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Since 1976, our litigators have effectively and efficiently represented clients in federal and state courts in business litigation, municipal law, employment law, personal injury and a variety of complex litigation.

Since 1976, our litigators have effectively and efficiently represented clients in federal and state courts in business litigation, municipal law, employment law, personal injury and a variety of complex litigation.

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Since 1976, our litigators have effectively and efficiently represented clients in federal and state courts in business litigation, municipal law, employment law, personal injury and a variety of complex litigation.

Healthcare Law News - Volume 96

VA STILL DOESN’T GET IT

The VA seems unable to understand or meet its obligation to veterans. Over a year after the roll out of program to allow veterans to go to non-VA  facilities for services unavailable at VA or where wait times were unacceptable, the program is still mired in problems and does not meet VA requirements.

The latest proof that the VA doesn’t get it – VA secretary Bob McDonald indicated that he didn’t consider long wait times for appointments a problem for the VA, even comparing it to going to Disney World.

Is it time to dismantle the VA? Is it time to radically and totally remake the VA?

IT’S NOT ME, IT’S YOU

At least one insurance company executive has recently claimed that the increases in premiums for health insurance in general, including under the Affordable Care Act, are the fault of hospitals and physicians, and not the poor, lowly and unappreciated health insurers. The executives point out that of each dollar of healthcare expenses: 55¢ go to hospitals and doctors, 22¢ to pharmaceuticals, 7¢ to taxes and 5¢ ancillary expenses (home healthcare or durable medical equipment). Only 10¢ is left over for insurers and administration and only 1¢ is left over as operating income.

An interesting view of the healthcare landscape. I wonder how hospitals and physicians will react to such a claim.

OVERPAYMENTS AND DEATH SENTENCES

We often write here about dealing with overpayment or false claims. The reason we write about them so often is that such claims are often dramatically large and may put the existence of a healthcare practice/hospital at risk. When Medicaid or Medicare asks for hundreds of thousands or millions of dollars back, and demands that you pay that amount now, few healthcare practices or hospitals have established reserves to help deal with these situations. New overpayment rules, which took effect on March 14, 2016, may be even more drastic.

Does your billing staff only occasionally fail to identify an overpayment or are there enough overpayments that Medicaid/Medicare will decide that your billing staff or company is not good enough.  They may claim that your billing practices or your failure to identify overpayments by having a proactive system to identify those payments, amounts to a “fraud.” Then, the False Claim Act comes into play, and the government may claim, not only the FCA fine amounts of $5,500.00 up to $11,000.00 per claim, but could demand three times that amount. In the past, this penalty has only been used against repeated and hardcore fraud offenders. This new rule indicates that it may use the treble payment option against practices that don’t undertake sufficient “proactive compliance” to determine whether the practice/hospital has been receiving overpayments.

In most cases, you are expected to identify overpayments within 60 days of the time the staff has “credible evidence” of a possible overpayment. We do not believe that there is sufficient information on what “credible evidence” of an overpayment is, much less, when the staff has knowledge of such “credible evidence” of an overpayment. In the rule comments, CMS claims that proactive review of billing charges does not require formal auditing or a compliance plan, but states physicians/hospitals must “maintain responsible business practices.” How much diligence is a reasonable amount of diligence? What are acceptable practices for identifying overpayments? Is it random testing? Is it a rule based exception system that should be used to identify any unusually large or frequent payments? Is it a compliance audit approach that requires an annual internal audit and review to take a cross-section of a practice or hospitals billing, and determine whether the billings were accurately coded, determine whether the billed services were reasonable and necessary and determining whether there is any other evidence of overpayment. No one knows.

Use of FCA penalties, and the possible tip of a whistle blower, indicate that where a whistle blower alerts the government to an over billing situation in your healthcare practice or hospital, the reasonableness and adequacy of your billing practices, and the adequacy of your internal auditing and compliance program, will be central issues in determining the penalties for failure to comply.

Keep in mind – you will usually have only up to 6 months to return all overpayments demanded by CMS. While there is an extreme circumstance exclusion, unless a 6 month pay back would be a death penalty to the practice, no practice should count on more than 6 months to repay overpayments.

Our takeaway:

  • Use a reputable, experienced and professional billing company for your billing. Choosing a billing company solely on price may turn out to be very expensive later.
  • If you use internal billing, train, train, train and hire adequate staff, so that you can have an internal auditing program.
  • Consider establishing a line of credit or a cash reserve to deal with overpayment claim returns.
  • When you receive an overpayment claim, or identify an overpayment concern internally, investigate, act, talk to your legal counsel and execute a plan. Putting one’s head in the sand will be a fast way to destroy your healthcare practice.

This newsletter is edited by Paul Wallace of Jones ∙ Wallace, LLC, a member of the American Bar Association Healthcare Law Section and the American Health Lawyers Association who has been representing physicians and healthcare practices for over 25 years.  Mr. Wallace assists physicians, practices and hospitals in contract items, federal legal compliance, practice entity creation, estate and wealth planning and similar issues.  Please feel free to call if you have any questions on this newsletter or legal matters at (812) 402-1600 or pwallace@joneswallace.com.