AHA criticizes CMS for ‘information void’ on short hospital stay claims

In a qui tam action that the American Hospital Association (AHA) characterized as an attempt to retrospectively review the medical judgments that doctors make every day, the association urged the court and the Department of Justice to approach short-stay hospital stays with “sensitivity” to the challenges that providers face in the “information void” left by CMS. While the AHA said in its amicus curiae brief that it took no position on the proper outcome of the case and sought only to provide background, it made clear its position that CMS’s standards for observation admissions are ambiguous.

In 2011 Karin Berntsen, an employee of Prime Healthcare Services, Inc., filed a qui tam action against the hospital system, its founder, and 14 of its hospitals alleging that emergency departments improperly admitted patients who could have been placed in observation, treated as outpatients, or discharged. She alleged that as a result of these unnecessary admissions, the hospitals submitted false claims to the federal health care programs. The federal government intervened in May 2016.

In its brief, the AHA explained that observation is a distinct type of hospital care, not to be confused with inpatient, emergency, clinic, or recovery services, that involves ongoing monitoring, testing, and assessment solely for the purpose of determining the need to admit a patient. There are, however, no clear standards for these admission decisions, said the AHA.

For example, argued the AHA, in the hospital inpatient prospective payment system (IPPS) proposed rule for calendar year 2014, CMS asked doctors to use a 24-hour period and the expectation of a patient’s need for an overnight stay as inpatient admission benchmarks (Proposed rule, 78 FR 27486, 27646, May 10, 2013), then in August 2013 promulgated the two-midnights rule (Final rule, 78 FR 50495, 50944, August 19, 2013). Indeed, the Medicare Payment Advisory Commission (MedPAC) noted that the difference between the inpatient criteria and the criteria for outpatient observation status are often unclear to providers.

In light of these ambiguous standards, which the AHA said CMS has struggled unsuccessfully to refine and clarify, the association asked courts to require the government in False Claims Act litigation to allege with specificity why inpatient claims are improper.

Kusserow on Compliance: OIG testifies regarding Detroit investigation results

The HHS OIG provided testimony before the House Ways and Means Subcommittee on Oversight, describing their work in Detroit to protect Medicare and Medicaid beneficiaries and to fight health care fraud from the field agent’s perspective. The OIG typically conducts investigations in partnership with other Federal and State agencies, as well as the private sector. Often investigations are part of the Detroit-based Medicare Fraud Strike Force, which combines the resources of Federal, State and local law enforcement entities to prevent and combat health care fraud across the country.

The OIG receives complaints or investigative leads from a variety of sources, including the OIG hotline, law enforcement partners, beneficiaries, providers, and informants. Traditional means of identifying fraud include conducting interviews of cooperating witnesses and surveillance. The schemes investigated range from billing for services not actually performed to organized criminal enterprises. The perpetrators of these frauds can range from highly respected physicians to individuals with no prior experience in the health care industry. The OIG highlighted some major areas of where they have been focusing, including:

  • Home and community-based services. Home and community-based services, including personal care services (PCS), which are particularly vulnerable to fraud, with investigations resulting in more than 350 criminal and civil actions and $975 million in investigative receivables for fiscal years 2011 – 2015.
  • Unnecessary prescriptions. Physicians write medically unnecessary controlled substance prescriptions in exchange for cash or submission by a patient to medically unnecessary services.
  • Prescription drug fraud. Enforcement action against and prevention of prescription drug fraud is a major priority to address a rapidly growing national health care problem, and an opioid epidemic with 678 pending complaints and cases involving Medicare Part D, which represents a 152-percent increase in the last 5 years.

The OIG employs data analytics and real-time field intelligence to detect and investigate program fraud and to target our resources for maximum impact. They also reported being a leader in the use of data analytics, employing a dedicated data analytics unit. The OIG also has direct access to Medicare claims data and use innovative methods to analyze billions of data points to identify trends that may indicate fraud, geographical hot spots, emerging schemes, and individual providers of concern. Testimony summarized the OIG national investigative results during the period of 2013 through 2015, as follows:

  • $11 billion in receivables, or money ordered or agreed in settlements
  • 2,856 criminal actions
  • 1,447 civil actions, and
  • 11,343 program exclusions.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

Connect with Richard Kusserow on Google+ or LinkedIn.

Subscribe to the Kusserow on Compliance Newsletter

Copyright © 2016 Strategic Management Services, LLC. Published with permission.

New alternative payment models announced by CMS

New opportunities for clinicians to join Advanced Alternative Payment Models (APMs) are available from CMS. The opportunities, developed by the CMS Innovation Center under the Quality Payment Program created by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (P.L. 114-10), are designed to improve care and potentially provide incentive payments to clinicians. By giving more clinicians the opportunity to participate in these models, CMS hopes that the benefits of high-quality, coordinated care will be extended to more Medicare beneficiaries.

The new opportunities. CMS announced that it expects to re-open applications for new practices and payers in the Comprehensive Primary Care Plus (CPC+) model and new participants in the Next Generation Accountable Care Organization (ACO) model for the 2018 performance year. In addition, the Innovation Center’s Oncology Care Model with two-sided risk will now be available in 2017, which will qualify the model as an Advanced APM beginning in the 2017 performance year.

2016 APM goals. Last year, HHS set a goal of having 30 percent of Medicare payments flow through APMs by the end of 2016. HHS met its goal 11 months early, at the beginning of 2016. Now, HHS has announced that 72 health plans and states, working through the Health Care Payment Learning and Action Network (LAN), a public-private partnership established by HHS in January 2015, have voluntarily reported on the same payment goals. For these plans and states, which represent almost 200 million of the nation’s covered lives, 23 percent of their 2015 health care spending flowed through APMs.

On October 14, 2016, HHS issued its Final rule with a comment period implementing the Quality Payment Program (see MACRA final regulations reflect input from ‘months-long listening tour’, Health Law Daily, October 14, 2016). In 2017, under the Quality Payment Program, clinicians may earn a 5 percent incentive payment through sufficient participation in the following Advanced APMs:

  • Comprehensive End Stage Renal Disease (ESRD) Care Model (Large Dialysis Organization (LDO) arrangement)
  • Comprehensive ESRD Care Model (non-LDO arrangement).
  • CPC+
  • Medicare Shared Savings Program ACOs – Track 2
  • Medicare Shared Savings Program ACOs – Track 3
  • Next Generation ACO Model
  • Oncology Care Model (two-sided risk arrangement)

In 2018, CMS anticipates that clinicians may also earn the incentive payment through sufficient participation in the following models:

  • ACO Track 1+
  • New voluntary bundled payment model
  • Comprehensive Care for Joint Replacement Payment Model (Certified Electronic Health Record Technology (CEHRT) track)
  • Advancing Care Coordination through Episode Payment Models Track 1 (CEHRT track)

According to CMS, these lists of models will continue to change as more models are proposed and developed in partnership with the clinician community and the Physician-Focused Payment Model Technical Advisory Committee.

Warren: EpiPen® Medicaid rebate settlement shows ‘crime does pay’

Calling a purported settlement between the Department of Justice (DOJ) and Mylan Pharmaceuticals “shamefully weak” and “shockingly soft,” Sen. Elizabeth Warren (D-Mass) warned that the DOJ is failing to deter drug companies from engaging in schemes to defraud Medicaid. In a letter to Attorney General Loretta Lynch, Warren detailed her concerns about the settlement, and requested a full briefing from the DOJ on the matter. Warren’s letter echoed similar concerns raised by Sen. Richard Blumenthal (D-Conn), who asked the DOJ to reject the proposed settlement agreement.

Medicaid drug rebate program

The Medicaid drug rebate program, authorized by Sec. 1927 of the Social Security Act, requires drug manufacturers to participate in exchange for state Medicaid coverage of most drugs. Manufacturers pay a rebate on drugs for which payment was made under the state plan, and the rebates are shared between states and the federal government to offset the cost of Medicaid prescription drugs. The rebate for brand-name drugs is 23.1 percent of the average manufacturer price (AMP) per unit, adjusted for changes in drug costs that exceed the inflation rate; the rebate for generic drugs is 13 percent of AMP per unit, with no inflation adjustment. Manufacturers are responsible for ensuring that their drugs are correctly classified and for paying the correct rebate amount.

EpiPen classification

After cost increases in Mylan’s EpiPen® Auto-Injector came under scrutiny (see Mylan attempts to mitigate EpiPen® cost hike controversy, August 25, 2016), CMS Acting Administrator Andy Slavitt confirmed that since 1997, the EpiPen has been misclassified as a generic (non-innovator, multiple source) drug. Under CMS’ definitions, the EpiPen—approved under a New Drug Application (NDA) by the FDA, under patent protection, and with no therapeutic equivalents—should have been classified as a brand (single source) drug (see Federal EpiPen® spending up 43 percent, Mylan misclassified drug as generic, October 6, 2016). Further, Slavitt confirmed that CMS “expressly told Mylan that the product is incorrectly classified,” though the agency could not comment on the total amount of rebates owed by Mylan—which purchased the EpiPen from Merck in 2007—as a result of the misclassification.

Purported settlement

In October 2016, Mylan announced that it had settled allegations of fraud against the Medicaid drug rebate program related to the company’s classification of the EpiPen® Auto-Injector as a generic drug, rather than a brand drug; the DOJ, however, has not released any information about the alleged settlement (see Mylan settles EpiPen® Medicaid rebate dispute for $465M, October 11, 2016). According to Mylan, it will pay $465 million and enter into a corporate integrity agreement with the HHS Office of Inspector General (OIG), resolving all potential rebate liability claims by federal and state governments, and with no finding of wrongdoing.

Shame and shock 

In her letter, Warren wrote that there is no excuse for Mylan’s misclassification of the EpiPen, since the company “had multiple opportunities, over multiple years” to correct the classification. According to calculations done by Warren’s staff, Mylan should have paid an estimated rebate of $416 per dose, rather than the $58 per dose it paid; as a result, Warren says, Mylan underpaid Medicaid rebates by an estimated $530 million. The $465 million settlement, therefore, would reward Mylan by fining the company about $65 million less than the amount Mylan earned by its purportedly fraudulent classification of the EpiPen. Warren reminded the DOJ of “extensive tools” to hold the company accountable, including penalties of up to $100,000 per item of false classification under the Medicaid drug rebate law (42 U.S.C. §1396r-8(b)(3)(C)(ii)), treble damages under the False Claims Act (31 U.S.C. §3729(a)(1)), and criminal penalties under the Health Care Fraud law (18 U.S.C. §1347). She called the announced settlement terms a “limp response” that fails to hold Mylan accountable and with “no deterrent value to prevent drug companies from engaging in abusive schemes to defraud Medicaid and rip off taxpayers.”