Ellis Medicine Announces Cardiac Surgery Warranty Program

Ellis Medicine in Schenectady, New York announced last week that it entered into agreements with MVP Health Care and Capital District Physicians Health Plan to offer a “warranty” to patients who undergo cardiac surgery at its hospital facility.

Under its Cardiac Surgery Warranty program, Ellis has agreed that if a patient following doctor’s orders develops related complications within 90 days of coronary artery bypass graft (CABG) surgery and is readmitted to Ellis, the patient will pay nothing for the second hospital stay. Patients must consent to participate in the Cardiac Surgery Warranty program and sign a contract agreeing to attend rehab, quit smoking and take other steps to reduce the chance of complications. All the payors’ commercial plans are included in the program, including Medicare Advantage plans.

This model is intended to replicate the Proven Care Program at Geisinger Health System in Pennsylvania. The key difference, however, is that the Geisinger system includes both hospitals and payors, whereas Ellis has entered into financial arrangements with two separate and independent entities. Ellis will share with CDPHP and MVP in the responsibility for hospital costs if the patient is readmitted.
Currently, Ellis Medicine’s readmission rates for heart failure patients are no different than the national rate, meaning its rates of readmission are not better or worse than the national average. Geisinger’s rate for readmission for heart failure is better than the national average.

The program includes steps to standardize care before and after surgery. A key legal issue that must be addressed in these arrangements is how the cardiac surgeons will be incentivized to ensure such standardization. Physicians could receive a bonus based on quality measure and other outcomes, but such bonuses must be consistent with fair market value. While data is available to assess the fair market value of a physician’s time, it is not readily available to assess the value of providing quality care.

Omniscient Cell Phones

I was traveling last week and spent two nights in New York city and then two nights in Manchester, Vermont.  In the past, I used the hotel’s clock radio as an alarm.  This requires that I find a radio station that has decent reception and I can stand to listen to early in the morning, which is not my favorite time of day.  I also need to figure out how to set the alarm and ensure the time is set correctly.  On a trip to San Francisco years ago, I forgot to check the time and was up, packed and ready to go the airport four hours before my flight.  Of course, in our post-9/11 world, that is about when you should be leaving for the airport.

These days, I just use the alarm function on my cell phone. It got me thinking about the many ways that we are using cell phones these days. We use them to wake us up, talk and text to friends and family and check emails.  We also use it to surf the internet, take pictures, record video, calculate sums, update our contacts, play games, keep our passwords, and navigate.

Cell phones can also be used as credit cards in Japan.  In some countries where it is not common to have a bank account, cell phones are being used to transfer cash and obtain funds.  Money is transferred from one person’s account to another person’s account by text message.

Our cell phones have more computing capability then the astronauts had when they flew to the moon.  The majority of us have no idea how to access even one-tenth of this capability.

That is okay, as long as we know how to protect our information. The more data we store on cell phones, the greater the risk to our privacy and security if we lose our phones or strangers are able to access the data without our knowledge and consent. I am concerned that the engineers working on new ways to use our cell phones have gotten ahead of the technology to protect the data. Yes, Big Brother is out there, but I am more concerned about his Crazy Cousin.

Medicare Hospital Value-Based Purchasing Program

The Centers for Medicare & Medicaid Services published a proposed rule on January 13, 2011 outlining the proposed Hospital Value-Based Purchasing Program(Hospital VBP Program) mandated by Section 3001(a) of the Patient Protection and Affordable Care Act (PPACA).

Although the Hospital VBP Program is not effective until October 1, 2012, Medicare hospitals must act now to ensure that they are eligible for incentive payments under the program as the initial performance period begins July 1, 2011.


CMS is required to establish a Hospital VBP Program that provides meaningful incentives to improve the quality of the care that Medicare hospitals provide. The program must be in place by Fiscal Year 2013 (October 1, 2012). The incentive payments are funded by a one percent reduction in hospital DRG payments beginning in Fiscal Year 2013.

CMS views the Hospital VBP program as a natural outgrowth to the collection of hospital quality data that was originally mandated in the Medicare Prescription Drug Improvement and Modernization Act of 2003, as modified by the Deficit Reduction Act of 2005. This program is known as the Medicare Hospital Inpatient Quality Reporting Program (Hospital IQR Program).

Proposed Measures

PPACA requires that the proposed measures for the Hospital VBP Program be measures that are currently used in the Hospital IQR Program. CMS has adopted 45 measures in the Hospital IQR program. Of these measures, 27 are chart-abstracted process of care measures that assess the quality of care furnished by hospitals in connection with treatment of acute myocardial infarction, heart failure, pneumonia, and surgical care improvement. Fifteen of the measures are claims-based measures that assess the quality of care furnished by hospitals as measured by 30-day mortality and 30-day readmission rates. Three of the measures are structural measures that assess hospital participation in cardiac surgery, stroke care, and nursing sensitive care systemic databases. The final measure is the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey.

CMS may not select readmission measures or any measures that have been included in the Hospital IQR program for less than one year prior to the beginning of the performance period

Applying this criteria, there are twenty-nine initial eligible measures for the Fiscal Year 2013 Hospital VBP Program. Initially, CMS proposes to include only seventeen of these twenty-nine measures. It excluded measures that they consider to be “topped out,” meaning all but a few hospitals have achieved a similar high level of performance on them. They also excluded some measures that they intend to retire in the future.

CMS is proposing to add measures to the Hospital VBP Program in the future by implementing a “sub-regulatory process”. Under this process, CMS can add any measure to the Hospital VBP Program if that measure is adopted under the Hospital IQR Program and has been included on the Hospital Compare Website for at least one year. The performance period for new measures would start exactly one year after the date these measures are publicly posted on the Hospital Compare Website. There is some question whether this sub-regulatory process meets the requirements of the Administrative Procedures Act.

Proposed Performance Period

CMS is proposing a three quarter performance period from July 1, 2011 through March 31, 2012 for the clinical process of care and HCAHPS measures. The hospitals performance on these measures will be compared to a three quarter baseline period of July 1, 2009 through March 31, 2010. For the outcome, claims-based measures, CMS is proposing to use an eighteen month performance period from July 1, 2011 to December 31, 2012. The baseline period would be July 1, 2008 to December 31, 2009.

Proposed Performance Standards

PPACA requires that the performance standards include levels of achievement and improvement and must be established and announced not later than sixty days prior to the beginning of the performance period. CMS is proposing to set the achievement performance standard for each proposed measure at the median (50thpercentile) of hospital performance during the relevant baseline period (either July 1, 2009 through March 31, 2010 or July 1, 2008 to December 31, 2009). Hospitals would receive achievement points only if they exceed the achievement performance standard and could increase their achievement score if they receive a higher level of performance. The improvement standard would be based on each specific hospital’s performance on the measure during the performance period as compared to the baseline period.

Expected Impact on Payments

CMS anticipates that the percent increase in payments to a hospital participating in the Hospital VBP Program will range from 0.0236% for the lowest scoring hospital to 1.817% for the highest scoring hospital. This means that when the one percent reduction in hospital DRG payments is taken into account, roughly one-half of the participating hospitals will receive a net increase of payments and one-half will receive a net decrease in payments. No participating hospital will receive more than a net one percent increase or decrease in payments.

CMS Guidance on the Stark Self-Referral Disclosure Protocol

On November 19, 2010, the American Health Lawyers Association sponsored a Webinar entitled “The New Reality of Stark Self-Disclosures, What to Do and Not Do”.

The Presenters included Troy Barsky, Esq. and Roy Albert, Esq. from the Centers for Medicare and Medicaid Services. Mr. Barsky is the Director, Division of Technical Payment Policy and Mr. Albert is in the Financial Services Group, Office of Financial Management.

Mr. Barsky and Mr. Albert made the following points regarding the Stark Self-Referral Disclosure Protocol (SRDP):

• Prior to the enactment of Section 6409 of the Patient Protection and Affordable Care Act (PPACA), CMS was not authorized to reduce amounts due and owing as a result of a violation of the Stark statute. The inclusion of this provision in PPACA is essential to the Stark self-disclosure process because without this authority an entity has no incentive to self-disclose.
• CMS essentially adopted the approach taken by the HHS Office of Inspector General in accepting self-disclosures under the anti-kickback statute.
• The purpose of the SRDP is to resolve actual and potential violations of the law and not to provide a process to obtain an opinion on whether a particular factual situation constitutes a violation. Therefore, if a disclosure is made under the protocol, CMS will assume that it constitutes a violation. A submission that attempts to argue that a particular arrangement did not violate the statute will be rejected.
• If a submission is rejected, CMS will be entitled to reopen the claims submitted in violation of the statute from the date of the disclosure.
• CMS and OIG will know whether there are simultaneous disclosures of the same conduct. If a submission is made under the SRDP, CMS will assume it did not fall within the Department of Justice or OIG jurisdiction.
• The submission should not include protected health information (PHI). If the submitter believes it is necessary to include PHI, the information should be segregated and the submitter should let CMS know that PHI is included.
• Submissions must be made electronically. If the submission constitutes a large PDF file, the PDF files should be broken up into the cover memo and the exhibits.
• Submitters should expect a response immediately indicating the submission has been received. It is the receipt of this automated e-mail that stops the sixty day clock on the obligation to refund any over payments. CMS expects to review each submission within two to three weeks and advise whether the submission has been accepted, rejected or whether additional information is required. In most cases, CMS expects to request additional information.
• CMS is considering whether it needs to promulgate frequently asked questions on its website regarding the SRDP.
• CMS is not providing any specific guidance on how the submissions will be resolved. The only assurances they will provide are that they will strive to be reasonable and efficient and will evaluate each submission on a case by case basis.
• The financial analysis should include the total amount actually or potentially due and owing to CMS. This would include any payments made by Medicare fee for service for a designated health service that was furnished pursuant to a prohibited referral. The submission should be itemized by year. If the submitter is estimating the amount due and owing, the description of the methodology used should be provided.
• The Office of Financial Management (OFM) has the responsibility to determine whether the amount due and owing should be reduced.
• The SRDP discusses the factors that OFM will use to determine whether to reduce the amount due and owing. The most important factor is the nature and extent of the improper or illegal practice. Some of the sub-factors OFM will consider are whether the arrangement was commercially reasonable, whether the compensation paid was fair market value, whether the arrangement took volume or value of referrals into account, whether the entity has a history of program abuse, whether the payments were set in advance, whether the entity has a pre-existing compliance program and the strength of the program, the length and pervasiveness of non-compliance in relation to the size of the disclosing entity, and the steps taken to correct the problems causing the non-compliance. Ideally, the steps would be taken before the disclosure is submitted, but must come before settlement.
• The additional factors that OFM will consider are the timeliness of the self-disclosure, the cooperation in providing additional information, litigation risks and the financial position of the disclosing party. The definition of litigation risk is found at 42 CFR § 401.613. Under this Section, CMS may compromise a claim if it determines that it would be difficult to prevail in a case before a court of law as a result of the legal issues involved or inability of the parties to agree to the facts of the case. The amount that CMS accepts as a compromise under this provision will reflect; (i) the likelihood that CMS would have prevailed on the legal questions involved; (ii) whether and to what extent CMS would have obtained a full or partial recovery of judgment, depending on the availability of witnesses, or other evidentiary support for CMS’ claim; and (iii) the amount of court costs that would be assessed to CMS.
• CMS will also look at the financial position of disclosing entity. CMS expects to look at the ability to pay in only limited circumstances. It would be a factor if the disclosing entity argued that it could not pay the amount the amount of the penalty that CMS believed was appropriate to assess.
• Under Section 6409(c) of PPACA, CMS must submit a report to Congress no later than March 23, 2012, which addresses the implementation of the SRDP. The report shall include the number of health care providers/suppliers making disclosures; the amount collected pursuant to the SRDP; the types of violations reported under the SRDP and such other information as may be necessary to evaluate the impact of Section 6409 of the PPACA.
• CMS has not determined yet whether it will make settlements under the SRDP available to the public. The OIG has made settlement terms available to the public.
• CMS has received approximately thirty submissions, some prior to the date that the SRDP was promulgated. The size of the submission so far has varied from one or two violations to fifty to one hundred financial relationships. All of the proposed violations relate to compensation arrangements and not ownership interests. The potential violations disclosed include technical violations and lack of fair market value and commercial reasonableness.
• In the case of a technical violation where the parties continue to perform under an expired contact as an example, the starting point for the financial analysis is the total amount billed to Medicare fee for service for designated health services and not the total compensation paid under the arrangement. If CMS agrees that the violation is solely related to signature requirements and not a more substantive requirement, CMS expects to compromise the amount due and owing significantly. The analysis will begin, however with the overpayment amount.
• The SRDP only applies to Medicare payments and not to Medicaid payments, although the federal Stark law does apply to the federal government’s share of the Medicaid payments. If the payor is a Medicare Advantage Plan, there is an exception for such arrangements that should apply in those cases.

Whose Tax ID Number Should be Used to Bill for Services Under the Stark Personal Services Exception?

Can a physician group continue to bill under its tax identification number if it is providing patient services to hospital patients under a personal services arrangement with a hospital? According to CMS, the answer is yes. The services do not have to be billed under the hospital’s tax identification number.
CMS expressed the opinion that it did not matter which entity did the billing. Under the revised definition of entity, the arrangement must satisfy the personal services exception regardless of whether the group continues to do the billing under its tax identification number or whether it bills for the services on behalf of the hospital under the hospital’s tax identification number. The billing tax identification number is not relevant to whether the elements of the Stark personal services exception are met.

CMS noted, however, that if the group did the billing under its tax identification number and the proceeds were deposited into a lock box account, the group must control the lock box account. If the group does the billing on behalf of the hospital under the hospital’s tax id number, then the lock box can be controlled by the hospital.

#You Know You’re Talking to a Lawyer When . . .

Another faux twitter post:

  1. You are telling an amusing story and he starts asking questions like you are a trial witness.
  2. She uses the word “tort” in a sentence, and is not ordering dessert.
  3. During a casual conversation, he can compose a grammatically correct paragraph that has more than three complete sentences.
  4. She uses the word “heretofore” in a sentence, and is not making a joke.
  5. He is taking notes during your conversation.
  6. She monitors the amount of time she spends talking to you.
  7. He asks for your opinion on a current event topic and then proceeds to tell you why you are wrong.
  8. She refers to you as an attractive nuisance.
  9. He can tell you the risk of being injured from (a) sleeping on the top bunk, (b) using a propane heater, (c) riding in the back of a pick-up truck, (d) driving a car on the Northway, or (e)  riding an ATV.
  10. She tries to defend the Big Bad Wolf in Little Red Riding Hood.

OMIG Webinar on Effective Compliance Programs

The New York State Office of the Medicaid Inspector General (“OMIG”) held a recent Webinar on Evaluating the Effectiveness of Compliance Programs.

New York was the first state to require providers to have a compliance program. The requirement applies to hospitals, nursing homes, clinics, ambulatory surgery centers, home care providers, mental health facilities and facilities for people with mental disabilities that participate in the Medicaid program. It also applies to those providers for which the Medicaid program “constitutes a substantial portion of their business operations,” which OMIG has defined as ordering, providing, billing or claiming $500,000 or more from Medicaid in any consecutive 12-month period. The $500,000 threshold applies if a provider receives the reimbursement directly or indirectly (i.e., Medicaid managed care) from Medicaid funds. There are administrative penalties for failing to meet this requirement, including exclusion from the Medicaid program.

Beginning December 31, 2009, these providers were also required to certify to OMIG that they have an “effective compliance program.” OMIG reported that of the 60,000 Medicaid providers, 12,000 are required to certify that they have an effective compliance program. As of April 1, 2010, only 50% of those providers had provided the required certification. OMIG is contacting those who have not done so. Most who were contacted were unaware of the certification requirement or confused it with the Deficit Reduction Act of 2005 requirement to provide training on the False Claims Act to employees and vendors.
OMIG has redesigned the certification form for 2010 to address this confusion. The new form will be available on December 1, 2010 on the OMIG website.

OMIG’s next priority is to audit whether the certification is accurate. Does the provider really have an effective compliance program? The new form advises providers NOT to submit the certification if they do not have an effective compliance program.

According to OMIG, an effective compliance program will meet the following standards:
• The organization exercises due diligence to prevent and detect inappropriate conduct.
• The organization promotes a culture that encourages ethical conduct and is committed to compliance with the law.
• The compliance program is reasonably designed, implemented and enforced so that the program is generally effective in preventing and detecting improper conduct – the failure to detect a specific offense does not mean this standard is not met.

Beginning next year, OMIG will be measuring the effectiveness of a provider’s compliance programs. What are the metrics that they will use to gauge effectiveness?
1. The provider’s certification history. Has the provider submitted the required certification that it has an effective compliance program in 2009 and 2010?
2. The provider’s audit and investigation history. What has OMIG found when it audited the provider? Has the provider been the subject of an investigation or complaint? How often has the provider been the subject of a Division of Medicaid Investigation audit?
3. The provider’s self-disclosure and self-reporting history. In this regard, more is better. Those providers who have never made a self-disclosure are not detecting inappropriate conduct.
4. The provider’s billing error rate and its ability to detect obvious billing errors, such as billing for services provided after the patient’s date of death or ordered by an excluded person.
5. The provider’s refund and void history, and whether there are any reports of issues associated with rebates and net acquisition cost.
6. Whether the provider is an outlier on the card swipe program for determining a beneficiary’s Medicaid eligibility. OMIG expects providers to achieve card swipe compliance of 85 percent, monitored through post-payment audits of a provider’s claims.
7. Whether the provider accepts orders for automatic refills of supplies and other items.
8. The provider’s performance on quality of care assessments, such as Medicare’s Hospital and Nursing Home Compare Reports and Program for Evaluating Payment Patterns Electronic Report.
9. Whether the provider uses unlicensed or unqualified providers to provide services. For example, is the provider billing for the services provided by a certified alcohol and substance abuse counselor when the services are not billable unless provided by a certified social worker.
10. Whether the provider bills for medically unnecessary services or so-called “Never Events”.
11. Is the provider subject to a corporate integrity agreement or corporate compliance assessment? What is the status of its compliance with these requirements? What does the independent review organization report about the provider?
12. Is the provider the subject of any other regulatory action, such as by the Department of Health, Office of Mental Health, or Medicaid Fraud Control Unit, or a special investigation unit review by a Medicaid managed care program?
13. Does the provider do self-assessments? OMIG has provided a self-assessment tool that providers can use to do the self-assessment.