Government News
of the Week:
Medicare Compliance, Medicare Advantage and Part D, and Other Federal and State Developments

1. Health plans that sell Medicare Advantage (MA) plans and stand-alone Prescription Drug Plans (PDPs) would have to modify the way they market the products to potential enrollees under new rules proposed by CMS on May 8. The proposed changes, which the agency says are designed to protect Medicare beneficiaries, would require health plans to modify the commissions they pay to sales staff and eliminate some tactics such as cold-calling and door-to-door solicitation. In addition, CMS proposed changes to ensure that that 90% of new enrollees in MA Special Needs Plans (SNPs) be special-needs individuals.

Competition for new members has prompted some health plans to dramatically boost the commission rates they pay brokers who market MA plans. During last fall's open-enrollment season, agents and brokers in some parts of the country earned commissions as high as $800 for each person they enroll in an MA plan.

To discourage "churning" of beneficiaries from plan to plan during enrollment — based on the highest commissions — a health plan would be required to offer the same commission for all of its MA products sold by its brokers, CMS spokesperson Peter Ashkenaz tells AIS. Likewise, all of its PDP commissions must be the same. "However, the commissions for PDP do not have to be the same as MA and MA-PD [i.e., MA prescription drug]," he explains. CMS is not setting the commission amounts.

CMS has proposed a $15 "value limit" on promotional items plans offer to potential enrollees. Pre-arranged appointments to market products would be limited to the scope agreed to by the beneficiary in advance, CMS said. And MA plans using independent agents would be required to use agents licensed by the state. The agency would have the authority to levy a penalty of up to $25,000 for each violation of the rule. It also would streamline eligibility determinations for Medicare's low-income subsidy (LIS) and limit beneficiary liability.

For SNPs covering beneficiaries eligible for Medicare and Medicaid, the rule would set standards to ensure their access to "essential services" available through Medicaid in addition to Medicare benefits.

To see a copy of the proposal, visit www.cms.hhs.gov/HealthPlansGenInfo/Downloads/PDP-MA_Proposed_Rule.pdf. The agency will accept public comments on the proposal until 5 p.m. Eastern Time July 15.

AIS is sponsoring an audioconference June 5 about the new MA and Part D marketing rules.

Reprinted from the May 12, 2008, issue of HEALTH PLAN WEEK.

2. Florida's legislature passed S.B. 2534, dubbed Cover Florida, which would provide lower-cost health plan options to Florida's 3.8 million uninsured individuals. Gov. Charlie Crist (R) intends to sign the bill when he receives it from the legislature, according to a spokesperson for his office. Cover Florida will allow the state to negotiate with health plans to develop affordable health coverage for uninsured Floridians ages 19 to 64. Businesses with fewer than 50 employees would be aided in negotiating health insurance rates by an organization funded by $1.5 million in state funds. Uninsured Florida residents could purchase limited plans for as little as $150 per month. Plans would be exempt from state mandates that require coverage for a range of items and procedures, according to the South Florida Sun-Sentinel. The policies would cover preventive care and office visits but not care from specialists or long-term hospitalizations.

Reprinted from the May 12, 2008, issue of HEALTH PLAN WEEK.

3. A New York oncologist and his wife will pay $275,000 in damages to the government to resolve allegations that they submitted false Medicare claims for cancer drugs that were imported from Canada, the U.S. Attorney's Office for the Eastern District of New York said April 24. Kee Shum, M.D., and Li Shum did not admit liability as part of the settlement. The parties settled to avoid the delay, uncertainty, inconvenience and expense of litigation, the settlement says. The government began investigating after another physician filed a whistle-blower lawsuit, saying that doctors across the country are importing cheaper oncology drugs from Canada and profiting through reimbursements from the government. The patients are not seeing any financial benefits and are not being told that they are given an imported drug, the suit claims, according to the feds. Kee Shum also entered a corporate integrity agreement with OIG. Richard Willstatter, an attorney representing Kee Shum, says the oncologist did not know that the imported drugs did not qualify for Medicare reimbursement. He says the feds threatened to file a False Claims Act lawsuit, which would have subjected the Shums to treble damages, so they decided to settle.

Reprinted from the May 12, 2008, issue of REPORT ON MEDICARE COMPLIANCE.

4. CMS overpaid nursing facilities a total of $5 million during fiscal year (FY) 2004 because they processed denials of payment for new admissions (DPNAs) incorrectly, HHS's Office of Inspector General (OIG) says in an Office of Evaluations and Inspections report (OEI-06-03-00390) posted May 2.

CMS has two solutions for nursing facilities that are found not to be in compliance with federal requirements for participation in Medicare and Medicaid, the report explains. The first is considered very severe and involves denying payment for services provided to all beneficiaries. "This remedy would likely cause existing nursing home residents to be relocated. As such, this remedy is rarely used," OIG says.

The less severe solution is to deny payments only for the services provided to beneficiaries who are new to the facility. CMS is required to impose a DPNA in two cases, the report says: "extended noncompliance" and "repeated instances of substandard quality of care."

CMS imposes the DPNAs, but fiscal intermediaries (FIs) identify and deny the payments, the report says.

Out of 697 DPNAs that were in effect during FY 2004, 74% had processing or payment errors, OIG found. Forty percent of those resulted in inappropriate payments exceeding $5 million (the other 34% had errors, but did not result in paid claims).

OIG found that many of the errors happened because FIs did not receive appropriate instructions from CMS. As a result, FIs could not create edits in time to suspend claims. "The other leading causes of error involved communication breakdowns between CMS and the FIs and CMS sending the processing instructions to the wrong FIs," the report says.

OIG points out that recent changes, such as Medicare Administrative Contractors (MACs) assuming FI duties, could potentially improve the situation. But it recommends that CMS (1) manage DPNAs to ensure that instructions are sent quickly and that FIs and MACs review cases to correct errors, (2) address communication problems by using a standard format to notify FIs and MACs that a DPNA has taken effect, and (3) update guidance on coding readmissions and verifying readmission status for DPNA claims.

Nursing facilities should also be watching their calendars during an enforcement cycle, says Chicago attorney Matthew Murer, who is with the law firm Foley & Lardner, LLP. This report shows that CMS and FIs can make mistakes, but it is the facility that pays at the end of the day, he says. Providers usually have three months to correct compliance issues. They should "really review in detail the cover letters for survey enforcement cycles" from CMS and state agencies, he says. "I have seen a good provider with a good history get stuck in a cycle, and the state or CMS is saying 'Don't worry, you just have minor things to correct.' But one minor thing triggers the remedy. So I have seen people get reassured, and it quickly adds up to hundreds of thousands of dollars," Murer says.

In a response included in OIG's report, CMS says it agrees with the findings and recommendations. It adds that it has already taken some actions, including developing new internal procedures to warn FIs and MACs about DPNAs more quickly.

Visit AIS's Government Resources; click on "OIG Office of Evaluations and Inspections Reports."

Reprinted from the May 12, 2008, issue of REPORT ON MEDICARE COMPLIANCE.

5. Rodney Moyer, former executive vice president of The Oath for Louisiana, pleaded guilty to conspiring to give insurance regulators financial reports that falsely said the health-plan company had enough reserves to pay the medical bills of its 80,000 subscribers. Moyer admitted guilt under an agreement with prosecutors that could require him to testify against other The Oath executives named in an April indictment, according to The Times-Picayune. The trial began May 1 before Louisiana U.S. District Judge Eldon Fallon. The Louisiana Department of Insurance did not respond to a request for comment by AIS's press time.

Reprinted from the May 12, 2008, issue of HEALTH PLAN WEEK.

6. CMS said it began piloting, on April 4, a personal health record (PHR) in South Carolina for beneficiaries covered by fee-for-service Medicare. The tool was developed by HealthTrio, and the pilot is being managed by QSSI. Palmetto GBA will help to populate beneficiaries' records with key information from hospital and provider medical claims once an individual registers and requests the data. Prescription drug information, however, will not automatically be entered into the PHR, according to CMS. But a beneficiary can choose to enter his or her prescription drug and over-the-counter medication information into the PHR. CMS said the PHR allows individuals to look up information specific to their own personal health status and health conditions and control who is able to see or share the information.

Reprinted from the May 12, 2008, issue of HEALTH PLAN WEEK.

7. Four cardiologists have agreed to settle allegations that they improperly took salaries from the University of Medicine and Dentistry of New Jersey (UMDNJ), the U.S. Attorney's Office for the District of New Jersey said May 7. The four separate settlements total $387,000. UMDNJ started a program to bring in more cardiac surgery patients through part-time employment contracts with some local cardiologists, the feds have said. The feds allege that the doctors did little work, but UMDNJ contracts with the cardiologists required them to work part-time as clinical assistant professors, and to teach, provide on-call coverage and support research efforts, among other things. Ed Dauber, attorney for Michael Benz, M.D., who is paying $30,000, says no fraud allegations were part of Benz's settlement. The other physicians' attorneys could not be reached for comment before AIS deadline. Two cardiologists already paid civil settlements, and two others recently pleaded guilty to embezzlement charges.

Reprinted from the May 12, 2008, issue of REPORT ON MEDICARE COMPLIANCE.

8. Daniel Maynard, D.O., has been permanently excluded from federal health care programs and will pay $253,000 to resolve allegations that he submitted false claims to Medicare and Texas Medicaid between 1999 and 2003, the U.S. Attorney's Office for the Northern District of Texas said April 30. The feds and the state allege that on 32 separate days, Maynard billed the programs for patient encounters that added up to his spending more than 24 hours each day seeing and treating patients. He claimed to have seen more than 100 beneficiaries on six occasions, the feds say. Maynard denies wrongdoing and liability as part of the settlement, the feds add. An attorney representing Maynard could not be reached for comment.

Reprinted from the May 12, 2008, issue of REPORT ON MEDICARE COMPLIANCE.

9. Louisiana's Senate approved legislation (SB 287) that would create a state-run Web site intended to let consumers compare the cost and quality of health care facilities in the state. According to state health and hospitals officials, the site would include information on bed sore rates, complications, mortality rates, and postoperative infections. The site likely will start with hospitals and later expand to include adult day care facilities, clinics, nursing homes and insurance providers, according to state officials. The proposed legislation was passed in the Senate by a vote of 34 to 0 on April 23 and was sent to the House, where it was referred to the Committee on Health and Welfare. Gov. Bobby Jindal (R) has included $500,000 annual funding for the program in the budget proposal for the fiscal year that begins July 1.

Reprinted from the May 9, 2008, issue of INSIDE CONSUMER-DIRECTED CARE

10. Despite being passed by the House of Representatives, the Protecting the Medicaid Safety Net Act (H.R. 5613) is having trouble getting through the Senate. The legislation would put a moratorium through March 2009 on seven Medicaid regulations, some of which are set to expire May 25. Under the regulations, states could not use federal Medicaid funds to help pay for physician training, and limits would be placed on Medicaid reimbursements to hospitals and nursing homes operated by state and local governments and rehabilitation services for individuals with disabilities and mental illnesses. Senate Majority Leader Harry Reid (D-Nev.) tried to bring the legislation up by unanimous consent, but Sen. Tom Coburn (R-Okla.) raised an objection. Moreover, the Bush administration has said it is prepared to veto any legislation blocking these Medicaid regulations. HHS Sec. Michael Leavitt sent a letter to the House Energy and Commerce Committee indicating that senior White House advisers would urge President Bush to veto the legislation. Kerry Weems, CMS acting administrator, however, told attendees at a meeting of the National Conference of State Legislatures that the agency would be willing to "discuss" the regulations with lawmakers. The Congressional Budget Office estimated April 16 that the Medicaid regulations would result in savings of approximately $17.8 billion over five years, and that legislation to delay the regs would cost $1.65 billion over two years.

11. OIG is proposing new compliance program guidance for nursing-home facilities that would supplement a Compliance Program Guidance (CPG) issued in 2000, according to an April 16 notice in the Federal Register. "The proposed notice takes into account Medicare and Medicaid nursing facility payment systems and regulations, evolving industry practices, current enforcement priorities…and lessons learned in the area of nursing facility compliance. When published, the final supplemental CPG will provide voluntary guidelines to assist nursing facilities in identifying significant risk areas and in evaluating and, as necessary, refining ongoing compliance efforts," it says. The fraud-and-abuse risk areas OIG lists include quality of care, submission of accurate claims, the anti-kickback statute, physician self-referrals and the HIPAA privacy and security rules. Some other compliance considerations are an ethical culture, regular reviews of compliance program effectiveness and communication to decision makers, OIG says. To read the proposed CPG, visit AIS's Government Resources; click on "2008 Federal Register."

Reprinted from the May 2008 issue of The HCCA-AIS MEDICAID COMPLIANCE NEWS,

12. The Government Accountability Office (GAO) has found more evidence of states receiving federal matching funds by paying certain government providers, such as county-operated nursing homes, amounts greatly exceeding established Medicaid reimbursement rates. While GAO did not indicate an exact amount of additional federal Medicaid funds generated through these arrangement, it did say the amount is in the "billions of dollars." These arrangements "threaten the fiscal integrity of Medicaid's federal and state partnership," GAO said, by shifting "costs inappropriately from the states to the federal government, and take funding intended for covered Medicaid costs from providers, who do not under these arrangements retain the full payments." It did acknowledge that CMS has undertaken an initiative resulting in 29 states ending one or more inappropriate financing arrangements by August 2006. GAO said that CMS's May 2007 rule limiting Medicaid payments to government providers' costs may alleviate some of its concerns with the transparency of CMS's initiative and review standards, but it will "depend on how CMS implements it." Go to www.gao.gov/new.items/d08650t.pdf.

13. The University of Miami (UM) said April 17 that backup tapes containing information on patients who came to its facilities since January 1999 were stolen from a storage company, but that the risk of access to the information is low. Local media estimate that data on 2.1 million patients were affected. The university says in a prepared statement that it is contacting 47,000 people whose data may have included financial information. University officials were contacted on March 19 by the offsite storage company and told that a container carrying the tapes was stolen from a company vehicle. Law enforcement is investigating the incident as one of a series of petty thefts in Coral Gables, the UM statement says. UM says it is unlikely that thieves could access the data "because of the complex and proprietary format in which they were written." UM hired an independent company to try to extract data from a similar set of tapes, but the team was unable to do so, the statement adds.

Reprinted from the May 2008 issue of REPORT ON PATIENT PRIVACY

14. The President's Council of Advisors on Science and Technology (PCAST) is expected to call for changes in federal privacy laws in a future report on personalized medicine, Government Health IT reported on April 9. PCAST will recommend that Congress amend HIPAA to protect genetic information, the Web site reports. It will also urge the American Health Information Community to "continue its work on integrating genomic information into e-health records," the article says. PCAST is appointed by the president and is made up of members from outside the government who have expertise in science and technology.

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