CMS Extends Provider Enrollment Moratoria for HHAs and Ambulance Providers, Again…

For the fifth time since 2013, the Centers for Medicare and Medicaid Services (CMS) has extended its Medicare, Medicaid and CHIP enrollment moratoria for home health agencies (HHAs) and ambulance providers in certain geographic areas.

The enrollment moratoria apply to new ambulance providers and HHAs in certain metropolitan areas within Florida, Illinois, Michigan, Texas, Pennsylvania and New Jersey.

In its notice of the moratoria, CMS commented that “[t]he circumstances warranting the imposition of the moratoria have not yet abated, and CMS has determined that the moratoria are still needed as we monitor the indicators and continue with administrative actions, such as payment suspensions and revocations of provider/supplier numbers,”

CMS gained the authority to impose moratoria on provider enrollment from Section 6401(a) of the Affordable Care Act in circumstances in which CMS determines that it’s necessary to prevent or combat fraud, waste or abuse.

Specifics on the metropolitan areas involved and details on the enrollment moratoria can be found in the pre-publication CMS Federal Register Notice. The Final Notice should become available on 7/28.

For more information on Provider Enrollment, CMS, Home Health, ACA, or other compliance or reimbursement related matters, please feel free to contact Ari J. Markenson at or 212.692.1012.

CMS Launches Medicare Care Choices Model for Hospice + Curative Care Demo

On July 20th, 2015, the Centers for Medicare and Medicaid Services (CMS) announced the award of Medicare Care Choices demo contracts to 141 hospice providers across the country.

Section 3021 of the Affordable Care Act authorized CMS  to test innovative payment and service delivery models that have the potential to reduce expenditures while maintaining or improving the quality of care for beneficiaries. The Medicare Care Choices model comes out of the Center for Medicare and Medicaid Innovation and involves empowering clinicians, beneficiaries and their families with greater flexibility in deciding between hospice care and curative treatment when faced with life limiting illness.

This model is designed to test whether Medicare and dually eligible beneficiaries who qualify for coverage under the Medicare or Medicaid Hospice Benefit would elect to receive the palliative and supportive care services typically provided by a hospice if they could continue to seek curative care from their providers. CMS will study whether access to such services will result in improved quality of care, patient and family satisfaction, and whether there are any effects on use of curative services and the Medicare or Medicaid Hospice Benefit. Continue reading CMS Launches Medicare Care Choices Model for Hospice + Curative Care Demo

“Per-click” fees OK but don’t count on it

The Stark Law, 42 U.S.C. 1395nn, places restrictions on lease arrangements between physician groups and hospitals for equipment owned by the physicians, leased to the hospitals and then used by the same physicians to treat patients at the hospital.  Under the Stark Law, such leases are prohibited unless the arrangement complies with the equipment rental exception, 42 U.S.C. 1395nn(e)(1)(B).

One requirement of the equipment rental exception, which is both statutory and regulatory (42 C.F.R. 411.357(b)), is that the rental charges be “set in advance.”  In a recent case from the D.C. Circuit Court of Appeals, Council for Urological Interests v. Burwell, the court considered whether a “per-click” or “per-use” fee could be considered “set in advance” and otherwise meet the criteria for the exception.  In an oddly constructed opinion, the court struck down a regulatory prohibition on per-click arrangements, but remanded under terms that would permit the restriction to be re-instated. Continue reading “Per-click” fees OK but don’t count on it

Duane Morris Partner Lisa Clark Featured in The Wharton Healthcare Quarterly

In the Spring 2015 edition of The Wharton Healthcare Quarterly, Duane Morris partner Lisa Clark’s article, “Affidavit: Healthcare and the Law – Healthcare Reform Update: What’s in a Name?,” discussed the innovations under the Affordable Care Act (ACA). One of the innovations was the Accountable Care Organization (ACO), where a new healthcare reimbursement system was introduced as an alternative to the tradition fee-for-service model. Over the years, the Accountable Care Organizations and other value-based models will be tested and hopefully, there will be buzz around this new model in the next year.

Healthcare Fraud Arrests Borrow Page from Government Narcotics Playbook

The Department of Justice’s sweeping arrest of nearly 250 people for healthcare fraud yesterday shows that they are still following an approach long used by narcotics investigators. By investigating and prosecuting healthcare professionals like drug dealers, the DOJ risks creating long term and even unintended consequences for healthcare professionals.

In an article for the American Health Care Association entitled Healthcare Fraud is the Quiche of the ‘80s, I pointed out that the government is investigating healthcare fraud with the same linear approach it investigates drug cases: identifying someone with “low level” culpability, developing informants, working up the chain-of-command to the “leaders” of the operation, take a picture with a big pile of drugs, declare victory, celebrate, repeat.

Yesterday the government revealed another page from its playbook – the roundup.

When I was a narcotics prosecutor our efforts yielded awards. We called our operations Sudden Impact. Indict lots of offenders but hold back and arrest them all at once. Why do this? There are some very legitimate benefits. First off, it does draw attention to a serious problem. The allegations of 243 defendants and over $700 million in fraud is significant (and just the tip of the iceberg). Furthermore, when we arrested 50 local drug dealers in one day – we suddenly noticed other known dealers leaving town. Why? The dealers knew what they had done but did not know who we had arrest warrants for and did not want to wait around to find out! Presumably, this sweep may deter those who are committing (or considering) healthcare fraud.

However, there are very real problems with applying these approaches to healthcare fraud.

The investigative approach of trading up the criminal “chain-of-command” only works if the degree of culpability follows a consistent progressive hierarchy. In healthcare fraud that not always true. Who is prompting or encouraging the fraud varies. It could be the owner, the patient, the nurses, the doctors, the recruiters, the billers… anyone involved in the transaction can lead it astray. The government’s assumption that physicians and other healthcare professionals should face the most punishment, and investigating accordingly, can yield miscarriages of justice.

The consequences of roundups is that it does scare people away – but not always the right people. Healthcare professionals are under attack and many quality professionals feel like even an honest mistake will subject them to scrutiny for potential fraud. They are not wrong. Many quality and honest healthcare professionals are deciding that being presumptively viewed as suspects is just not worth it. Some are leaving healthcare – others, more commonly, are abandoning the Medicare and Medicaid system – thus denying the recipients of government-sponsored healthcare access to quality healthcare providers. The government needs to be aware of the unintended consequences of its actions – no matter how laudable its motives may be.

There are lessons to be learned:

  • The war is on. Healthcare is under attack. Whether civil, administrative, or criminal – there are consequences. Innocence does not entirely insulate you from consequence because exoneration comes at a cost. Investigating and defending these allegations is not inexpensive and too many people only remember the allegation – not the outcome.
  • Perform a checkup. Healthcare professionals should heed their own advice and obtain some preventative care. The days of honest mistakes are over and one should address a problem before it becomes acute.
  • The roundup is coming soon to a city near you. Getting out in front of it – understanding and evaluating your exposure – and establishing policies and practices to minimize any future exposure is just what the doctor ordered.

Medical Director Arrangements Are Getting SNFs in FCA Hot Water

Following up on a post from last week entitled “OIG Issues Fraud Alert on Medical Director Arrangements“, the US Department of Justice announced today a $17 million settlement of a False Claims Act suit brought by the former CFO of a Miami nursing home network.

The FCA claim accused the nursing home company of running a kickback scheme. According to the settlement, from 2006 through 2013,  the nursing homes allegedly hired physicians as medical directors in sham positions at its facilities. The physicians performed few or no contractual job duties. The sham positions were essentially disguised payments for referrals to the facilities.

The case is United States of America et al v. Plaza Health Network et al, case number 1:12-cv-20951, in the U.S. District Court for the Southern District of Florida.

For more information on OIG enforcement, medical director relationships, or other compliance related matters, please feel free to contact Ari J. Markenson at or 212.692.1012.

OIG Issues Fraud Alert on Medical Director Arrangements

On June 9, 2015, the Office of the Inspector General of the US Department of Health and Human Services (“OIG”) issued a fraud alert entitled: Physician Compensation Arrangements May Result in Significant Liability.

This isn’t the first time the OIG has warned providers and physicians about questionable compensation relationships for medical director or administrative services. The OIG advised that compensation arrangements such as medical directorships must be fair market value for bona fide services the physicians actually provide. The OIG cited to its recent settlements with 12 individual physicians who entered into questionable medical directorship and office staff arrangements as the primary reason for the issuance of the fraud alert. Continue reading OIG Issues Fraud Alert on Medical Director Arrangements

New Jersey Federal Court Grants Class Certification To Chiropractors Challenging Systematic Denial Of Claims By Horizon Under ERISA And State Law

In an opinion that sets forth a blueprint to class action certification for healthcare providers challenging insurance companies’ claim practices, a federal district court in New Jersey has granted class certification in DeMaria v. Horizon Healthcare Inc., d/b/a BlueCross BlueShield of New Jersey, No. 11-7298 (WJM) (D.N.J. June 1, 2015), an action brought by participating and non-participating chiropractors who treated patients insured by Horizon Healthcare Services, Inc., d/b/a BlueCross BlueShield of New Jersey and Horizon HMO.  The plaintiff chiropractors allege that Horizon systematically denied payment of insurance benefits for certain chiropractic treatments provided by the plaintiffs.  The district court held that the Complaint satisfied the elements for class certification under Fed.R.Civ.P. 23(a), as well as 23(b)(1) and 23(b)(3) and granted class certification.

Plaintiffs alleged that the class members regularly provided three types of chiropractic treatment:  (1) chiropractic manipulative therapy (“CMT”); (2) evaluation and management services (“E/M”); and (3) ancillary physical therapy (“PT”).  Horizon allegedly paid the plaintiffs for CMT, but denied all claims for E/M and PT on the grounds that its “bundling” practice incorporated payments for all chiropractic treatments into a “global fee” for CMT.  Horizon’s denial of these claims was automatic, as was its denial of all appeals.  Horizon’s Explanation of Benefit forms stated that the claims for E/M and PT were denied because chiropractors were “not eligible” for payment for those services. Plaintiffs sought relief for Horizon’s denial of E/M and PT claims on the ground that Horizon’s bundling practice violated the Employment Retirement Income Security Act of 1974 (ERISA) and breached its contracts. Continue reading New Jersey Federal Court Grants Class Certification To Chiropractors Challenging Systematic Denial Of Claims By Horizon Under ERISA And State Law

Gov’t and IPC Continue FCA Fight In Court

The Government and IPC The Hospitalist Company, Inc. (“IPC”) continue their False Claims Act (“FCA“) fight in court, now disputing the scope of discovery in light of the Northern District of Illinois’ partial denial of IPC’s motion to dismiss (detailed by Duane Morris here).  The Government has moved to strike certain of IPC’s general objections to discovery: (1) IPC’s objection to producing documents from IPC’s nationwide operations and (2) IPC’s objection to producing documents dated after December 31, 2010 (“Motion“).

Continue reading Gov’t and IPC Continue FCA Fight In Court

The Anti-Kickback Statute Continues Its Expansive Reach

Five ambulance companies have agreed to pay $11.5 million to resolve a False Claim’s Act suit brought by a former competitor alleging allegations of the Anti-Kickback statute. (United States ex rel. Carlisle v. Pacific Ambulance, S.D. Cal., No. 3:09-cv-02628-L-BLM, dismissal 5/7/15).

The complaint was levied by the former CEO of a medical care transportation company against several former competitors. The CEO acknowledged the discounts as having historically been a standard practice across the industry and even admitted his own company once offered these same services, but stopped after learning of another allegation of impropriety involving similar conduct. This case continues a trend that anything that could even conceivably be portrayed as being “of value” can be framed as an incentive for referrals and thus become the subject of Anti-Kickback statute scrutiny. Long Term Care providers should proactively evaluate their existing relationships because liability for a violation of the Anti-Kickback statute runs both ways: to the person providing the kickback as well as the party receiving the benefit.

This case should act as a reminder to all healthcare providers and their ancillary partners of the expanding reach of the Anti-Kickback statute and the potential for scrutiny. It illustrates that the scrutiny can emanate from more than just the government. It could result from a survey, an audit or investigation, from competitors within the marketplace, or former employees through the use of the false claims act qui tam provisions. It should also underscore the importance of consistently reevaluating internal practices based on today’s norms. What was once acceptable may no longer be and “everyone was doing it” is no longer a viable defense (if it ever was).

This settlement comes on the heels of the March 2015 OIG Advisory Opinion No. 15—04 (available at  (last accessed May 28, 2015)) in which the Inspector General opined that a laboratory waiving some portion of the patient’s fees to obtain exclusive rights to the medical practice’s laboratory work might violate the Anti-Kickback statute. In that instance, the perceived potential benefit to the providers included such “controversial” concerns as improving efficiency for doctors, avoiding administrative burdens, and enjoying consistency in communications regarding the reporting of test results. We are, arguably, nearing a point where practices which denote the hallmark of good business in any other industry can continue to be vilified and, potentially, criminalized in healthcare.

These decisions illustrate the continuing trend of broadening the scope of potential Anti-Kickback statute liability. The most prudent course of action is to intensely analyze anything (beyond quality services) that might be cast as providing incentive to refer. Regularly performing these assessments (internally or externally) is the best practice for providers intent on avoiding the scrutiny of the federal government’s investigative arm or the burdens of a False Claims Act.