Highlight on New Mexico: New health Secretary has several issues on her plate

The New Mexico Department of Health is undergoing some changes, making important decisions, and overrun with its workload. The new Secretary of Health must figure out how the agency will manage its large load of applications for medical marijuana approval and ensure that providers continue to accept the state’s growing number of Medicaid beneficiaries.

A new leader

New Mexico has a new Secretary for the state Department of Health. Governor Susana Martinez recently appointed Lynn Gallagher to the position. Gallagher has been the Department of Health’s Deputy Secretary, and has also served as General Counsel for the Aging and Long-Term Services Department. Secretary Gallagher described her appointment as “bittersweet,” as it follows the death of Secretary Retta Ward.

Department overloaded with medical marijuana requests

One of the new Secretary’s immediate problems is managing the influx of medical marijuana card requests. According to the Department, the state has about 24,000 people in the medical cannabis program, up from 14,000 last year. On average, New Mexico is receiving 2,700 applications per month. The hard copy system is not helping matters, and approvals are taking about 50 days despite the eight-person team. The state soon plans to bring in some temporary workers to relieve the load.

Underused school-based services cut

The New Mexico Department of Health has chosen not to renew the contracts for school based health centers at Roosevelt Middle School, School on Wheels, Maxwell Municipal Schools, Mountainair Middle and High School, and Belen High School. The department has deemed that primary care services at these school health centers have been underused. Lists of alternative centers that are available for local students have been provided.

A Medicaid provider crisis looks to become even worse

An article written by a public policy analyst calls for the state to reform its Medicaid program, arguing that the current program places an incredible burden on physicians, even before the reimbursement reductions are implemented. In 2014, a Wall Street Journal article emphasized how New Mexico’s Medicaid expansion was vital to those who were suddenly able to obtain care, but exposed the program’s burden on providers. A family doctor turned away all newly eligible Medicaid enrollees who sought care at her practice because of the low reimbursement rates. She noted that Medicaid reimbursed her half of what commercial insurers paid for a moderately complex visit, and regretfully stated that she could not grow the proportion of Medicaid patients that she saw because of the strain it would put on herself and her family.

As if the situation wasn’t bad enough then, the New Mexico Human Services Department recently proposed reimbursement cuts for providers serving Medicaid patients in order to relieve pressure on state and federal government spending. Although preventive care and obstetrics services would be exempt from the cuts, over 2,000 general physicians would be subject to rate decreases.  Hospitals would see their rates slashed by 3 to 8 percent. These cuts stem from the projected $417 million deficit that the Medicaid program will crease in 2016 and 2017, as well as estimates that 43 percent of state residents would be enrolled in Medicaid by 2020. Already, Medicaid patients are subject to lengthy wait times for visits, from three weeks to almost two months. The rate cuts are expected to worsen the wait times.




Kusserow on Compliance: More on the new OIG guidance on exclusions

The HHS Office of Inspector General (OIG) has authority under the Social Security Act to exclude any individual or entity from participation in the federal health care programs for engaging in prohibited conduct. Those programs may not pay for any items or services furnished, ordered, or prescribed by an excluded party. Going back to 1997, the OIG published a policy statement with non-binding criteria to be used by the OIG in assessing whether to impose exclusion under its authorities and has used this in evaluating whether to impose exclusion ever since. This policy has also been used as an OIG authority in the creation of Corporate Integrity Agreements (CIAs), or the use of some other approach to mitigate risks of future misconduct with OIG oversight. The OIG has now published a revised superseding policy.

The OIG position in favor of sanctions is rooted in the idea that some period of exclusion should be imposed against a person who has defrauded Medicare or any other federal health care program. The new OIG guidance document sets forth circumstances in which this presumption may be rebutted and the non-binding factors that the OIG will use to make such a determination, as well as describing how they will evaluate risk to the federal health care programs in using its other available remedies. The OIG outlined a “risk spectrum” range of options when settling a civil or administrative health care fraud case that includes the following remedies: (1) exclusion; (2) heightened scrutiny (e.g., implement unilateral monitoring); (3) integrity obligations; (4) take no further action; or (5) in the case of a good faith and cooperative self-disclosure, release exclusion with no integrity obligations.

The OIG often concludes that exclusion is not necessary if there is agreement to appropriate integrity obligations, in exchange for a release of exclusion, such as with a CIA. The CIAs are designed to strengthen and promote an entities’ compliance program so that future issues can be prevented or identified, reported, and corrected. Integrity obligations also enhance the OIG’s oversight of the entity. Failure to agree to terms of a CIA may result in pursuing exclusion or the exercise of other administrative actions, as deemed appropriate to “unilaterally monitor” compliance with federal health care programs. If the OIG determines a party presents a relatively low risk to federal health care programs, neither exclusion nor integrity obligations will be deemed necessary. These situations include the absence of egregious conduct, such as patient harm or intentional fraud, relatively low financial harm, and where a successor owner, after the misconduct, is resolving the matter.

There are two limited circumstances in which OIG will usually give a person a release of exclusion without requiring integrity obligations: (1) when the person self- discloses the fraudulent conduct, cooperatively and in good faith, to the OIG; or (2) when the person agrees to robust integrity obligations with a state or the Department of Justice (DOJ) and OIG determines these obligations are sufficient to protect the federal health care programs.

It is worthwhile to review the revised exclusion policy statement and evaluate how your compliance programs, self-disclosure protocols, and other practices measure against the standards described by the OIG.

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.

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



Life Safety Code requirements for Medicare, Medicaid facilities streamlined

Medicare and Medicaid participating health care facilities, including hospitals, long-term care facilities, hospices, and others will be required to adhere to the 2012 edition of the Life Safety Code (LSC) established by the National Fire Protection Association (NFPA) to ensure the safety of patients and residents. When necessary, CMS stated in an advance release of its Final rule, the agency will grant waivers of some provisions of the LSC when the application of the rules would result in an unreasonable hardship and if patients’ health and safety would not be jeopardized by provision of the waiver. This Final rule published in the Federal Register May 4, 2016.

A necessary update

Following strong industry encouragement, CMS’ Proposed rule (79 FR 21552), published April 16, 2014, proposed to amend fire safety standards, adopt the 2012 LSC, and eliminate references to earlier editions of the LSC. The agency emphasizes that enforcing earlier editions of the code can result in confusion and limitations on options. New buildings are typically designed to meet the standards of the latest LSC, enforced by state and local jurisdictions. Requiring facilities to comply with two different editions of the code could result in inconsistencies and increased costs without increased patient benefit.

2012 LSC changes

The 2012 LSC differs significantly from the 2000 LSC, which was the previous edition for Medicare and Medicaid facility compliance. The format of the LSC was altered, and the use of exceptions was removed for clarity. In addition, the 2012 version contains a “building rehabilitation” chapter that clarifies the improvement standards for different types of rehabilitation work. Each category, such as repair, renovation, or change of use, will have different standards. CMS believes that these guidelines will reduce costs for health facilities during minor construction projects.

The 2012 edition also classifies a “health care occupancy” as a facility serving four or more individual as inpatients. However, CMS finds the LCS’s exception for those serving fewer than this amount inapplicable to Medicare and Medicaid facilities, and will require all occupancies providing care to one or more patients to comply with relevant 2012 requirements.

Kusserow on Compliance: Whistleblowers receive $98M in $784.6M FCA settlement

Pharmaceutical companies Wyeth and Pfizer Inc., agreed to pay $784.6 million to resolve allegations that Wyeth knowingly reported to the government false and fraudulent prices on two of its proton pump inhibitor (PPI) drugs, Protonix Oral® and Protonix IV®. The case was brought under the qui tam provisions of the federal False Claims Act (FCA) (31 U.S.C. § 3729 et seq.) by two relators, a former hospital sales representative for AstraZeneca Pharmaceuticals and a practicing physician. They will receive $98,058,190.00 as their share from the settlement. This amount ranks among the largest award for whistleblowers ever.

Pfizer acquired New Jersey-based Wyeth in 2009, approximately three years after Wyeth had ended the conduct that gave rise to the settlement. The Department of Justice (DOJ) alleged that Wyeth failed to report deep discounts on Protonix Oral and Protonix IV that it made available to thousands of hospitals nationwide through a bundled sales arrangement in which a hospital could earn deep discounts on both drugs, if it placed them on formulary and made them “available” within the hospital. Through this bundled arrangement, Wyeth sought to induce hospitals to buy and use Protonix Oral, which hospitals otherwise would have had little incentive to use, because other pre-existing oral PPI drugs were priced competitively and were considered to be as safe and effective. Wyeth wanted to control the hospital market because patients discharged from the hospital on Protonix Oral were likely to stay on the drug for long periods of time, rather than switch to competing PPIs, during which time payers, including Medicaid, would pay nearly full price for the drug.

All this resulted in their wrongfully avoiding paying hundreds of millions of dollars in rebates to Medicaid. Under the terms of the settlement, Wyeth will pay $413,248,820 to the federal government and $371,351,180 to state Medicaid programs.

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.