By Kim Harvey Looney

The Joint Commission announced the introduction of new standards require accredited healthcare organizations to address bad behaviors.  While healthcare leaders and caregivers have recognized for years that intimidating and disruptive behaviors are a serious problem, the Joint Commission goes a step further and states that such behavior poses a serious threat to patient safety and the overall quality of care.   The new standards apply to hospitals, nursing homes, home health agencies, laboratories, ambulatory care facilities, and behavioral healthcare facilities.  These entities have long struggled with healthcare professionals with intimidating and disruptive behaviors.  The Joint Commission is going to assist accredited healthcare organizations  in dealing with this issue by requiring them to create a code of conduct that defines acceptable and unacceptable behaviors as well as to develop the process to deal with those professionals who exhibit behaviors that are unacceptable.  The Sentinel Event Alert recommends that healthcare organizations take 11 specific steps to help put an end to intimidating and disruptive behaviors, including implementing a zero tolerance policy, providing education, and holding all team members accountable for behavior.  The new Leadership standard that addresses disruptive and inappropriate behaviors will take effect Jan. 1, 2009. 

By Kim Harvey Looney

On Wednesday afternoon, July 9, 2008, the Senate voted 69 to 30 to stave off a cut in Medicare fees to physicians.  Senator Edward M. Kennedy (D- Mass.) made a surprise appearance.  While President Bush has promised to veto the bill, Senate leaders are not worried because the bill has now passed both the House and Senate by veto-proof margins – 355-59 in the House and 69-30 in the Senate.   Without such action, physicians would have started to feel the 10.6 percent automatic cut sometime after July 15.   A number of Republicans who had previously voted against the bill ended up voting for it after they were targeted by ads from the American Medical Association, including Senators Kay Bailey Hutchison (R-Tex.), John Cornyn (R-Tex.), Arlen Specter (R-Pa.),  Bob Corker (R-Tenn.) and Lamar Alexander (R-Tenn.).  A total of nine Republicans switched their votes.    

By Bobby Guy

For the senior living company looking to expand its portfolio, distress sales can provide a unique opportunity to purchase a diamond in the rough at a very favorable price.

Article available at this link from the May/June 2008 issue of ADVANCE for Long-Term Care Management.

By Jennifer Weaver and Nate Gilmer

On June 9, 2008, the United States Supreme Court limited the scope of the False Claims Act (FCA) with its opinion in Allison Engine Co. v. United States ex rel. Sanders, a decision that potentially calls into question the applicability of the FCA to Medicaid claims.

For more information, please see the Waller Lansden bulletin at this link.

By Vinita Ollapally

On May 2, 2008, the Centers for Medicare and Medicaid Services (CMS) issued its Interim Final Rule with Comments Implementing Medicare, Medicaid, and SCHIP Extension Act of 2007 to the Long Term Care Hospital Prospective Payment System (Final Rule).  The Final Rule increases the standard Federal rate for long term care hospitals (LTCHs) for Rate Year 2009 by 2.7 percent from the rate established for 2008.  CMS estimates that the changes in the Final Rule will result in total payments to LTCHs of $4.47 billion, which is approximately $110 million over the 2008 rates.

LTCHs are generally defined as hospitals that have an average Medicare inpatient length of stay greater than 25 days.  Medicare pays LTCHs a single, predetermined amount under the LTCH prospective payment system (PPS), which uses Medicare-severity long term care diagnosis related groups (MS-LTC-DRG) to determine payments.  These are the same MS-DRGs that are used to determine payments for inpatient stays in acute care hospitals, but the payment amounts are different to reflect different hospital resources required to treat patients during long stays.  In unusually costly cases, Medicare may pay a LTCH an additional amount, called an outlier payment, in addition to the LTCH PPS payment for the MS-LTC-DRGs.  In order to be eligible for an outlier payment, the LTCH’s estimated costs in treating the patient must exceed the MS-LTC-DRG by a fixed-loss amount.  The Final Rule increases the fixed-loss amount for high cost outlier cases from $20,738 to $22,960.      

The CMS press release on this rule is available at this link. 

The final rule is available at this link.

By Kim Harvey Looney

On May 1, 2008, CMS issued a press release titled “CMS Proposes More Accurate Payment Rates for Medicare-Skilled Nursing Facilities in Fiscal Year 2009.” 

CMS is proposing a recalibration of the case-mix adjustment.  What this really means is a decrease in payments to SNFs.  The proposed change stems from refinements that CMS made to the case-mix indices (CMIs) in 2006 to better account for resources used in the care of medically complex patients.  While the 2006 expansion of the Resource Utilization Group (RUG) model was intended to be budget neutral, Medicare expenditures actually increased as a result of the change.  Instead of the 19 percent estimated by CMS, patients were classified in one of the newly created RUG groups more than 30 percent of the time.  CMS's proposal to recalibrate is being done in order to “reestablish budget neutrality on a prospective basis.”  The proposed recalibration, however, would cause a reduction in payments to nursing homes of $770 million, or 3.3 percent.  While CMS estimates that most of the SNF PPS payments would be offset by the proposed market basket update to Medicare payments of 3.1 percent, SNFs can still expect to see a slight decrease in payment of $60 million, or 0.3 percent. 

Public comments on the proposal will be accepted until June 30, 2008.  More information is available on the CMS web site at this link.

By Kim Harvey Looney

Critical new information was added on April 23 to the Centers for Medicare & Medicaid Services’ (CMS) web site.  Additional information includes whether or not a nursing home is or has been on CMS’s special focus facility (SFF) list.  The SFF list shows nursing homes that have a history of poor performance or repeated violations of state and federal health and safety rules.   The new information will give patients and their families a more complete picture of particular nursing homes and the quality of care they provide.  The Medicare web site also provides a resource for comparing nursing homes.

Information about the homes includes performance scores on quality measures, staffing information and a three-year history of the home’s health, safety and fire inspection reports.  Once a facility has been selected as an SFF, the state survey agency conducts twice the number of standard surveys and will continue enforcement until the nursing home either improves significantly enough to be taken off the SFF list, is granted additional time to comply due to promising developments, or is terminated from the Medicare and Medicaid programs.  CMS Acting Commissioner, Kerry Weems, stated, “[Today’s] action is the next step in our commitment to bring transparency and accountability to the process families must go through to find the care that is best for them and their family member.”   It is anticipated that the web site will be updated quarterly with new information.

By Kim Harvey Looney

On April 15, Inspector General Daniel R. Levinson issued An Open Letter to Health Care Providers  announcing that the Office of Inspector General (OIG) had refined the requirements of the OIG Provider Self-Disclosure Protocol (SDP).  Under the SDP, healthcare providers can voluntarily report fraudulent conduct affecting Medicare, Medicaid and other Federal healthcare programs and not be required to enter into Corporate Integrity or Certification of Compliance Agreements with OIG, as long as the provider discloses in good faith, fully cooperates with the OIG, and provides requested information in a timely manner.

The Open Letter sets forth four additional self-disclosure submission requirements for the initial submission to improve the disclosure process:

1. A complete description of the conduct being disclosed
2. A description of the provider’s internal investigation or a commitment regarding when it will be completed
3. An estimate of the damages to the Federal health care programs and the methodology used to calculate that figure or a commitment when the provider will complete such estimate
4. A statement of the laws potentially violated by the conduct

The provider must complete the investigation and damages assessment within three months after acceptance into the SDP.  Providers will be removed from the SDP unless they disclose in good faith and timely respond to any requests of the OIG for additional information.

The OIG’s press release on the self-disclosure protocol is available at this link.

By Jim Mathis

(But so were lots of other folks, too!)  After the February delay in implementation (see Feb. 11 2008 blog entry, ESRD Conditions of Coverage Delayed: Will We All Retire First?), I would have bet internal debate within CMS would have taken the full extension year (or almost that), running the new CoCs into the brand new administration we will have after January 2009.  This delay would in turn have led to another round of delay occasioned by that administration guiding policy the way it prefers.

But on Thursday, April 3 we got the news of the release of the final rule.  Barry Straube, MD, CMS Chief Medical Officer (and a nephrologist by training) reportedly had said at the time of the February delay that final approval and publication would take about two months:  He pegged that one almost to the day! (But apparently they are having a bit of  a delay in getting it published in the Federal Register – it appears April 15 may be the date!)

So kudos to CMS for promulgating a new standard and the industry for working together to encourage a standard it can now work to achieve!  Many folks see this as a big step forward in the potential for improved patient care and outcomes, but the biggest change may be felt in surveys.  We will all have to be patient as surveyors get accustomed to a new approach.

For example, just as providers have indicated that some states have had difficulty in recent years settling on a reasonable and consistent survey approach relating to the significant growth of home-based and nocturnal programs, so also for a while surveyors may feel more comfortable with a ‘check the box’ survey focusing on process requirements under the old CoCs than with a survey focusing on patient-centered, outcome-oriented approaches under the new CoCs.  But it will be an exciting and interesting time!

Thanks to Vinita Ollapally for helping me verify some information on this post!

By Jim Mathis

Friday, April 4, 2008 saw the publication of proposed rules amending Medicaid regulations covering home and community-based services (HCBS).  Under the Deficit Reduction Act of 2005 (DRA) a new section (1915(i)) was added to the Social Security Act to permit states to provide HCBS under their regular state Medicaid plans that were previously eligible only under waiver or demonstration projects.

Clearly, the Bredesen administration’s desire to stimulate non-residential care of the elderly and disabled in Tennessee, as represented by the Long Term Care Community Choices Act of 2008 is timely. For more information, see the Waller Lansden bulletin.

The comment period on the proposed federal rules runs until June 3, 2008. The rule can be found at this link.

By Kim Harvey Looney

The Tennessee Court of Appeals ruled recently that hospital bylaws were part of a physician’s employment contract. 

In JAMES C. GEKAS, M.D. v. SETON CORPORATION, d/b/a BAPTIST HOSPITAL, a physician sued a hospital for breach of contract after the hospital declined to promote him to a permanent position on its medical staff.  The physician claimed that the hospital's bylaws were part of his employment contract, and that the manner in which the hospital reached its decision violated those bylaws. 
 
The trial court ruled in favor of the hospital, as did the Court of Appeals.  The opinion of the Court of Appeals, delivered by Judge Patricia J. Cottrell, stated that while the court agreed with the physician that the bylaws formed part of his contract, the record clearly showed that the hospital substantially complied with its bylaws in the matter.

By Kim Harvey Looney and Nate Gilmer

The Tennessee House and Senate recently passed legislation (HB 2729/SB 2614) that will permit assisted care living facility residents to receive hospice care while continuing to remain a resident of the assisted care living facility.  Under the legislation, the treating physician must certify that hospice care can be appropriately provided at the assisted care living facility in order for a resident who qualifies for hospice care under Medicare to receive these services.  The hospice provider and the assisted care living facility will be jointly responsible for developing an appropriate plan of care.  The hospice provider must be available to assess, plan, monitor, direct and evaluate the patient's palliative care in conjunction with the resident’s physician as well as in cooperation with the assisted care living facility.  This bill has been sent to the Governor and will be effective upon his signature.

By Brian Browder and Brendan Thompson

Nursing home operators need to consider all the options for profitability in a changing market.

Article available at this link from the March/April 2008 issue of ADVANCE for Long-Term Care Management.

The United States Tax Court ruled recently that a group of individual physicians who sold their practice group to a nonprofit hospital were not entitled to take a charitable deduction for the value of intangible assets each individual allegedly conferred in the sale.

The physicians argued that between $1 million and $2 million in intangible assets - including their patient rosters and professional reputations - were donated. The court agreed with the position taken by the Internal Revenue Service that the physicians were wholly compensated under the terms of the employment agreement each signed.

For more information, please see the Waller Lansden bulletin at this link.

By Jim Mathis

Even though we all knew it; it is nice to have confirmation!

Sixth Circuit affirms that Medicare Secondary Payor (MSP) statute does not confer private right of action.  I just came across the Feb. 28, 2008 decision in Stalley v. Methodist Healthcare in which the US Court of Appeals for the 6th Circuit joined others in strongly asserting to the plaintiff’s bar that the MSP statute is not a qui tam statute, conferring a private right of action.

Generally, the MSP statute governs when Medicare will be secondary to other coverage.  Providers assert that the rules can be complex.  Tracking patient responsibility and payor coverage order on individual patients, conditions and encounters can cause even the most diligent providers to make mistakes (which then have to be rectified.)  Although none of us would advocate "sneaking" claims in on Medicare that should be covered elsewhere, we also recognize that if the courts interpret the MSP statute to include whistleblower-type financial incentives to the private plaintiff’s bar, an explosion of actions surrounding this activity may follow.  Charting these waters is precarious enough without the added peril of bounty-hunter provisions never intended in the original legislation.

By Kim Harvey Looney and Vinita Ollapally

Two cardiologists pleaded guilty on Feb. 28, 2008, to embezzlement of approximately $840,000 from the University of Medicine and Dentistry of New Jersey (UMDNJ).  The cardiologists were hired to work part-time at UMDNJ’s University Hospital and provide services such as teaching at the UMDNJ medical school, on-call coverage, attending weekly conferences and lecturing, among other things.  Both doctors admitted that they intentionally accepted salaries of approximately $840,000 from 2003 to 2006, but provided almost no meaningful services to UMDNJ in return, other than referring cardiac patients, and were therefore not entitled to compensation.  The prosecutions are an outgrowth of a U.S. Attorney’s Office investigation of fraud and abuse of UMDNJ.

The U.S. Attorney’s press release describing the matter is available at this link.

By Kevin Kimery

In a memorandum released March 12, 2008, the Centers for Medicare and Medicaid Services (CMS) backed off from its Dec. 13, 2007 proposed national coverage determination (NCD) that would have largely eliminated Medicare reimbursement for cardiac CTA scans.  The proposed NCD elicited a groundswell of opposition from the medical community.  Of the 660 comments CMS received, 649 expressed clear disagreement with the proposal and only 10 agreed with CMS’s position.

Since private payors frequently follow CMS’s lead in making coverage determinations, the proposed NCD would have had a harsh financial impact on providers.  The scanners used in these tests can cost upwards of $1 million.

Although CMS called off the NCD it proposed, it should be noted that CMS has not been convinced of the merits of CTA scans.  It stated that “there is uncertainty regarding any potential health benefits or patient management alternations from including coronary CTA in the diagnostic workup of patients who may have CAD [coronary artery disease].”  Essentially, CMS is stating that, as far as they are concerned, the jury is still out on this test, so they have withheld judgment – at least for now.

Recovery Audit Contractors (RACs) collected more than $356 million in improper Medicare payments from providers in 2007, according to a February 2008 CMS press release. Almost half of the overpayments were the result of incorrect coding and about one-third were claims that did not meet Medicare's criteria for medical necessity. Other types of errors identified include insufficient documentation, duplicate claims and incorrectly following fee schedules.

For more information see the Waller Lansden bulletin at this link.

By Brandon Schirg

On March 5, 2008, the U.S. House of Representatives passed H.R. 1424 (also known as the Paul Wellstone Mental Health and Addiction Equity Act of 2008), which mandates that health insurance policies offer equal health insurance coverage for mental and physical illnesses when the policy provides coverage for both.  In addition to addressing mental health insurance coverage, however, the legislation also contains a provision that would significantly amend the Whole Hospital Exception to the Stark Law.

As adopted by the House, the bill would prohibit a hospital from having any physician ownership unless on the date the legislation is enacted the hospital already had (i) physician ownership and (ii) a Medicare provider agreement in effect.  Like previously proposed amendments to the Whole Hospital Exception, the legislation would also prohibit physician-owned hospitals from increasing the number of their beds or operating rooms.  Physician ownership in the hospital would be limited to no more than 40 percent of the total value of the investment interests held in the hospital, with no individual physician being allowed to own more than 2 percent.  In addition, grandfathered hospitals would be required to disclose the fact that the hospital is partially owned by physicians on their web sites and in any public advertising.  These hospitals also would be required to submit an annual report to the Secretary of the Department of Health and Human Services that contains a detailed description of the hospitals’ physician owners and their ownership interests.

The Senate version of the bill (S. 588), which was passed on September 18, 2007, and is supported by the White House, does not contain the language amending the Whole Hospital Exception.  The two measures are now headed to a conference committee, which will attempt to resolve this and other differences between the bills.        

By Jennifer Weaver and Manisha Desai

On Feb. 26, 2008, the United States Supreme Court heard oral argument in Allison Engine Co. v. United States ex rel. Sanders, a case that may determine the breadth of the False Claims Act (FCA), a federal anti-fraud statute that allows individuals to sue on behalf of the federal government. The question presented in Allison Engine is whether the FCA applies to false claims submitted to a third party that pays the claim with federal funds, even though the false claim was not submitted directly to the federal government. Given that the federal government provides funds to numerous private entities as well as state and local governments, the Court's ultimate decision could have far-reaching impact, particularly in the healthcare industry.

For more information, please see the Waller Lansden bulletin at this link.

By Kim Harvey Looney

A bill was proposed in the Tennessee Legislature that would give public hospitals the right to hold some meetings in private.  House Bill 3504, sponsored by Rep. Ulysses Jones, a Memphis Democrat, passed the House State Government Subcommittee on Wednesday.  The companion bill, Senate Bill 3643, has been delayed since January in a Senate committee.  Public hospitals are subject to the open meetings law and public records law.  The proposed bill would allow government-funded hospitals to exclude the public when certain strategic and marketing issues,  including feasibility studies,  are discussed.  Any records addressing proposed marketing strategies and strategic plans, including feasibility studies, would also be exempt from the public records laws.   Supporters of the bill claim that the current law requiring all meetings to be public gives private hospitals an unfair advantage.  Private hospitals do not have to discuss their marketing and strategic plans in public.  Any action by a hospital's board of directors adopting, rather than simply discussing, a specific strategy or plan would remain subject to the open meetings laws, and the adopted strategy or plan, as well as the studies that were considered in the adoption of the strategy or plan, would then be subject to the public records laws.

The full text of HB3504 is available on the General Assembly's web site.

By Jim Mathis and Nate Gilmer

A recent advisory opinion (No. 08-03) issued by the Office of the Inspector General of the Department of Health and Human Services (OIG) concluded that the OIG would not impose sanctions on a provider health system's program offering prompt payment discounts to patients. This opinion is significant in that it sheds light on the type of safeguards healthcare facilities should implement if they wish to discount or waive the patient responsibility portion of bills, and evidences an increasing willingness of the OIG to move beyond the technical requirements of certain safe harbors where efficiencies can be gained and appropriate safeguards from abuse are in place.

For more information, please see the Waller Lansden bulletin at this link.

By Jim Mathis

Today’s Wall Street Journal (print article only available with online subscription) and its Health Blog report on the announcement of a joint project between Google and Cleveland Clinic (see Clinic’s announcement) that will "create a new kind of healthcare experience" with health information and medical records.  It is unclear whether the Google site will be more of a records repository or a health information site, but it is clear that we have seen a recent flurry of interest in consumer accessible information such as Microsoft’s HealthVault which provides a prominent place to store personal health information and Steve Case’s RevolutionHealth which contains that function but provides more prominence to information; all of which either compete or are evidence of a new generation beyond ‘traditional’ information sites like WebMD and pioneer  Dr. Koop.

I can envision providers having a hard time trusting the security and accuracy of such sites, but it appears that the demand for consumer accessible health information, including medical records, will not fade, so some method will have to be developed.  I wonder if each provider building their own really makes operational and economic sense?

Thanks to Bobby Guy for the heads-up on the Steve Case site.

By Bobby Guy

In our opening blog last July, we discussed how excess liquidity was affecting deal opportunities in the healthcare market.  The United States is now widely seen as being in a credit crunch: the secondary markets look like Chernobyl, and primary lenders and originators of debt are unable to move loans off of their books by selling or syndicating them into the secondary market (i.e., selling them to bondholders, securitized pools, other lenders, and investors).   This results in a credit crunch because for regulated banks, for example, every dollar of loans they have to keep on their books can reduce their ability to make future loans by approximately $10.    At the same time, as regulated and unregulated lenders have retrenched, tighter lending standards have also become the norm, and as we all know, less credit means a hit to the demand curve for acquisitions and expansions.   In non-economic speak, acquisitions are more difficult and asset prices will stabilize or fall.  Consider the housing market, for example, where prices are falling because of excess supply and plummeting demand. 
 
How will this affect the healthcare market?  Let's look at the senior living market in this blog entry.  We recently discussed the effects of the credit crunch in an article in McKnight's Long-Term Care News.  Generally, the healthcare market is seen as more resilient than other markets because it is a need-driven service rather than a want-driven service; when consumers feel less wealthy, one of the last places they cut back is on their medications and medical services.  So the market usually is seen as having the strong fundamentals of a "safe" investment even in the down-cycle.  But for the seniors market, it is important to realize that some of the market is driven by consumer desire.  For example, consider seniors who decide to sell their home and move into an age-restricted independent living facility, an assisted living facility, or a very pricey continuing care retirement facility (also known as a CCRC).  These moves often involve choice rather than necessity, and many seniors might be able to hold on for a few years longer before making the move, timing it for better economic advantage.  If the housing market continues to slide, especially in places like Florida, this could have a significant affect on occupancy for senior housing.  Don't get us wrong - we're very bullish on the market overall, especially based on national demographics.  But the credit crunch in the market will certainly lead some facilities to struggle, giving rise to acquisition potential for the opportunistic buyer - a subject we'll discuss in a follow-up blog shortly. 

By Jim Mathis and Lesli Love

On Jan. 31, 2008, the Office of the Inspector General and the Health Care Compliance Association jointly issued a report from a roundtable held in December 2007 between long-term care professionals and government representatives.  Several focus breakouts were reported, but one of the main goals of the day-long conversation was to identify items that could be included in a “Quality of Care Dashboard” – a tool to be used by boards of directors of long-term care organizations in trying to improve oversight of quality.

The roundtable group noted several ways that boards of directors can demonstrate a commitment to quality, such as providing a forum for the Compliance Officer or other representatives to communicate quality issues directly to the board or crafting a mission statement or resolution addressing its commitment to quality.  The group noted that a board must allocate resources in a way that is consistent with a commitment to quality – the theme for this breakout session was that quality of care must be emphasized from the top down.

Other sessions presented ideas on processes and outcomes relating to quality.  The roundtable group challenged boards to receive and review quality reports and data and frequently discuss such data, including asking critical questions about issues, encouraging the free flow of information and evaluating whether proper corrective action is taken when needed.  They also identified measures participants thought valuable in providing oversight:  survey results, resident outcomes and care delivery, events reporting, complaints, resident and family satisfaction surveys, staff satisfaction and surveys, and financial indicators.   

These suggestions can be helpful to all provider types – not just long-term care organizations – who want to show that the entire organization is committed to quality of care.

By Jim Mathis

The current ESRD Conditions of Coverage were promulgated in 1976. 42 CFR 405.2100 et seq.  Lots has changed in healthcare delivery and technology since then. (Dialysis coverage was granted in Medicare in 1973).

On Feb. 4, 2005 CMS published a proposed rule establishing new ESRD Conditions of Coverage.  CMS said that the existing conditions were procedural and they wanted to eliminate unnecessary procedural requirements and to move to conditions that were focused on patient experience and outcomes.  That made for significant changes and lots of us made a huge effort to make comments by the May 2005 comment deadline.  We had heard that CMS was trying to balance the demands of many internal and external constituencies.  Apparently it was quite a job because CMS had three years to finalize the rule, but, due to “exceptional circumstances” on Feb. 4, 2008, the final day, CMS issued a notice extending publication of the final rule for one year, until Feb. 4, 2009.

I am wondering if the proposed rule will be withdrawn.

By Jim Mathis and Vinita Ollapally

CMS has posted a home health prospective payment system informational guide for home health at this link.  The fact sheet is a short, user friendly overview addressing home health services covered by Medicare and elements of the home health prospective payment system.  Published by the Medicare Learning Network, it’s part of the Payment System Fact Sheet Series, which provides a general summary of coverage and payment information for Medicare fee-for-service providers.
 
There has been a trend over the past several years for states to restructure how existing Medicaid funds are used.  Most recently, the Governor of Tennessee proposed the “Long Term Care Community Choices Act of 2008” in an effort to rebalance TennCare funding to provide more home residential alternatives to nursing home care in Tennessee, a state that is behind the trend.  Some of that movement could result in additional Medicare home health activity.  For more on this topic, see our earlier blog entry.

This fact sheet should be helpful for consumers who now may have more care options and for individuals providing guidance to those patients.  It could also be a useful resource for any companies that currently offer, plan to expand, or plan to start offering home health services.

By Brandon Schirg

On Jan. 31, 2008, CMS added 12 new questions to its federal physician self-referral law (Stark Law) frequently asked questions web page.  The questions and answers cover a number of different topics including:

• The definition of a “physician organization”
• The scope of the new Phase III “stand in the shoes” provision
• Physician/resident recruitment
• The termination and amendment of personal services agreements

While the questions and answers are general in nature, they do provide fairly straightforward guidance on some of the most commonly encountered physician self-referral issues and are another valuable source of information as to how CMS interprets the Stark Law.

The Stark Law FAQs are available at this link.

By Brendan Thompson

In his State of the State Address on Jan. 28, 2008, Tennessee Governor Bredesen addressed a promise that he made in the past but felt he had not kept: expanding alternatives to nursing homes for the state’s elderly and disabled residents to include home and community based services.  As part of the “Long Term Care Community Choices Act of 2008,” Bredesen is seeking to fundamentally restructure how long term care is handled in the TennCare program by creating more residential alternatives to nursing homes, expanding consumer-directed options that allow consumers to select or even employ their own caregivers and speeding up eligibility for such alternative services.  Bredesen’s plan does not call for putting significant new dollars into long term care during 2008, but rather it restructures how existing Medicaid funds are used in an effort to provide alternatives to traditional nursing homes.

As Bredesen acknowledged in his speech, Tennessee typically ranks dead last among the states that offer alternatives to traditional nursing homes.  For a discussion of national trends in state spending for elderly and disabled Medicaid beneficiaries and where Tennessee has traditionally stood in light of such national trends, please see our client bulletin.

By Jim Mathis and Josh Collins

We note that the U.S. District Court for the Western District of Tennessee recently dismissed a qui tam suit brought against Baptist Medical Center in Memphis, Tenn.*   The suit alleged that Baptist violated the False Claims Act (FCA) by falsely certifying compliance with Medicare’s Conditions of Participation (CoPs).  In recent years, the doctrine of false certification has become an increasingly popular tool for qui tam plaintiffs seeking large recoveries from healthcare providers. 

The plaintiff, the Associate Chief Nursing Officer at Baptist Medical Center, discovered what she claimed were severe staffing shortages at the hospital, and that the operating room failed to meet applicable standards for cleanliness, sterilization of instruments, and quality of care.  When she continued to raise these issues with hospital administrators, she was terminated. She filed the suit shortly thereafter.
 
The court clearly pointed out that, unlike Conditions of Payment, CoPs are not a prerequisite to a particular reimbursement.  Alleged non-compliance with CoPs could lead to corrective action, but because the government would not have immediately withheld Medicare payments as a result of such deficiencies, they were neither material to payment nor so deficient as to constitute worthless services.  Under the FCA, a false statement within a claim only makes the claim fraudulent if that statement influences the decision making body. 

For now, providers in Tennessee can take a break (perhaps momentary) from the worry that FCA false certification theory will keep expanding.  Providers should remain mindful, however, of allegations of Conditions of Payment violations, which are much more fact-specific.

*United States ex rel. Landers v. Baptist Mem’l Health Care Corp., No. 2:99-cv-2097 (W.D. Tenn. Dec. 17, 2007).

By Michelle Marsh

Hospitals only have until January 31 to submit the “Notice of Participation” form necessary to participate in the Hospital Outpatient Quality Data Reporting Program.  It’s necessary to submit the form, then submit required quality data for 2008 encounters in order to receive the full annual update to their OPPS payment rate beginning in 2009.

The Notice of Participation form and other information about the outpatient quality reporting program is available at http://www.qualitynet.org. 

By Michelle Marsh

CMS just issued a new informational guide on the hospice payment system.  The Hospice Payment System Fact Sheet is a short, user-friendly overview covering the hospice services provided by Medicare, certification requirements, election reqirements and hospice payment rates for fiscal year 2008.

By Josh Collins

Savings and expected recoveries of $43 billion were reported by the Department of Health and Human Services Office of the Inspector General (OIG) in its Semiannual Report to Congress on Dec. 14, 2007, for fiscal year 2007 (October 2006 – September 2007). This represents $2.18 billion in investigative recoveries, $1.9 billion in audit recoveries, and an estimated $39 billion in savings accruing from various OIG recommendations – all significant increases from the previous year. In addition, 447 criminal actions and 262 civil actions resulted in the OIG excluding 3,308 individuals and entities from federal healthcare programs for fraud and abuse violations.

Please see our bulletin for more information.

By Bobby Guy

We hope you've enjoyed the Top 10 list, and that you find it helpful in recognizing early the warning signs of financial distress, and keys for avoiding the cash doldrums.

One point requires noting here: we recognize that there are numerous reasons that healthcare companies can fail, and this Top 10 list is intended to capture only the majors, not all the reasons.  Other examples for failures can include reasons like a disastrous lawsuit, bad outsourcing relationships, poor family succession planning, and unanticipated tax dilemmas. 

We look forward to your comments and input regarding the Top 10 list.  If you prefer not to post your comments publicly, feel free to e-mail them to us at bobby.guy@wallerlaw.com.   Cheers (and yes, we mean it - we're very bullish on the healthcare industry).