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

3. A hospital district can share funds with a county in which it operates a hospital in order to contribute to the construction of a new communications and emergency operations center, the HHS Office of Inspector General (OIG) says in Advisory Opinion 10-09. While such an arrangement could violate the anti-kickback statute, OIG says it would not impose administrative sanctions on the parties.

The district operates an acute care facility, which is the only hospital in the county, although there are other providers within about 10 miles. The county runs an emergency medical transport service that often takes patients to the hospital, which is usually the nearest provider. The EMS team operates under a state-approved protocol for transporting trauma patients. If a situation falls outside of the protocol, the team allows the patient to choose where he or she will be taken.

The county wants to construct a new communications and emergency operations center (that would include the existing emergency operations center) estimated to cost $7.5 million, with the hospital district hoping to contribute $2.5 million to the new center.

The new operations center would also let the county participate in the National Disaster Medical System and accept patients from other areas that experience disasters, according to the OIG opinion.

At issue is the grant from the district operating a hospital to the entity that provides EMS services to that hospital, OIG says. However, a number of factors mitigate the risk of fraud and abuse from this arrangement, “while providing significant benefits to the community,” it says.

Those factors include: (1) The grants are from one government organization to another and amount to an intra-governmental shift of resources, and both organizations play a role in the delivery of health care services within the community; (2) the remuneration (the $2.5 million) will be for public, not private, benefit, including emergency services; (3) there is minimal risk of overutilization or increased costs to federal health care programs; and (4) the plan offers significant benefits to the residents of the county, including an operations center that can withstand strong storms, integration of emergency management between the hospital district and the operations center, improvement of disaster information sharing, and upgraded emergency communications equipment and connections.

The hot button issues usually considered by OIG — whether the terms of the arrangement meet a safe harbor, whether they interfere with medical judgment or quality, or whether there is any increase in costs to federal health care programs — didn’t make an appearance here, says Al Shay, a partner with Morgan, Lewis & Bockius.

To read the opinion, visit AIS’s Government Resources, and click on “OIG Advisory Opinions.”

Reprinted from the June 28, 2010, issue of REPORT ON MEDICARE COMPLIANCE

4. More rate-filing math errors have been discovered by the California Dept. of Insurance. Insurance Commissioner Steve Poizner (R) said June 24 that Aetna Inc. had withdrawn its rate filing that would have increased rates by an average of 19% on its 65,000 policyholders after “substantial mathematical errors were uncovered during the process of conducting an additional actuarial review,” according to Poizner’s office. Aetna self-reported the error. A week before the error was announced, Poizner said his office would scrutinize rate increases sought by Aetna, Anthem Blue Cross, Blue Shield of California and Health Net, Inc. — the four largest insurers in the individual health insurance market in California. In May, Anthem Blue Cross (a WellPoint Inc. subsidiary) withdrew a proposed rate hike after auditors determined the increase was based on “unreasonable assumptions.”

Reprinted from the June 28, 2010, issue of HEALTH PLAN WEEK

5. On June 18, the HHS Office of the National Coordinator for Health Information Technology (ONC) issued a final rule to establish a temporary certification program for electronic health record (EHR) technology. Health care entities will need to follow the program to receive authorization from ONC to test and certify EHR technology, HHS explains. The HITECH Act included provisions for incentive payments for providers who have EHR systems. CMS will soon issue final regulations on implementation of the EHR incentive programs, HHS says. In March, HHS released a notice that proposed the creation of two programs — one temporary and one permanent — for testing and certification. The final rule for the permanent certification program is expected in the fall.

Reprinted from the June 28, 2010, issue of REPORT ON MEDICARE COMPLIANCE

6. OIG wants its exclusion authority expanded to include past employees who are found responsible for fraud, OIG chief counsel Lewis Morris told The Hill in an interview. Once a company is convicted, HHS can exclude any owner or current company employee who knew or should have known about the scheme. But companies and executives have found a loophole by resigning or divesting their interest, thereby escaping OIG exclusion, The Hill explains. “OIG wants Congress to expand its exclusion authority to include any worker — past or present — found responsible for fraud,” it reports.

Reprinted from the June 28, 2010, issue of REPORT ON MEDICARE COMPLIANCE

7. National Government Services, Inc. (NGS) should recover $1.9 million in overpayments it made to 11 terminated providers between 2003 and 2007, OIG says in an audit report (A-05-09-00076) posted June 14. NGS (which assumed the fiscal intermediary business of AdminaStar Federal LLC) had not yet recovered overpayments from providers who billed for services that occurred on or after the effective date of their terminations from Medicare, the report says. OIG says NGS should recover the overpayments and follow its procedures to identify and recover future overpayments that occur after terminations. NGS agreed with the findings. To read the report, visit AIS’s Government Resources and click on “OIG Audit Reports.”

Reprinted from the June 28, 2010, issue of REPORT ON MEDICARE COMPLIANCE

8. Despite many similarities between the new reform law and Massachusetts’ health reform program, some of the differences will require action by state policymakers to prevent residents from paying higher premiums, according to a new report by the Blue Cross and Blue Shield of Massachusetts Foundation. The differences include coverage requirements for individuals, families and businesses; insurance subsidies for state residents; rules for health benefits exchanges; and insurance market reforms, the report found. A major difference is with the state’s Commonwealth Care program for low-income adults. According to the foundation, the state program provides more generous subsidies than the federal program would, but covers fewer people — only those with an annual income at or below $30,000. Without a commitment from the state to maintain current subsidy levels, the state’s poorest residents could face significant increases in health care costs in 2014, the study concluded. To view the report, visit bluecrossfoundation.org.

Reprinted from the June 28, 2010, issue of AIS's HEALTH REFORM WEEK

9. The FDA has pledged that it will establish a clear regulatory pathway for diagnostic test manufacturers to market their products, according to an article published in the New England Journal of Medicine. Currently, many diagnostic tests are not independently reviewed by the FDA, and there is limited oversight of most laboratory-developed tests. But FDA and NIH officials say they want to ensure the agency stays on top of the growing pharmacogenomics trend to ensure that the right drugs are prescribed at the right time. As the first step, NIH will create a voluntary genetic-testing registry for the more than 2,000 genetic tests that lists whether they are cleared by the FDA.

Reprinted from the June 25, 2010, issue of DRUG BENEFIT NEWS

10. A Massachusetts Division of Insurance appeals board has overturned the state’s rejection of premium increases proposed by Harvard Pilgrim Health Care for its small-group and individual products. The board determined that the rate increase the company had sought was in line with the rising cost of medical care and that the company had adequately worked to control utilization. The board also concluded that Harvard Pilgrim “demonstrated its cost-containment programs, documented its realized cost savings from its cost containment efforts and proved that its cost containment programs, including its utilization programs, are adequate in organizational structure, commitment by senior staff, scale, effectiveness and responsiveness.” With small businesses in the state facing double-digit rate increases, Gov. Deval Patrick (D) implemented new rules in February requiring health plans to seek approval for rate increases. Several of the plans tried to fight the decision in court, but on April 12 a judge rejected their request to temporarily raise rates. The state has capped the rates health plans can charge at 2009 levels. Several health plans are fighting the decision. The rejection of rate hikes proposed by Blue Cross Blue Shield of Massachusetts, Tufts Health Plan and Fallon Community Health Plan will be considered by the panel.

Reprinted from the June 28, 2010, issue of HEALTH PLAN WEEK

11. Health insurers that sell limited benefit plans, also known as “mini-med” plans, will not be impacted by phased restrictions on annual benefit limits, according to regulations issued by the Obama administration June 22. Mini-med products typically pay a fixed number of total dollars or a fixed amount per day for certain medical services and either put relatively low caps on or don’t cover other medical services. Some do not cover hospital facility fees or medications and have low limits on coverage for surgeries.

An estimated 2 million people, primarily low-wage and part-time workers, are covered by such plans. The administration said it would allow companies that sell mini-med plans to apply for exemption from annual benefit restrictions if the reform rules would result in a significant decrease in access to benefits or a significant increase in premiums. Additional guidance on how to apply for the waiver is expected soon from HHS.

Reprinted from the June 28, 2010, issue of HEALTH PLAN WEEK