Newsletters

The Health Law Advisor - Fall 2006

WACHLER & ASSOCIATES, P.C.
NOW OFFERS A FULL RANGE OF LEGAL SERVICES

Wachler & Associates, P.C. is pleased to announce that we have established an of counsel relationship with Jaffe Raitt Heuer & Weiss, P.C. Wachler & Associates, P.C. specializes in all aspects of healthcare law, and we have provided healthcare and related legal services to our clients for over twenty years. The affiliation with Jaffe gives our firm the ability to offer a full range of legal services to our clients. As part of this relationship, the attorneys of Wachler & Associates, P.C. will have access to 90 high quality attorneys practicing in a wide range of disciplines. The affiliation also provides both of our firms the ability to service larger healthcare institutional clients that often have multifaceted legal needs. For more information regarding the law firm of Jaffe Raitt Heuer & Weiss, P.C., we invite you to visit their website at www.jaffelaw.com.

COMPLIANCE CORNER:
What all physicians need to know about the proposed changes to the
Medicare physician fee schedule

On August 22, 2006, the Centers for Medicare and Medicaid Services (CMS) published its proposed rule regarding changes to the Medicare Physician Fee Schedule for 2007. The proposed changes include not only amendments to the physician fee schedule, but also changes to the Medicare reassignment rules and Stark regulations.

The final physician fee schedule was published on November 1, 2006 and is currently available from the CMS website from the following link: http://www.cms.hhs.gov/physicianfeesched/downloads/1321-fc.pdf?agree=yes&next=Accept.

The final rule does not yet adopt the revisions outlined below. However, CMS plans to issue its final regulations regarding the issues addressed by this article after further consideration at a later date.

The proposed changes to the 2007 Medicare Physician Fee Schedule seek to clarify provisions of the Medicare reassignment rule, specifically with respect to "pod" or "condo" laboratories (pod labs). Pod labs are those laboratories located off-site from a physician's office, which are operated by an independent contractor physician pursuant to a reassignment arrangement with the ordering physician's office. In one common scenario, the independent contractor physician located at the pod lab performs the technical component of a service and bills Medicare for this service; the group practice of the physician would also bill Medicare for the interpretation performed by the independent contractor physician, who has reassigned his right to payment to the group practice. CMS believes that these types of arrangements are subject to fraud, waste, and abuse, including but not limited to generation of medically unnecessary tests, kickbacks, fee-splitting, and may result in referrals that would be otherwise prohibited under the Federal Stark law.

Within this framework, CMS proposed to amend the reassignment rule as follows: If the technical component of a diagnostic test is billed by a physician or medical group under a reassignment involving a contractual arrangement with a physician who performs the service, the amount billed to Medicare may not exceed the physician's net charge to the billing physician or medical group; the billing physician's or medical group's actual charge; and the fee schedule amount for the service that would be allowed if the physician or other supplier billed directly. In other words, the physician may not mark-up the charge for the test. In addition, the billing entity must perform the interpretation.

CMS is considering additional amendments to the reassignment rules. For example, a physician or medical group could bill for a reassigned interpretation of a diagnostic test only when the following conditions are met:

• A physician that is financially independent from the person or entity performing the test and also from the physician or medical group performing the interpretation must order the test.
• The physician or medical group performing the interpretation must not see the patient.
• The physician or medical group billing for the interpretation must have performed the technical component of the test.

These changes, if adopted, could prove problematic for both hospital-based radiology groups that utilize independent contractors for reads and non-radiology physician practices that contract for professional interpretation services and bill globally for these services.

With respect to the non-radiology physician practices, the proposed change would affect the ability of a non-radiologist referring physician practice to bill for professional interpretations performed pursuant to a contractual reassignment.

Additionally, the proposed changes to the Medicare physician fee schedule include a proposal to amend the in-office ancillary services exception to the Stark law, to change the definition of centralized building. Presently, federal regulations define "centralized building" as all or part of a building, mobile vehicle, van or trailer that is owned or leased on a full-time basis (i.e. 24 hours per day, seven days per week, for a term of not less than six months) by the group practice and that is used exclusively by that group practice. CMS has proposed that the definition of a "centralized building" be revised to require that the space equal or exceed 350 square feet. Additionally, CMS has proposed that the space must contain the necessary equipment to perform substantially all of the designated health services that will be performed in any given year.

Although these changes to the physician fee schedule have not been formally adopted, physician practices are well advised to be cognizant of impending changes to federal laws and regulations. This compliance corner offers tips to assist physicians in their compliance efforts.

Although it is difficult for any busy physician practice to dedicate the time and resources necessary to stay apprised of impending changes to healthcare laws, every physician practice should designate an individual whose designated responsibility is to stay apprised of changes in the law. Proposed revisions to the physician fee schedule are typically published in the Federal Register in the summer. The final rule will be published in the late autumn of each year. Federal register notices can be accessed from the following website: www.gpoaccess.gov. A physician practice should also review information from professional societies and other similar resources. It is also wise for a physician practice to develop a relationship with health care legal counsel as another way to stay apprised of important legal issues that impact your practice.

It is essential that every physician practice evaluate its current relationships and referrals for fraud and abuse and Stark law compliance. Additionally, a practice contemplating entering into new arrangements and relationships should consult with appropriate counsel to ensure that the practice remains in compliance. The Federal Stark law is not an intent-based statute, and a violation of the provisions of this law can result in serious fines and other penalties.

OIG RELEASES 2007 WORK PLAN

The Department of Health and Human Services' Office of Inspector General (OIG) recently announced its work plan for fiscal year 2007. All providers should review the sections of the work plan applicable to the services they provide. As in previous years, this year, the OIG will focus attention on the following, among other projects:

• Billing Service Companies
• Physician pathology services
• Cardiography and echocardiography services
• Physical and Occupational therapy services
• Part B mental health services
• Wound care services
• Payment for initial preventive examinations

Additionally, this year, the OIG also will focus attention on the following:

• Evaluation of "incident to" services
• Place of service errors
• Review of E&M services
• Inpatient psychiatric services
• Medicare reimbursement for polysomnography
• Long distance physician claims associated with home health and SNF
• Violations of assignment rules by Medicare providers
• Imaging Services in Physician Offices

The 2007 work plan can be accessed in its entirety from the following link: http://www.oig.hhs.gov/publications/workplan.html.

DEADLINE QUICKLY APPROACHING FOR
COMPLIANCE WITH THE DEFICIT REDUCTION ACT OF 2005

On February 8, 2006, the Deficit Reduction Act of 2005 was signed into law. In addition to incentivizing states to adopt Medicaid false claims act legislation, the statute also imposes education requirements on health care entities that receive $5 million or more annually in Medicaid reimbursement or payments. Health care entities subject to this law must update their compliance policies, employee handbooks, and educational materials by January 1, 2007 to reflect state and federal fraud and abuse laws as well as whistleblower protections as a condition of receiving Medicaid reimbursement or payments.

Specifically, section 6032 of the Deficit Reduction Act of 2005 requires an entity governed by the statute to:

• Establish written policies regarding the Federal False Claims Act, the administrative remedies for making false claims and statements, any State laws pertaining to civil or criminal penalties for false claims and statements, and whistleblower protections under such laws;

• Include as part of such written policies, detailed provisions regarding the entity's policies and procedures for detecting and preventing fraud, waste, and abuse; and

• Include in any employee handbook for the entity, a specific discussion of the state and federal false claims laws and regulations, the rights of employees to be protected as whistleblowers, and the entity's policies and procedures for detecting and preventing fraud, waste, and abuse.

The Deficit Reduction Act of 2005 can be accessed from the following link: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:s1932enr.txt.pdf.

RECENT AND UPCOMING EVENTS AT WACHLER & ASSOCIATES, P.C.

• Abby Pendleton presented on Fraud and Abuse Compliance Issues to the United Communications Group Physicians National Summit on September 14-16, 2006.
• Andrew Wachler presented on the new Medicare appeals process at the Annual Meeting of the Health Care Compliance Association on October 1-3, 2006.
• Abby Pendleton presented on the new Medicare appeals process at the Annual Meeting of the Medical Group Management Association (MGMA) on October 25, 2006.
• Andrew Wachler presented on the new Medicare appeals process at the Annual Meeting of the American Academy of Ophthalmology on November 11-24, 2006.
• Abby Pendleton will present an audio conference on November 27, 2006 regarding compliance in the field of anesthesia.
• Abby Pendleton will present at the annual meeting of the Society of Pain Practice Management on January 20-21, 2007.
• Andrew Wachler, Robert Iwrey, and Adrienne Dresevic will present to Michigan physicians as part of a 5/3 Bank series of presentations in January 2007.
• Andrew Wachler will speak on the new Medicare appeals process at the Annual Meeting of the American Society of Abdominal Surgeons on March 3-4, 2007.
• Andrew Wachler will speak on the topic of New Developments in Third Party Payor Audits at the 2007 Radiology Summit of Radiology Business Management Association (RBMA) in May 2007.

CONTACT US

For questions regarding any of the information contained in this newsletter, or if we can assist you with any of your legal needs, please contact the attorneys at Wachler & Associates, P.C. at (248) 544-0888:

For more information, please visit our website at www.wachler.com.