October 15, 2001 

Settlements
Fines
CMS Head Chastises Hospitals
CMS Allows Paid Pre-op Exams
CA Laws Signed & Vetoed
OIG 2002 Work Plan
South Carolina Limits OxyContin
IRS & Tax-exempt Hospitals

Settlements

In my last Medicalaw I discussed the University of Florida being forced to pay the government in a whistleblower suit for billing for resident work.  The University now concedes that they were told of the infraction and the doctors who reported were harassed.  This is not only not a good idea but is actually stupid.  An ophthalmologist is now suing the University for the harassment for complaining about the billing methods used.  The plaintiff states he was asked to falsify records and time sheets.  The accused harasser states he was cleared of any criminal wrongdoing by the DOJ, but this is a civil trial and different rules apply.   

In the largest settlement ever, Tap Pharmaceuticals agreed to a fine of $875 million and a 7 year Corporate Integrity Agreement (CIA).  A handful of urologists have also been caught billing for Lupron samples. 

The federal government is getting back $8 for each $1 expended in combating fraud. Top

Fines

Maryland fines insurers for not paying promptly.  Aetna got hit with a penalty of $250,000 for continually not paying podiatrists properly.  They were under an order to have the process done by a certain date, but didn't pay interest on the late claims.  Aetna was also fined $600,000 for the late payment of claims. The next time Aetna gets disciplined their ability to accept new business would be removed.  Aetna replied that they are now current and hope to remain that way.  United has also been fined $300,000 for late payments, also under a previous agreement with the state.  Magellan Behavior Health has been given a fine of $150,000 for prompt pay violations.  I wonder how much these fines hurt the company since they obviously don't take it seriously until threat of removal from business in the state. They say they will improve but it doesn't seem to happen.  What is the money they make on the float compared to the fine?  Are the fines deductible as a business expense?    

California fined Health Net $100,000 for late payments to providers. They will also need to pay interest to the providers who were not paid timely.  Also fined $50,000 was Heritage Provider Network.  They were ordered to pay $200,000 in interest to the providers.  In California the legal rate of interest is 10%.                    Top

CMS Head Chastises Hospitals

Tom Scully, the head of CMS, chastised hospitals for being too slow in devising and reporting quality indicators to the public.  He states if they don't agree on their own standards soon, the government will do it for them.  You all know how user friendly and helpful the government can be- see HIPAA.  Scully also stated that Medicare +C is losing badly.  The program is "dropping like a rock."  He continues to see insurers dropping out and none begging to get in.  He stated he can try to make the rules more flexible for the plans but can not give them more money.                Top

CMS Allows Paid Pre-op Exams

If medically necessary the government will pay for preoperative exams.  The exam should not be part of the global fee nor routine screening and must be requested by the attending surgeon. This overrides local carriers that have been denying the charges. The coding necessary is left up to the direction of the physician with the usual oversight.         Top

CA Laws Signed & Vetoed

California Governor Davis stating California has a severe monetary crisis but not stating it is of his handling of the energy problem has vetoed most laws that call for monetary expenditures.  Some of the important healthcare laws passed and signed are:
SB 16: sets penalties for entities that do not report healthcare practitioners.
SB 340: allows pharmacists to alter the form of medicine prescribed when the form is not appropriate for the patient. 
SB 446: requires health plans to cover FDA approved HIV vaccines
SB 1174: allows certified EMR to perform unsupervised blood glucose tests
SB 456: gives a framework for state agencies to meet HIPAA requirements
AB 453: allows lab personnel doing forensic work to test blood for HIV if accidental contact occurs
AB 487: requires all physicians to complete a CME course on pain management and treatment for the terminally ill.  It also mandates the MBC to develop a protocol for investigation of complaints
AB 586: allows pharmacists to order "simple" lab tests without a physician's order
AB 1424: allows broadening of information allowed when considering whether a person is a threat to self or others.
AB 1428: allows the Dental Board to license dentists fro other states without them passing the California tests
AB 1490: permits electronic access to most laboratory tests by patients if arranged by the physician and that confidentiality would be maintained thru the use of a secure ID number. Online HIV, hepatitis, substance abuse, cancer tests and Pap smears would not be available.
AB 1503: requires MCO to allow patients to continue with their own mental health provider for a reasonable time even after changing HMO
AB 1586: requires doctors to inform the MBC of their board status when they renew their license
SB 1219: requires HMOs to cover annual cervical screenings using either a Pap test or any FDA approved screening test requested by the physician
SB111: allows NP, CNM or PAs to supervise medical assistants in a community based clinic if there are written protocols

Some of the bills vetoed:
AB 1279: $2 million to expand rural health
AB 1061: would have allowed authorized school personnel to help children take their medication with parental consent
SB 833 and SB 1041: which would have allowed more people into Medicaid and Dental care
AB 142: would have prohibited risk for medications by providers
AB 249: would have allowed a partial tax exemption for diabetic lancets & strips Top

OIG 2002 Work Plan

The OIG new work plan is for physician coding and documentation of EM codes, appropriateness of consultation services, ABN, hospital privileging within the context of Medicare's COP, one-day hospital stays, discharge and readmissions and consecutive inpatient stays.  The OIG has also disclosed what to expect in site visits under a CIA.  The visits will be by OIG attorneys and analysts and will last 1-3 days depending on the size of the organization inspected.  The organizations will have a 2 week notice of the visit.  The visit will look at disclosure logs, training programs and other documentation that center around the original problem. JCAHO dog & pony shows and employee prepping are discouraged. Many interviews are one on one with employees and the employee may have a company representative, not the compliance officer, present.         Top

South Carolina Limits OxyContin

South Carolina is now making physicians call a state pharmacist for permission before prescribing OxyContin.  It is ok to use the drug for cancer, sickle cell disease, or terminal illness.  It is not OK to prescribe the drug for back pain etc.  Most physicians are using other medication rather than wasting 10 minutes calling the pharmacist and answering the questionnaire.        Top

IRS & Tax-exempt Hospitals

The IRS has stated that an emergency room is not required for a tax-exempt status.  The community benefit potion necessary may be met in other ways, including using surplus revenue to improve facilities.  There is a new manual to IRS auditors that has a 20 page section on tax-exempt organizations.  The manual states that just having policies is not enough. A hospital must walk the walk which includes an open hospital medical staff, taking Medicare & Medicaid patients and following EMTALA.  The hospital does not need to meet each and every component but only promote the health of the community as a whole.

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DISCLAIMER: Although this article is updated periodically, it reflects the author's point of view at the time of publication. Nothing in this article constitutes legal advice. Readers should consult with their own legal counsel before acting on any of the information presented.