In a bold and seemingly unprecedented move, Aetna recently sued several California surgery centers for an alleged “fraudulent billing scheme”.  The lawsuit alleges that the surgery centers induced physicians to refer patients to the surgery centers with promises that the patients would not have any financial responsibility for their coinsurance and deductibles.  Aetna claims that the surgery centers then turned around and submitted charges for reimbursement that were artificially inflated driving up the cost of health insurance coverage.

Aetna’s lawsuit alleges that providers are liable for engaging in a fraudulent and illegal kickback scheme when they waive a patient’s coinsurance and deductible amounts, even if the provider bills the patient but ultimately does not collect from the patient.  Aetna is asking the court to require the surgery centers to pay damages, to disgorge their profits, and pay Aetna’s attorney fees.  Aetna is also asking the court to issue an injunction preventing such “fee-forgiving” practices, in the future.

Aetna’s theories of liability are somewhat novel and it remains to be determined if they will be successful.  Providers should be aware that insurers are increasingly using aggressive litigation tactics to challenge unauthorized discount arrangements between providers and patients.  As a result of increased scrutiny by third party payors with respect to charges and waivers of co-pays and deductibles, providers should review their billing and collection practices to ensure contractual, legal and regulatory compliance.

Once a year, as required by the Health Insurance Portability and Accountability Act of 1996, the Department of Health and Human Services Office of the Inspector General (“OIG”) solicits proposals to develop new or revised anti-kickback, fraud and abuse safe harbors.  The OIG published its request for proposals for new or revised safe harbors in the December 29, 2011 Federal Register.  The notice also seeks comments on developing special fraud alerts.

Comments are due February 27, 2012.

The Centers for Medicare and Medicaid Services (“CMS”)  released its proposed rule regarding the required reporting of device, biologics and pharmaceutical manufacturer payments to physicians on December 14, 2011.  The proposed rule includes templates for physicians and manufacturers to use when logging payments and gifts.

Medicare Recovery Audit Contractors (RACs) mine data using automated systems to detect and recover improper Medicare payments.  RAC audits pick up billing and coding errors and deny claims based on those errors.  In many instances, the service was provided and was billable.  In some cases, the coding error makes no difference in reimbursement, sometimes reimbursement should be higher, sometimes lower, but still reimbursable, under some code. In some cases, the RAC’s automated systems deny claims that were properly billed, because of software coding flaws.  RAC auditors don’t correct billing errors, they just take the money back.

2010 brought significant changes in the law for the healthcare industry with the passage of the Patient Protection and Affordable Care Act (“PPACA”), the Provena decision regarding real estate tax exemption, and the Lebron case invalidating Illinois’ cap on noneconomic damages in medical malpractice cases.  2011 brought more changes in the law, new PPACA regulations, worry and uncertainty to the healthcare industry.

I have been asked to speak at the Orthopaedic Trauma Association’s 2011 meeting in San Antonio on October 15.  The Association recently polled its members asking them to identify a topic for the plenary session and orthopaedic on-call compensation emerged as a common concern.  In preparing for the presentation, I came across the OTA On-Call Position Statement posed  on OTA’s web site.

More thoughts on physician employment by hospitals 

One of my clients, who was approached by a hospital for possible employment, proposed a trial period of 12 months.  During that 12 months, she would be employed by the hospital and at the end of 12 months either party could walk away for any reason with no strings attached.  No strings in this case meant no non compete and the hospital would pick up any tail insurance liability.

A few thoughts on HIPAA

            Real case scenario.  A health care provider’s car gets broken into and private health information (“PHI”) is stolen, along with other items.  Next steps?  Once the provider determines that a breach of unsecured  PHI has occurred (an incidental disclosure of PHI does not constitute a breach), the provider should perform a risk assessment to determine whether the event poses a significant risk of financial, reputational or other harm to the patient. 

Those of us who have been in the health care industry for awhile have seen hospital employment of physicians come and go several times.  In my early years as a health care attorney, I was an in-house counsel in the hospital industry.  I represented hospitals in the rush to jump on the band wagon of physician employment.  I am now in the private practice of law and while I continue to represent hospitals, I also represent physicians and physician groups exploring various relationships with hospitals including employment.