive services mandate in particular, prompted conservative members of the Missouri legislature to resist PPACA proactively with legislation. In July 2010, the legislature amended Mo. Rev. Stat. sec. 376.805 to prohibit any health insurance exchange operating in the state from offering policies that cover abortion services, even through an optional rider.

In July 2012, the Missouri legislature passed SB 749, amending Mo. Rev. Stat. Sec. 376.1199 to require plans to offer and issue policies excluding contraceptive coverage to entities whose beliefs are contrary to the use or coverage of contraception. The conspicuous notice to individuals must state whether the group policy includes a rider for the coverage of elective abortions. If the benefit is included, the notice must state that an individual has the right to exclude the coverage and not pay for it if it is contrary to his or her moral, ethical or religious  beliefs.

The bill also added section 191.724 to the Missouri statutes. This section creates an additional right not to obtain or pay for coverage of abortion, sterilization or contraception if those items or services are contrary to the religious or moral beliefs of an individual, employer, health plan sponsor, or other person or entity.  No government entity or official may discriminate against or penalize in any way an entity that exercises its rights under the statute. And the state attorney general may sue in state or federal court to protect the right not to purchase the coverage. Governor Jay Nixon (D) vetoed the bill. But on September 12, 2012, the legislature overrode the veto. Section 191.724 became effective immediately because of an “emergency clause,” while the changes to section 376.1199 became effective 30 days later.


On October 12, 2012, John Huff, Director of the Missouri Department of Insurance, Financial Institutions and Professional Regulation (DIFP) issued Bulletin No. 12-03 advising the industry that policies must meet the new requirements in order to receive agency approval before they may be offered for sale.  The Missouri Insurance Coalition (MIC) , an industry group,  saw a problem. PPACA required health insurers to cover contraceptives in all group plans except those sold to religious employers. Now state law required them to offer and sell policies that exclude contraceptives to anyone who claimed a moral objection.  The state agency brought cease-and-desist orders against some coalition members. Others were required to respond to market conduct interrogatories by describing their efforts to come into compliance with section 376.1199. The DIFP also refused to approve policies that did not comply with the Missouri statute.

The Litigation

So the MIC asked a federal court for a declaratory judgment that the state law was invalid and an injunction against state enforcement. The MIC argued that the law was preempted by PPACA under the Supremacy Clause of the United States Constitution, which states that the constitution and federal laws are “the supreme law of the land; in other words, when there is a conflict been state and federal law, the federal law preempts,  or takes precedence over, the state law.

At the hearing, the DIFP argued that an insurer’s failure to comply with section 376.1199 constitutes unlawful misrepresentation, concealment and suppression of material facts about the rights of policyholders. DIFP expected to obtain civil penalties and the costs of investigations from insurers who violated the law, and it would not waive the accrual of penalties while the litigation continued—notwithstanding its inability to present any argument that could support a ruling that the federal law did not preempt the state law.

Judge Audrey Fleissig granted a temporary restraining order barring state officials from taking any action to enforce the law. But Missouri hasn’t given up. The state recently asked the court to transfer venue, to move the case from the federal court in St, Louis to the one in Jefferson City, the state capital.  The court denied the request in accordance with basic procedural rules.

[Editor’s Note: A White Paper on state mandates for coverage of contraception will be released this spring.]

MedPAC Suggests Reforming Medicare’s Benefit Design With Focus on Beneficiary Cost Sharing

Congress should direct that the Medicare fee-for-service (FFS) benefit have an out-of-pocket (OOP) maximum, according to Glenn Hackbarth, chairman of the Medicare Payment Advisory Commission (MedPAC) in testimony before the House Ways and Means Committee on February 26, 2013. Because the current FFS benefit does not have a limit on the amount of beneficiaries’ cost sharing, he said, a small percentage of Medicare beneficiaries incur very high levels of cost sharing each year. This change would be one part of a benefit design that also would include an additional charge on supplemental insurance as well as replacing coinsurance with copayments that may vary by type of service and provider.

Adding an OOP maximum to the FFS benefit would reduce the financial risk for beneficiaries with very high spending and could mitigate the need to purchase supplemental insurance, a significant expense for many beneficiaries, Hackbarth said. In recommending an additional charge on supplemental insurance, MedPAC maintains that it is reasonable to ask beneficiaries to pay more when their decision to get supplemental coverage imposes additional costs on the program that are not fully reflected in their supplemental premiums. Those costs are currently paid for by all Medicare beneficiaries through higher Part B premiums and by the taxpayer, Hackbarth said.


A redesign of benefits, according to MedPAC, should create clearer incentives for beneficiaries to make better decisions about their use of care, while holding aggregate beneficiary cost-sharing liability the same as under current law. This is a contrast to recently proposed changes to Medicare benefits that would require beneficiaries to pay more. Medicare should allow for ongoing adjustments and refinements in cost sharing as evidence of the value of services accumulates and evolves, MedPAC proposes.

Over the long term, the Medicare program needs to move toward a benefit design that gives individuals incentives to use higher value care and discourage using lower value care, according to MedPAC. To encourage this, Congress should consider giving the Secretary authority to reduce or increase cost sharing on services if evidence indicates that doing so would reduce Medicare spending or lead to better health outcomes without increasing costs. This authority would be exercised through the usual notice and comment rulemaking process, Hackbarth said.

Supplemental Plans

Almost 90 percent of FFS beneficiaries have supplemental coverage that fills in some or all of Medicare’s cost sharing, effectively nullifying the program’s tool for influencing beneficiary incentives, Hackbarth said. To address the insurance effect of supplemental coverage, MedPAC recommends imposing an additional charge on supplemental policies. This approach would allow beneficiaries to add costs to Medicare but require them to pay for at least some of those additional costs.

The additional charge recommended by MedPAC would apply to most sources of supplemental coverage, including Medigap and employer-sponsored retiree plans. The additional charge would not apply to Medicare Advantage plans because they are at risk for benefit designs that increase costs relative to their capitation payments and are able to employ other tools for managing their enrollees’ use of services.

The Commission considers it important that risk-averse beneficiaries who wish to buy first-dollar coverage or reduce the uncertainty in their OOP spending through supplemental insurance should be allowed to do so but effectively at a higher price.

Health Care One of the Areas Hardest Hit By Possible Sequester Cuts

Automatic cuts to health care spending as part of the sequester will become effective on March 1, 2013, if Congress does not find an alternative way to reduce the budget deficit. If Congress cannot come up with an alternative, it will impose upon itself on Friday an $85 billion budget reduction, resulting from across-the board cuts. Health care will be one of the areas hardest hit, according to the White House.

Mental Health Cuts

One of the most serious cuts will come in areas affecting mental health. According to the White House, if the sequestration takes effect, up to 373,000 seriously mentally ill adults and seriously emotionally disturbed children could go untreated, which would likely lead to increased hospitalizations. This would be a result from direct cuts to the Mental Health Block Grant program which provides mental health services for seriously mentally ill adults and seriously emotionally disturbed children not receiving needed mental health services. Additionally, close to 8,900 homeless persons with serious mental illness would not have the outreach, treatment, housing, and support they currently receive through the Projects for Assistance in Transition from Homelessness (PATH) program.

AIDS and HIV Treatment and Prevention

The White House has indicated that cuts to the AIDS Drug Assistance Program could potentially result in 7,400 fewer patients having access to life saving HIV medications. Further, approximately 424,000 fewer HIV tests could be conducted by Centers for Disease Control (CDC) state grantees, which could result in increased future HIV transmissions, deaths from HIV, and costs in health care.

Tribal Services

Cuts in funding to the Indian Health Service and Tribal hospitals and clinics could reduce their ability to provide services. With the cuts, these facilities would be forced to provide 3,000 fewer inpatient admissions and 804,000 fewer outpatient visits.

State Cuts

The White House has posted several state-specific examples of the ways the cuts will hurt areas such as public health. For example, Illinois public health programs will lose approximately $5 million for programs dealing with public health threats, substance abuse treatment and prevention, HIV testing and childhood vaccinations. California and Texas will rank among the hardest hit states, with funding decreases of over $18 million and $10 million, respectively. The Washington Post has also created a table showing the significant spending cuts across the board, state by state and each category of cuts from the sequester.

Impact on Public Health

Health-specific programs are not the only place being cut that will have an effect on public health. For example, the Federal Emergency Management Agency would likely have deep cutbacks, reducing funding for state and local grants that emergency management personnel, which would hamper the federal government’s ability to respond to natural disasters like Hurricane Sandy and other emergencies. The Food and Drug Administration’s Center for Drug Evaluation and Research would also experience cuts. Approximately 600,000 women and children would be dropped from the Department of Agriculture’s Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) from March through September. These cuts and others like them are likely to have a significant downstream impact on public health.