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New News - Class 10

2-8-08:    In a whistleblower case, involving the False Claims Act, the whistleblower, a former Merck sales manager is awarded $68 million, seven year later.

Merck will pay $671 million after allegations it overcharged Medicaid and paid kickbacks to doctors.  According to prosecutors, Merck cheated Medicaid out of millions of dollars in discounts over eight years by routinely overbilling the government for its most popular medicines, the arthritis drug Vioxx (rofecoxib) and the cholesterol drug Zocor (simvastatin).  

According to prosecutors, Merck had about 15 different programs used by its sales representatives to give doctors and other health professionals 'illegal kickbacks,' disguised as fees for training or consultation, to induce them to prescribe Merck drugs.

Merck issued a statement denying that the settlement constitutes an admission by Merck of any liability or wrongdoing and that it believes its pricing and sales and marketing policies and practices were consistent with all applicable regulations and contracts during the relevant time. (American Health Lawyers Association, Health Law Daily, 2-8-08).

Billing Claims - Incorrect payments to providers - UnitedHealth settles billing claims for $12 million in 36 states and is to implement a three year process improvement

"On 9-6-07, UnitedHealth Group agreed to pay $12 million to settle claims by 36 states and the District of Columbia over billing practices at the company's UnitedHealthcare subsidiary.
      The Wall Street Journal (9/7, B4, Fuhrmans) reports, "As part of the settlement, United Healthcare, the company's biggest health-insurance division, also agreed to implement a three-year 'process improvement' plan requiring it to submit quarterly reports and meet annual benchmarks toward reducing claims-payment errors, speeding payments and handling complaints and appeals better. If these aren't met, the company could pay as much as $20 million more in fines."
      The New York Times /AP (9/7, C7) added, "A joint investigation by insurance officials in the states found that the Minnetonka, Minn.-based insurer often applied incorrect fee schedules and deductibles, didn't promptly pay claims, and was generally unable to correct problems pointed out by regulators, New York state insurance officials said Thursday."
      The Hartford Courant (9/7, Levick) reports, "The agreement has no cap on how much restitution UnitedHealthcare companies will pay to members, doctors, and other care providers. The companies must reprocess claims and pay interest as required by various states' laws. In addition, UnitedHealthcare will hire an independent examiner acceptable to regulators to assist them in monitoring the company's compliance with the agreement." UnitedHealthcare Chief Executive Kenneth A. Burdick noted, "This new, forward-thinking approach focuses the regulatory process for the states and our company on a practical set of uniform performance standards, while providing clearer and more meaningful means of assessing how well we are serving customers."
      Modern Healthcare (9/7, Blesch) adds, "The companies 'neither admit nor deny the regulatory findings and desire to enter into this agreement in order to promote regulatory efficiency, to avoid disruption to insureds, enrollees, and vendors, and are willing and desirous to resolve all multi-state areas of concerns,' according to the agreement."
      The Minneapolis Star-Tribune (9/7, Yee) describes the deal as "one of those rare clashes between regulators and insurers where both sides can claim victory" and notes that the agreement is "the first multi-state settlement by a health-insurance company." The Star-Tribune also interviews CRT Capital Group analyst Sheryl Skolnick, who said the deal is "a bargain" for UnitedHealth. The Star-Tribune adds, "The embarrassment factor probably is a bigger deal for a company that prides itself on the efficiency of its claims payment system, Skolnick said."
      The Florida Times-Union (9/7, Karkaria), the St. Paul Business Journal (9/7, Wyant) and Crain's NY Business (9/7, Benson) also cover the settlement.
      Iowa commissioner sees possible model for future actions against insurers.   The Saint Paul Pioneer-Press (9/7, Forster) interviews Iowa Insurance Commissioner Susan Voss, who said, "Several states were experiencing a lot of complaints. ... The idea was to bring the company in behind closed doors and ask, 'How can we get you to resolve this.'" Additionally, "she hopes it will serve as a model for future actions against national companies that do business in many different states." (Per Source:  Health and Life Sciences Law Daily for American Health Lawyers Association 9-7-07)

Other Countries

According to AP (8-12-07):  Americans are living longer than ever, but not as long as people in 41 other countries, according to "international numbers provided by the Census Bureau and domestic numbers from the National Center for Health Statistics."  One significant factor, according to researchers, "is that 45 million Americans lack health insurance, while Canada and many European countries have universal healthcare."  Dr. Christopher Murray, head of the Institute for Health Metrics and Evaluation at the University of Washington, "said improved access to health insurance could increase life expectancy." However, "he predicted, the U.S. won't move up in the world rankings as long as the healthcare debate is limited to insurance." Murray suggests policymakers should also "focus on ways to reduce cancer, heart disease and lung disease" and he "advocates stepped-up efforts to reduce tobacco use, control blood pressure, reduce cholesterol and regulate blood sugar."

7-18-07:

Antitrust

A federal court in New York allowed antitrust claims to proceed.  Plaintiff, Saeeda A. Mahmud, M.D. sued defendants Walter Kaufmann, M.D., Jeff Auerbach, M.D., Jane Brooks, M.D., Gopal Shah, M.D., and David Brody, M.D. alleging they caused Bon Secours Community Hospital and Orange Regional Medical Center to deny her medical staff privileges both on the basis of her Pakistani race and in an effort to limit competition for certain specialized medical services in the area of Port Jervis, New York.

Plaintiff brought claims pursuant to 42 U.S.C. § 1981, the New York Human Rights Law, New York Executive Law §§ 290, et seq. (NYSHRL), the Sherman Antitrust Act, 15 U.S.C. §§ 1, et seq., and New York General Business Law § 340 (NYGBL), as well as common law claims for interference with prospective economic advantage and prima facie tort.

While it “is well-established that the Sherman Antitrust Act does not apply to concerted action among officers or employees of the same enterprise acting as such,” the court found that "'member physicians of an independent practice association [are] legally capable of conspiring among themselves' for purposes of the Sherman Antitrust Act." See Capital Imaging Assocs., P.C. v. MohawkValleyMed. Assoc., 996 F.2d 537, 544, (2d Cir.), cert. denied, 510 U.S. 947 (1993).

4-8-06:

Iasis Healthcare, Franklin, Tenn., which owns or operates 14 hospitals in five states said it is cooperating with a subpoena from the HHS inspector general's office seeking records dating back to 1999 on contractual arrangements between physicians and the system's hospitals. The arrangements include leases, medical directorships and recruitment agreements.  In January HHS offered new guidance to hospitals about their contractual arrangements with
physicians. Federal authorities also are investigating relationships between physicians and Tenet Healthcare Corp. hospitals in California, Louisiana, Tennessee and Texas.  (Source:  Modern Healthcare 9-20-05)

Is this for Fraud and Abuse Investigation?

Four hip- and knee-replacement manufacturers received subpoenas from the U.S. attorney's office in Newark, N.J., for documents related to any consulting and service contracts between the companies and orthopedic surgeons who use or are considering using the companies' orthopedic implants.  The companies are:  Biomet, Johnson & Johnson's DePuy Orthopedics, Smith & Nephew, and Stryker Corp.  (Modern Healthcare's Daily Dose, 3-31-05)

Mandate for Electronic Prescribing

The guarantee widespread adoption of e-prescribing in the future includes improved patient care, increased profitability for health plans, and a new Medicare mandate requiring it. 

Health Information Technology Benefits

Grants are being awarded to help determine how best to use health information technologies to improve patient safety by reducing medication errors; increasing the use of shared health information between providers, laboratories, pharmacies and patients; helping to insure safer patient transitions between health care settings, including hospitals, doctors' offices, and nursing homes; and reducing duplicative and unnecessary testing.  Health information technology has the potential to produce savings of up to 10 percent of the country's total annual spending on health care.  (HHS news 101-13-04)

Resources from the Government Current Status and Future Focus

Fiscal Year 2005 Work Plan

The Office Inspector General (OIG) Fiscal Year 2005 Work Plan is available online.  The Work Plan sets forth various projects to be addressed during the fiscal year by the Office of Audit Services, Office of Evaluation and Inspections, Office of Investigations, and Office of Counsel to the Inspector General.

The Work Plan includes projects planned in each of the Department's major entities: the Centers for Medicare & Medicaid Services; the public health agencies; and the Administrations for Children, Families, and Aging. Information is also provided on projects related to issues that cut across departmental programs, including State and local government use of Federal funds, as well as the functional areas of the Office of the Secretary. Some of the projects described in the Work Plan are statutorily required, such as the audit of the Department's financial statements, which is mandated by the Government Management Reform Act.  

See:  http://www.oig.hhs.gov/publications/workplan.html#1

Red Book Available

The 2004 Cost-Saver Handbook, commonly called the Red Book is available online.  The Red Book The Red Book is a compendium of significant Office of Inspector General (OIG) cost-saving recommendations that have not been fully implemented.  The OIG claims that full implementation of the recommendations in the 2004 edition of the Red Book could produce substantial savings to the Department.  Each recommendation includes a summary of the current law, the reason that action is needed, the estimated savings that would result from taking the recommended action, and the status of actions taken and the type of action needed (legislative, regulatory, or procedural) is indicated.

See:  http://www.oig.hhs.gov/publications/redbook.html#1

Side Note of interest: Flu Vaccination - Prosecute Price Gauging 

HHS Secretary urges States to prosecute for flu vaccination price gauging.  With the loss of half of our nation's flu vaccine due to manufacturing issues in England some are trying to make a quick profit from this public health challenge. (HHS Press Release 10-14-04)

Antitrust Complaint - Evanston Northwestern Healthcare Corporation and Highland Park Hospital

The Federal Trade Commission (FTC) filed its first antiturt challenge to ahopsital merger in six years against Evanston Northwestern Healthcare Corporation (ENH) alleging that ENH's merger with Highland Park Hospital resulted in anticompetitive price increases and that a physician group affiliated with the merged hospitals engaged in price fixing in violation of the FTC Act. The FTC's complaint asserts that the merger violated the Clayton Act, based on an analysis conducted under the Horizontal Merger Guidelines and on the actual competitive effects - in the form of higher prices actually charged by ENH after the merger. The FTC seeks a remedy to restore competition to the benefit of consumers seeking competitively-priced health care. 

See:  http://www.ftc.gov/opa/2004/02/enh.htm

Per Crain's (2-11-04):  ENH said it will fight the FTC challenge because it does not have dominant market share.  

Antitrust - Charity Approach

For antitrust reasons in an effort to meet federal antitrust rules to create a significant risk three hospitals in Boston, MA have agreed to donate $3 million to charity if they do not achieve six goals to cut costs and improve care over the next year.  They wanted to have a financial model that was more clearly tied to their clinical goals and more in line with the antitrust environment.  This includes discharging at least 15% of patients by noon , rather than by 4 p.m. or 5 p.m. as is now often the case.  Two of the hospitals Massachusetts General and Brigham and Women's belong to Partners HealthCare and they have a joint venture in cancer care with Dana-Farber Cancer Institute.    (Modern Healthcare 10/21/03 )  

Economic Credentialing Issues

Some cardiologists with ownership interest in a heart hospital in Arkansas filed a lawsuit against a hospital that notified them their staff privileges were ending. The doctors' complaint contends Baptist's policy of "economic credentialing" violates state and federal statutes.  (Modern Healthcare 2-20-04)

A hospital in Idaho Falls, Idaho, has revoked the privileges of five doctors associated with a nearby physician-owned rival and the doctors are looking into what are their legal rights.  (Modern Healthcare 2-05-04)

Medical Malpractice

Ohio State Medical Society is financing motions for sanctions for certain medical malpractice lawsuits where it believes member physicians have been frivolously named in the lawsuit as a defendant.  The frivolous lawsuit committee consists of three members and is currently reviewing about 50 matters.  Some of the members of the society claim that just by being named in a medical malpractice lawsuit significantly increases their insurance premiums and this happens even if they only have minimal contact with the patient and are eventually dismissed out of the case.  Some plaintiff attorneys claim that in order to protect the rights of patients, especially if there is a statute of limitation issue, they must name the doctor as a defendant to for discovery purposes. (ABA Journal 2004)

Health Insurance

Per Modern Healthcare 10/6/03 :  California Chamber of Commerce is considering legal action against a new state law requiring larger employers to provide their workers with health insurance.  The law requires businesses with 200 or more employees to provide health insurance for workers and their families beginning in 2006 or pay a fee for the employees to receive coverage through a state-run program.  In each case, the employer would pay 80% of the cost and the employee 20%.  The chamber believes the new law is effectively a tax on employers and employees and should have passed the legislature on a two-thirds vote instead of a simple majority.  The state Assembly and Senate approved the proposal by votes of 46 to 32 and 25 to 15, respectively. In signing the law, Gray Davis said it would ease the burden the uninsured place on the economy. Under the law, the mandate will be expanded in 2007 to companies with 50 to 199 employees and to firms with 20 to 49 employees if and when a state tax credit is approved. The law is expected to bring health insurance to an estimated 1 million uninsured workers.

Genetic Discrimination

Per AMNews (11-3-03):  Legislation passed unanimously in the Senate with the assistance of Senate Majority Leader Bill Frist, MD (R, Tenn.) prohibiting health insurers and employers from using the results of patients' genetic tests against them.  Advocates for this legislation are pushing the House to act to ban genetic discrimination.   According to the Health Insurance Assn. of America health insurers claim it will only add unnecessary and costly regulatory burdens without improving consumer protections.

Per Virginia Commonwealth University, Life Sciences Survey, Oct. 2001, interest in genetic tests is high, but concerns are widespread, a poll of 1,122 adults shows:

HIPAA Related Products

Electronic eligibility checking is among a set of eight standard transactions targeted by the "administrative simplification" section under the Health Insurance Portability and Accountability Act (HIPAA).  WebMD Corp., Elmwood Park , N.J. , placed a $280 million bet on growth generated by this law by agreeing to acquire Medifax EDI, Nashville .  Medifax, a privately held company, provides insurance eligibility information on patients in 140 health plans including Medicare and most Medicaid plans.  It will be merged with WebMD's Envoy claims-processing division, also located in Nashville .  (Modern Healthcare 10/22/03 )

Privacy Issues:  Danger of "offshoring" work

Per Modern Healthcare 10/22/03:  “A woman in Pakistan doing cut-rate clerical work for UCSF Medical Center, San Francisco, threatened to post patients' confidential files
on the Internet unless she was paid more money. The violation of medical privacy -- apparently the first of its kind -- highlights the danger of "offshoring" work that involves sensitive materials, an increasing trend among budget-conscious U.S. companies and
institutions. U.S. privacy laws are virtually unenforceable overseas.  Nearly all Bay Area hospitals contract with outside firms to handle at least a portion of their voluminous medical-transcription workload.  Those firms in turn frequently subcontract with other companies. In the case of the threat to release UCSF patient records online, a chain of
three different subcontractors was used. UCSF and its original contractor say they had no knowledge that the work eventually would find its way abroad.”

Stolen Personal Medical Information

A class-action lawsuit was brought on behalf of military personnel whose personal information was stolen in a burglary at a TriCare contractor.  The lawsuit was based on a Dec. 14, 2002 , burglary at TriWest Healthcare Alliance, Phoenix where thieves stole computer hard drives containing names, addresses, phone numbers, medical claim histories and Social Security numbers for about 562,000 military personnel.  Company officials said there was nothing linking the stolen information to fraud.  The U.S. District Judge dismissed the lawsuit because there had been no actual damages to prove negligence allowing plaintiffs an opportunity to file an amended complaint.  (Modern Healthcare 10/21/03 )

OIG Fraud and Abuse

Per OIG 10-30-03:  The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) protects the integrity of HHS programs from fraud, waste and abuse through its nationwide network of auditors, investigators and analysts. In FY 2002, OIG saved taxpayers a record $21 billion, excluded 3,448 people and companies from Medicare/Medicaid reimbursement, secured 517 criminal convictions and 236 civil actions.

 2002 Fraud and Abuse Collections by Federal Government

The federal government won or negotiated for healthcare fraud collections in 2002 more than $1.8 billion in judgments, settlements and administrative penalties and collected $1.6 billion of that amount.  The Justice Department filed 361 criminal indictments and HHS' inspector general's office filed 221 civil actions in 2002, according to a joint annual report by the agencies. The inspector general's office collected $150.2 million in improper payments, issued 20 advisory opinions and excluded 3,448 individuals or organizations from participating in federal healthcare programs. Between 1997 and 2002, the fraud and abuse program collected $4.3 billion in healthcare fraud recoveries and returned $4.1 billion to the Medicare Trust Fund. (Modern Healthcare 10/8/03 )

Background of OIG Fraud Investigations

Per OIG (10-7-03):  Efforts to combat fraud were consolidated and strengthened under Public Law 104-191, the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The Act established a comprehensive program to combat fraud committed against all health plans, both public and private. The legislation required the establishment of a national Health Care Fraud and Abuse Control Program (HCFAC), under the joint direction of the Attorney General and the Secretary of the Department of Health and Human Services (HHS) acting through the Department's Inspector General (HHS/OIG). The HCFAC program is designed to coordinate Federal, State and local law enforcement activities with respect to health care fraud and abuse. The Act requires HHS and DOJ detail in an Annual Report the amounts deposited and appropriated to the Medicare Trust Fund, and the source of such deposits.

OIG Committed to Investigating Fraud

Investigating fraud committed against Medicare and Medicaid will be a significant focus of the DHHS OIG in fiscal year 2004, the agency said in its Work Plan for Fiscal Year 2004.  This includes investigations for services not rendered, making claims that manipulate payment codes in effort to inflate reimbursement amounts, and making other false claims to obtain program funds in 2004.  Also, OIG anticipates publishing several new safe harbors for the Anti-Kickback Statute in 2004. 

See OIG Work Plan at:  http://www.healthlawyers.org/docs/ask2003/oigworkplan.pdf

Failure to Care Cases Brought under False Claims Act

A nursing home in Baton Rouge, La., will pay the biggest civil settlement by a single nursing home for "failure of care" to resolve allegations that the home billed Medicare and Medicaid for services that were not rendered or were provided "in a grossly deficient manner" from 2000 to 2002.  The settlement of $750,000 is so high partly because of its failure to fulfill a previous plan of correction.  The settlement protects General Health System from civil but not criminal charges.  General Health System no longer owns the nursing home.  The system's flagship is 436-bed Baton Rouge General Medical Center .  The state attorney general's office began a criminal investigation involving possibly falsified patient records at the home. 
 

This is an area of increasing interest to U.S. attorneys nationwide.  "Failure of care" cases under the False Claims Act have been restricted to nursing homes, but federal officials and healthcare lawyers have said the theory will be applied to hospitals in the coming years.   (Modern Healthcare 10/7/03 )

OIG – CIAs, Advisory Opinions

Office Inspector General (OIG) has some Corporate Integrity Agreements CIAs) on its website at:  http://oig.hhs.gov/fraud/cia/index.html  

For Advisory Opinions FAQ see: http://oig.hhs.gov/fraud/advisoryopinions/aofaq.html

Illinois Couple Sues FDA over Drug Importation from Canada

An Illinois couple sued the Federal Drug Administration (FDA) and is seeking class action status in the first legal challenge to a new law that prevents states and consumers to legally import lower-cost prescription drugs from Canada.  The lawsuit claims that the  new U.S. Medicare law violates the Andrews' privacy by denying them freedom to make their own medical decisions. It also asserts the law disproportionately effects seniors who don't live in northern border states and can't easily drive into Canada to buy cheaper medicine.  Illinois Governor Rod Blagojevich claims such a program would save $91 million from the $340 million Illinois spends on prescription drugs for state workers and retirees. Economists claim that if the lawsuit is to prevail that Canadians will suffer the consequences of reduced supply or higher costs by the US drug companies not wanting to lose profits in US market. 

Pro: Sates Importing Prescription Drugs from Canada

A senior Food and Drug Administration official said the agency won't sue cities and states that set up plans to bring in the unapproved prescription drugs from Canada .  This gives a boost to programs such as the one in Springfield , Mass. , where the mayor has contracted with a private supplier to provide prescription drugs from Canada to city employees in hopes of saving as much as $9 million a year.  New York Mayor says this is on the “to do” list.  (Modern Healthcare 10/24/03 )

Anti: Importing Prescription Drugs from Canada

The importation of price-controlled drugs from Canada has grown to a projected $800 million this year and shows no signs of letting up.  It began as a novelty: Grannies riding buses to Canada in search of cheaper medicines.  The Bush administration, echoing the arguments of drugmakers, is fighting the medicine trade from Canada and elsewhere as illegal and unsafe. 

Other Countries - Look at other healthcare systems

Dr. Mark McLaughlin visited Russia to see how surgeons worked there when he was a neurosurgery resident in Pittsburgh in 1997.  He found a healthcare system with antiquated technology (Russian neurosurgeons rarely used microscopes when performing delicate brain surgery), poor pay with top surgeons earning just $200 a month, not much prestige being a surgeon as it was more like a manual laborer.  He also found surgeons struggling to save lives.  He brought an internationally renown surgeon to St. Petersburg to teach new techniques and brought some of the Russian surgeons to America.  He says: "These doctors remind me of why I went into medicine.  They inspire me to be as good as I can be." (Parade October 26, 2003)

Compliance with National Medicare Outpatient Cardiac Rehabilitation Policies

Evanston Northwestern Healthcare was reviewed by the Office Inspector General (OIG) at the request of the the Centers for Medicare and Medicaid Services to determine the lever of provider compliance with national Medicare Outpatient cardiac rehabilitation policies.  The review disclosed that the hospital did not designate a physician to directly supervise the services provided by its cardiac rehabilitation program.  Various recommendations were made including that the hospital implement controls to endure that medical record documentation is maintained to support Medicare outpatient cardiac rehabilitation services. 

Re: Antitrust

9-23-03:  Per Crain's Chicago Business:  Vista Health indicated it will seek state permission to close one of its two hospitals, 231 bed  Provena St. Therese Medical Center in Waukegan, IL.  This comes after Vista had learned that Federal Trade Commission (FTC) staff would urge the FTC not to challenge the merger that created Vista Health.  In March the FTC announced it was investigating Vista Health as part of an antitrust review of completed hospital mergers.  The venture lost more than $17 million on revenue of $154.8 million in 2002.  The consolidation of St. Therese with 142 bed Victory Memorial Hospital in Waukegan is expected to take about two years to complete.

7/17/03:  In one of the largest health care fraud settlements in U.S., Abbott Laboratories will pay $622 million to resolve federal probe for fraud.  A CIA was entered into with the Office of Inspector General of the Department of Health and Human Services.

Per Chicago Tribune, May 15, 2003, Section 2, page 1 and 2, "Illinois Probes Cancer Treatment Centers' Billing" by Bruce Japsen:  A whistleblower lawsuit filed under seal in 1999 was brought by a former employee of the Cancer Treatment Centers of America.  Cancer Treatment Centers of America and two top executives are named in the complaint, the founder and CEO and the COO.  This is a Zion, Illinois based company and Illinois authorities are investigating whether this company over-billed government and private insurers for oncology services and medical care.  The allegations include:  patients were enticed to choose Cancer Treatment facilities by free airline tickets for travel to its facilities; billed for services not rendered by the doctors, did not document and billed when doctors were not present.  

The Cancer Treatment Centers of America network covers four states and billings exceeded $100 million annually between 1997 and 2000 of which $40 million was for Medicare health insurance and $6 million for Medicaid.  

The whistleblower who filed the complaint under seal handled physician billings until she was fired in May 2000 and had worked in Zion from 1997 to 2000.  The U.S. Justice Department declined to intervene in the case and the seal was lifted in March, 2002.  

2-3-03:  For new proposed law, believed to be the first of its kind by its supporters - Holding Doctors Accountable for Quality of Care - see Class 5 - New News.

1-4-03:    For Physician Work Stoppage issues over medical malpractice insurance premiums and caps see Class 9 - New News

HIPPA made Easy 

Originally October 16, 2002

Apply for one year extension by October 15, 2002

Submit compliance plan by October 16, 2003  

Health Insurance Portability and Accountability Act of 1996 (HIPAA)

www.cms.hhs.gov/hipaa/hipaa2/default.asp

10/16/02:  Per HHS Secretary Tommy Thompson,

Deadline Passed -- TO FILE EXTENSION ELECTRONICALLY:  http://www.cms.hhs.gov/hipaa/hipaa2/ASCAForm.asp

Fraud and Abuse

2-18-03:  The Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) uses a nationwide network of auditors, investigators and analysts to detect fraud, waste and abuse . In FY 2002, OIG claims that it saved taxpayers a record $21 billion, excluded 3,448 people and companies from Medicare/Medicaid reimbursement, secured 517 criminal convictions and 236 civil actions.

12-18-02:  Per Chicago Tribune (12-18-02), "U.S. Sues Hospitals on Medicare Billing," with subtitle "Northwestern, Loyola are Cited":  the federal government has sued Northwestern Memorial Hospital, Loyola University Medical Center and 25 other hospitals around the country accusing them of overcharging Medicare multi-millions of dollars.  The U.S. Justice Department claims the hospitals improperly charged Medicare for procedures involving experimental cardiac devices that had not been approved by the Food and Drug Administration.  Under the federal False Claims Act, private citizens are permitted to file suits on behalf of the government and share in any recovery.  the allegations were first brought to the government's attention via several civil suits filed in 1994 in federal court in Seattle by a whistleblower, Kevin Cosens, a former medical device salesman from Seattle.  Already, the U.S. has reached settlements with 31 hospitals for about $42 million and the government is finalizing settlements with two other hospitals.  Whistleblowers can get 15 to 25% of settlements.  Cosens and his attorney have already reaped more than $9 million as their share of the settlements.

Defenses or tools to use in settlement strategies for the hospitals may include:  the now-contested technology very quickly became the accepted standard of care and Medicare routinely pays for all of these devices today, in 1995 Medicare clarified its policy for payments for procedures involving these same investigational devices to specifically permit billing Medicare, the hospital did not bill Medicare for the devices only the procedures to implant them, the government may have paid more if the new devices had not been used, these devices made it possible for patients to avoid major surgery with longer recovery rate and larger costs to the government per patient. 

10-2-02     Per Modern Healthcare (9-30-02):  The number of whistleblower lawsuits filed under the False Claims Act has declined from a peak of 535 in 1997 to 300 in 2001.  Recoveries remain high and have reached $850 million to date this year.

The DHHS OIG last week released its fiscal year 2003 work plan setting forth its planned activities over the next year.  Fraud and abuse are among the items on Inspector General's (IG) agenda in FY 2003.  The IG will also study financial arrangements between physicians and ambulatory surgical centers and evaluate the conditions under which physicians bill "incident-to" services and supplies.  Also, the IG indicated revised guidance for compliance plans for the hospital industry would be forthcoming.  See workplan at:  http://oig.hhs.gov/publications/docs/workplan/2003/Work%20Plan%202003.pdf

Modern Healthcare (7-25-02):  From 1997 to 2001, Massachusetts General Hospital Anesthesia Associates, an anesthesiology group practice affiliated with 855-bed Massachusetts General Hospital in Boston, allegedly double-billed Medicaid for anesthesiology services and failed to report the overbilling.  The 130-doctor group will pay $1.5 million to the state's Medicaid program to resolve allegations of billing fraud.  The group is part of the larger Massachusetts General Physicians Organization, a 1,600-member doctors group affiliated with Massachusetts General. "This truly was a computer billing error," the organization's CFO, Jim Heffernan, said and that the state Medicaid program uses a different system and that our billing submissions were incorrect and there was no intent to defraud.  The settlement includes $1.2 million in returned payments and about $300,000 in penalties and reimbursement of investigation costs. The group agreed to a three-year billing compliance program, including conducting a quarterly review of claims.

Pneumonia Upcoding

Per Modern Healthcare (7-2-02):  To date, at least 50 hospitals nationwide have negotiated settlements to resolve similar allegations involving upcoding pneumonia (billing Medicare for a more serious form of pneumonia than was actually treated) - paying a settlement total of more than $48 million.  As part of a national federal investigation based on a 7-year-old whistleblower lawsuit, recently, three hospitals settled allegations of pneumonia upcoding for a collective $3.7 million.  Saint Anthony's Health Center, Alton, Illinois, 296-bed, part of BJC HealthCare, St. Louis, is the largest of the three settlements, and it will pay $2 million to resolve upcoding allegations; Cumberland Medical Center, Crossville, Tennessee, 144-bed, will pay $1.43 million, and General Hospital, Brownsville, Pennsylvania, 115-bed, will pay $225,000. 

Analyzing Hospitals offering Free Rides

For an interesting analysis of how the Office of Inspector General (OIG) analyzes if a hospital offering free transportation services to certain patients for extended courses of treatment is a violation of the fraud and abuse anti-kickback statutes see Advisory Opinion 00-7 at:

http://www.oig.hhs.gov/advopn/2000/ao00_7.htm

This is an advisory opinion applicable only to the given specific situation, however this opinion gives a good overview of how the anti-kickback statute is interpreted and applied by the OIG.  Examples of abusive situations involving free transportation that are a violation are listed in the Advisory Opinion, such as:

"Psychiatric facilities offering out-of-state patients free round-trip airline tickets to Florida in order to receive services at their facilities; Van drivers soliciting, and offering free transportation services to, Medicaid patients for health care providers who compensate the drivers on a per patient or per service basis; Unscrupulous health care providers offering residents of nursing facilities and other congregate care facilities free transportation services to and from their offices for services that are frequently of questionable necessity; Hospitals offering patients free limousine services; and Hospitals offering patients free ambulance services without making individual determinations of financial need."

Alleged Unnecessary Procedures to Boost Income - Kickbacks and Death Study of Edgewater Hospital in Chicago

6-29-02:  According to Chicago Tribune, "Edgewater Doctor's Sentence is 12 Years," a Chicago cardiologist was sentenced to 12 1/2 years in federal prison and forfeit $2 million in profits and pay an additional $14.4 million in restitution for performing unnecessary heart procedures that resulted in the deaths of two patients. Edgewater Hospital closed in December with millions of dollars in losses.  The cardiologist pleaded guilty in February to racketeering after he admitted he performed 750 unnecessary cardiac catheterizations and many other unneeded medical tests as part of a scheme to boost Edgewater's profits.  Most of the unnecessary procedures were paid for by Medicare.  Three other doctors and a hospital administrator have pleaded guilty and are serving prison sentences ranging from 35 months to 61/2 years.  The management company which formerly ran the hospital has pleaded not guilty and awaits trial in August.  Prosecutors allege the cardiologist and others at the hospital kicked back money to physicians for admitted hundreds of patient to Edgewater who did not need hospitalization.  Prosecutors claimed many of those who were admitted were substance abusers, homeless people and senior citizens who were given cash, food, and cigarettes and coached to lie about symptoms.  

12/3/01:  According to Crain's Chicago Business, a former executive at Edgewater Medical Center was sentenced to 61/2 years in prison in connection with alleged Medicare fraud and a physician was sentenced to 52 months in prison for his part in the alleged scheme to perform and bill for unnecessary medical procedures.

5/18/01:    According to Chicago Tribune (May 18, 2001), page 1 and 28, "Fraud Ring Alleged at Chicago Hospital", a 58 count indictment was made against three physicians, a hospital administrator and a hospital management company involving a situation in which allegedly un-indicted "patient recruiters" recruited patients from homeless shelters throughout Chicago to go to Edgewater Medical Center to receive medical and detoxification treatment in return for cash, food and cigarettes.  The indictment alleges that Medicare, Medicaid, and private companies paid more than $1 million for unneeded medical care performed at the 160 bed facility.  Counts in the various indictments include:  healthcare fraud, paying kickbacks for referrals, mail fraud, wire fraud, racketeering, racketeering conspiracy.  One of the physicians is claimed to have allegedly received a lucrative contract to provide anesthesia services at the hospital in return for referring patients and to have allegedly received more than $290,000 in payments in exchange for patient admissions.  Another doctor is allegedly claimed to have received monthly payments to pay for sending patients to be admitted to the hospital.

Per Modern Healthcare (6-18-02): Tenet Healthcare Corp., Santa Barbara, Calif., announced this morning that it would pay $55.75 million to settle civil allegations relating to clinical laboratory billing violations and fraud at two of its hospitals. Tenet denies wrongdoing in the settlements. The for-profit chain of 115 hospitals agreed to pay $17 million to resolve issues relating to clinical laboratory unbundling fraud at 139 current or former Tenet hospitals. Tenet also will pay $29 million to settle allegations that its 360-bed Palmetto General Hospital, Hialeah, Fla., defrauded Medicare by filing fraudulent cost reports through its home health agency. Tenet will also pay $9.75 million to settle cost-reporting fraud allegations at its 244-bed Brotman Medical Center, Culver City, Calif.

Per Modern Healthcare (5/24/02):  The former owner of a behavioral health facilit, Campus Hospital of Cleveland, was sentenced for paying kickbacks for patient referrals from 1995 through 1998 to one year in prison and ordered to pay $600,000 in restitution . This person pleaded guilty to participating in a conspiracy to pay $600,000 in “referral fees” to “patient recruiters” for referring out-of-state Medicare patients to Campus for substance-abuse treatment.  The hospital’s former COO and two other defendants also pleaded guilty to the scheme and were sentenced in March. The hospital paid in the range of $600 to $1,000 per referral and received $3,500 by Medicare for each case. The former COO was ordered to serve four months in prison followed by home detention and must pay $600,000 in restitution; a nationally known lecturer and author of 14 books on substance-abuse treatment also pleaded guilty was sentenced to four months’ home confinement and $30,000 in restitution.

4/02:  The federal government collected over $1.3 billion in 2001 as a result of judgments, settlements, and administrative impositions in healthcare fraud cases and proceedings, according to an annual report by DHHS and the Department of Justice (DOJ).  Federal prosecutors filed 445 criminal indictments in health care fraud cases in 2001. A total of 465 defendants were convicted for health care fraud-related crimes in 2001. There were also 1,746 civil matters pending, and 188 civil cases filed in 2001. HHS excluded 3,756 individuals and entities from participating in the Medicare and Medicaid programs, or other federally sponsored health care programs, most as a result of convictions for crimes relating to Medicare or Medicaid, for patient abuse or neglect, or as a result of licensure revocations. This record number of exclusion actions is the result of successful collaboration with state Medicaid Fraud Control Units (MFCUs) and state licensure boards. 

See:  http://www.usdoj.gov/dag/pubdoc/hipaa01fe19.htm

4-12-02:  The United States Attorney's Office for the District of Columbia and the Department of Justice announced that PacifiCare Health Systems will pay the United States $87.3 million to settle allegations that it and its predecessor companies violated the False Claims Act with respect to claims submitted to the Office of Personnel Management. The predecessor firms were FHP International and TakeCare Corporation.  This is the largest civil settlement involving contracts with OPM to provide benefits to federal employees under the Federal Health Benefits Program (FEHBP). Today's settlement resolves allegations by the United States that PacifiCare, through its subsidiary health maintenance organization plans, submitted inflated claims for insurance payments based on rates that were not developed in accordance with OPM regulations and rating instructions.

HCA Settlement

8/13/01:  An Order was filed in the United States District Court for the District of Columbia August 7, 2001, approving the settlement in the Columbia/HCA Healthcare Corp. case in which HCA will pay $745 million, plus interest.  The amounts for the various qui tam relators (6 relators specified) was listed as well in the court Order.

Consider This

10/8/01   According to a report by Taxpayers Against Fraud, a Washington, D.C., public interest group:  For every dollar the government spent fighting health care fraud using the FCA between fiscal years 1997 and 2000, it recovered $8.  

Health-related fraud cases accounted for 41% of the nearly $7 billion the government recovered under the FCA since its amendment, and according to the report, the Medicare error rate, which measures improper payments due to estimated fraud, waste and abuse, fell to 7% in 2000 from 14% in 1996. (This information is from AMNews 10/15/01)

DHHS OIG Declines to Impose Sanctions on Ambulatory Surgical Center Joint Venture 

12/3/01:  In Advisory Opinion No. 01-21, issued on November 16, 2001, and posted on November 26, 2001, the OIG concluded that it would not impose sanctions in connection with a medical center's proposal to acquire an ownership interest in an operating ambulatory surgical center currently owned by a group of gastroenterologists. While the OIG found that the proposed arrangement did not qualify for safe harbor protection, it concluded that the safeguards putin place by the parties made the risk of abuse sufficiently low.
See:  http://oig.hhs.gov/advopn/2001/ao01-21.pdf.

On October 5, 2000, the Committee on the Budget, U.S. House of Representatives, Waste, Fraud and Abuse Task Force Release Final Summaries, See Task Force on Healthcare that starts off by quoting Uwe E. Reinhardt, professor of political economy at Princeton University, stating in The Wall Street Journal (January 21, 2000) that "[T]he statutes and rules governing Medicare... now run the risk of becoming themselves a form of waste, fraud and abuse."  The following lists the Task Force's major finding on fraud measurement techniques in the Medicare Program:  

    The Task Force highlighted "two wasteful, burdensome regulations that do not even comply with the law" stated that "Considering Medicare is subject to more than 130,000 pages of regulations and supporting documents, further investigation is warranted." 

See:    http://www.house.gov/budget and select "Task Force on Healthcare."

12-14-00:  According to a press release on December 14, 2000, entitled "Attorney General Announces Largest Department of Justice Fraud Settlement in History", under a civil settlement, HCA will pay $745 million, plus interest, for its alleged false billing practices and it will pay $95 million in criminal fines.  According to this press release:  ""In addition to these fines and damages, HCA - formerly known as Columbia/HCA - has also signed a Corporate Integrity Agreement with the Department of Health and Human Services. The agreement will assure that the violations that led to this investigation in the first place are not repeated. It will also require HCA to self-report misconduct to the Department of Health and Human Services and cooperate in the ongoing investigations into the conduct of individuals.  Today's civil settlement resolves claims that the company engaged in fraudulent billing practices, including overbilling the government, charging for services that were not performed and claiming funds for non-reimbursable costs.  It is a settlement that not only recoups the funds for the American taxpayer - but penalizes the company as well. It's a simple message: If you overbill the U.S. taxpayer, then we are going to make you pay it back, and then some."

For press release see:  http://www.usdoj.gov/opa/pr/2000/December/697ag.htm

False Claims Act

Tenet Healthcare Pays $29 Million Settlement To DOJ
On 7-17-02 the Department of Justice (DOJ) announced it has reached a
settlement with a subsidiary of Tenet Healthcare Corporation, Lifemark
Hospitals of Florida, to resolve allegations that Lifemark, Tenet, and other affiliated companies violated the False Claims Act by submitting false claims to the Medicare Program for home healthcare services  based on false, fraudulent, and misleading statements or omissions regarding the patient's medical condition, history, and/or eligibility for Medicare. Also, the government alleged that some claims submitted to the Medicare Program were for services:  (1) never rendered, (2) provided by unskilled, unlicensed, or uncertified personnel, (3) based on insufficient, forged, or missing documentation, and/or (4) never ordered by a physician.  The case was investigated by the United States Department of Health and Human Services, Office of Inspector General, and the Federal Bureau of Investigation, and was handled by the United States Attorney's Office for the Southern District of Florida and the Civil Division of the Department of Justice.

See:  http://www.usdoj.gov/opa/pr/2002/July/02_civ_406.htm

Minn. frees anesthetists of physician oversight
Minnesota with about 1,100 nurse anesthetists, is the fourth state to allow nurse anesthetists to work without physician supervision.  Gov. Jesse Ventura notified the Centers for Medicare and Medicaid Services that Minnesota would exercise its right to opt out of the supervision requirement.  Minnesota joins Idaho, Iowa and Nebraska in opting out. Anesthesiologists have vehemently opposed allowing nurse anesthetists to provide anesthesia without physician supervision, and the battle has been particularly fierce in Minnesota. In January, a federal appeals court reinstated a $1.3 billion False Claims Act lawsuit in which the Minnesota Association of Nurse Anesthetists charged area anesthesiologists with defrauding Medicare of as much as $100 million by billing for procedures as “personally performed” when nurses did the majority of the work.  Source:  Modern Healthcare (4-23-02)

OIG Improper Fiscal Year 2001 Medicare Fee-for-Service Payments report

From HHS press release 2-21-02:  the portion of Medicare fee-for-service payments that do not comply with Medicare laws and regulations, was 6.3 percent in fiscal year 2001, compared with 6.8 percent in fiscal year 2000.  Secretary Tommy G. Thompson said  "We are also working to make our procedures and rules more understandable through our regulatory reform efforts, which will help physicians and other providers avoid unintended errors."  For fiscal year 2001, medical reviewers examined the medical records behind 6,594 claims filed on behalf of 600 beneficiaries nationwide.  These were selected randomly by OIG from the total 34 million beneficiaries enrolled in fee-for-service Medicare.  About 931 million fee-for-service Medicare claims
were filed in 2001.  According to this press release, improper payments include:

 "Medically unnecessary" services -- Usually cases in which medical
reviewers determined that the beneficiary's condition did not warrant
inpatient hospital care, but did warrant a lower level of care (43.2 percent of improper payments in 2001);

Documentation deficiencies -- Instances where medical records were
insufficient to support the claims, or nonexistent (42.9 percent); or

Miscoding -- Services found to be coded for a higher level of care
than was supported by the medical records (17 percent).

By projecting the findings of the review, the fiscal year 2001 rate would
represent an estimated $12.1 billion in improper payments out of the total $191.8 billion in fee-for-service Medicare payments  -- compared with $11.9 billion in fiscal year 2000, out of the total $173.6 billion in payments that year.  The improper payment rate does not measure fraud, although some overpayments could be the result of fraud. The audit process does not attempt to determine the exact cause of the error.

See the OIG Improper Fiscal Year 2001 Medicare Fee-for-Service Payments report at: 
http://oig.hhs.gov/oas/reports/cms/a0102002.htm

TO DISCLOSE OR NOT TO DISCLOSE?

According to Chicago Tribune (January 16, 2001), Section 3, page 2: "Rush to Disclose Pays Off For Rush," by voluntarily disclosing, the maximum amount is double damages as compared to whistle-blower cases where damages typically are triple.  See the 7th Circuit 1999 case of Mathers vs. Bank of Farmington that held that cases publicly disclosed to government investigators before a whistle-blower's action cannot result in a claim for the whistle blower.  This case may trigger health facilities to come forward on their own.

According to Chicago Tribune (January 10, 2001), Section 3, page 2:  "Rush to Pay U.S. $800,000 for over-billing on Clinic's Work".  According to this article, Rush-Presbyterian-St. Luke's Medical Center agreed to pay for over-billing Medicare and Medicaid for services provided by its transplant clinic.  The hospital voluntarily notified the U.S. attorney's office in Chicago in May, 1999 that the federal programs were billed for physician services even though attending doctors were not present for certain outpatient procedures for a period of six years ending in May, 1999.

Four months after Rush's disclosure to federal authorities, in September, 1999, a Rush nurse alleged identical fraud allegations in a federal civil action brought under the False Claims Act against the hospital.  Last August, the nurse's claims were dismissed.  Because the hospital came forward with the irregularities, the hospital avoided a much costlier settlement from claims filed by the nurse whistleblower.   

The Department of Heath and Human Services ("DHHS") Office of Inspector General ("OIG") issued its "Open Letter to Health Care Providers" in March 2000, the OIG concluded that companies that self-disclosed improper billing to the government obtained more favorable settlement agreements and corporate integrity agreements ("CIAs") than companies that failed to self-disclose.

Challenging Statistical Sampling in Medicare Program 

One of the most effective ways to challenge an overpayment determination or a calculation of penalties appears to be by challenging the statistical sampling conducted in the Medicare program by proving the failure by those authorized by HCFA to conduct the sampling studies correctly.

DHHS OIG Declines to Impose Sanctions on Ambulatory Surgical Center Joint Venture - ophthalmologists

10/22/01:  In Advisory Opinion No. 01-17 (issued on Oct. 10, 2001, and posted on
Oct. 17, 2001), the DHHS OIG determined that it would not impose sanctions on an existing ambulatory surgical center joint venture between a hospital-affiliated entity and an entity owned indirectly by five ophthalmologists, together with the execution of three related ancillary agreements. The OIG was primarily concerned that the Hospital could potentially direct or influence referrals to the surgical center in violation of the Anti-Kickback Statute. However, the Hospital certified that it would (1) refrain from taking any actions to encourage
Hospital-affiliated physicians to refer patients to the surgical center, (2)
not allow compensation paid to physicians to be directly or indirectly
related to the value or volume of referrals to the surgical center, and (3) annually inform physicians of the foregoing measures.  Based on these safeguards the OIG concluded that the potential risk for fraud and abuse was sufficiently low and declined to impose sanctions.

See:    2001 Advisory Opinion No. 01-17, at:
http://www.oig.hhs.gov

Self - Referral - Stark Laws

U.S. Court In District Of Columbia Holds Lithotripsy Furnished "Under
Arrangement" Is Not An Inpatient Or Outpatient Hospital Service Under Stark II And Therefore Not A Designated Health Service

7-12-02:  In the first successful challenge to regulations promulgated under the Stark II law, the U.S. District Court for the District of Columbia granted summary judgment to plaintiffs, the American Lithotripsy Society and the Urology Society of America, finding that the Stark statute, which was designed to prevent the overutilization of certain medical services, did not encompass lithotripsy, a procedure not susceptible to overutilization. After examining Stark II's text, structure, purpose, and legislative history, the court found the disputed category-inpatient and outpatient hospital services-to be unambiguous, even though undefined.  In the case American Lithotripsy Society v. Thompson, No. 01-01812, the court held that certain regulations promulgated by the Centers for Medicare & Medicaid Services (CMS) violated the Administrative Procedure Act, 5 U.S.C. Sect. 706(2)(A) and the Regulatory Flexibility Act, 5 U.S.C. Sect. 601 et seq. The regulations mandated that, because lithotripsy is a service performed "under arrangement," it is an inpatient or outpatient hospital service subject to Stark II prohibitions; however the court found that the category did not encompass lithotripsy.  
See court's opinion through the American Lithotripsy
Society's web page, at http://www.lithotripsy.org/alsvshhs2.html

Re:    Stark Rules

The Health Care Financing Administration ("HCFA") published a notice in
the April 4 Federal Register, 66 Fed. Reg. 17813, extending the deadline of the public comment period to June 4, 2001 on the Stark II Phase I Final Rule.

Previously:  Health and Human Services (HHS) has released a final regulation to be effective January 4, 2002 aiming to help with self referral related issues.  This final regulation, among other things, generally permits physicians to refer to entities with which they have a compensation relationship, as long as the compensation paid to the physician is no more than would be paid to someone who provided the same services but was not in a position to generate business for the entity.  The final regulation also clarifies some of the exceptions to the self-referral prohibition and offers guidance on how to structure financial arrangements to comply with the exceptions.

See the new rule, "Physicians' Referrals to Health Care Entities With Which They Have Financial Relationships," in the January 4 Federal
Register, 66 Fed. Reg. 905, at http://www.access.gpo.gov/su_docs/fedreg/a010104c.html

Note:  On February 2, 2001, the Health Care Financing Administration (HCFA) published a notice temporarily delaying for sixty days the effective date of section 424.22 regarding physician certification and plan of treatment requirements for home health services which would have become effective February 5, 2001 and now will become effective April 6, 2001 to give President Bush's administration officials time to review the rule.  See Federal Register, 66 Fed. Reg. 8771 or go to:  http://www.access.gpo.gov/su_docs/fedreg/a010202c.html

RE:   Compliance Program Guidance for Individual and Small Group Physician Practices

On 9/25/00 the Department of Health and Human Services' Office of Inspector General ("OIG") issued Compliance Program Guidance for Individual and Small Group Physician Practices.  

The final physician guidance is available on the Office of Inspector General Web site at:  http://www.dhhs.gov/progorg/oig/new.html  For additional help, call OIG Public Affairs at ( 202)619-1343.

This final guidance is  a "roadmap" to help physicians in individual and small group practices design voluntary compliance programs that best fits the needs of that individual practice.  Inspector General June Gibbs Brown claims that "The guidance itself provides great flexibility as to how a physician practice could implement compliance efforts in a manner that fits with the practice's existing operations and resources."  

Inspector General Brown further stated that, "We are encouraging physician practices to adopt the active application of compliance principles in their practice, rather than implement rigid, costly, formal procedures. Our goal in issuing this final guidance was to show physician practices that compliance can become a part of the practice culture without the practice having to expend substantial monetary or time resources."

The following is from an e-mail sent by the HHS-OIG-Media in regards to this final guidance:  "Under the law, physicians are not subject to civil, administrative or criminal penalties for innocent errors, or even negligence. The Government's primary enforcement tool, the civil False Claims Act, covers only offenses that are committed with actual knowledge of the falsity of the claim, reckless disregard or deliberate ignorance of the truth or falsity of a claim. The False Claims Act does not cover mistakes, errors or negligence. The OIG is very mindful of the
difference between innocent errors ("erroneous claims") and reckless
or intentional conduct ("fraudulent claims").

A voluntary compliance program can help physicians identify both erroneous and fraudulent claims and help ensure that submitted claims are true and accurate. It can also help the practice by speeding up and optimizing proper payment of claims, minimizing billing mistakes and avoiding conflicts with the self-referral and anti-kickback statutes.

Unlike other guidance previously issued by the OIG, the final physician guidance does not suggest that physician practices implement all seven standard components of a full scale compliance program.  While the seven components provide a solid basis upon which a physician practice can create a compliance program, the OIG acknowledges that full implementation of all components may not be feasible for smaller physician practices.  Instead, the guidance emphasizes a step by step approach for those practices to follow in developing and implementing a voluntary compliance program. As a first step, physician practices can begin by identifying risk areas which, based on a practice's specific history with billing problems and other compliance issues, might benefit from closer scrutiny and corrective/educational measures.

The step by step approach is as follows: 1) conducting internal monitoring and auditing through the performance of periodic audits; 2) implementing compliance and practice standards through the development of written standards and procedures; 3) designating a compliance officer or contact(s) to monitor compliance efforts and enforce practice standards; 4) conducting appropriate training and education on practice standards and procedures; 5) responding appropriately to detected violations through the investigation of allegations and the disclosure of incidents to appropriate Government entities; 6) developing open lines of communication, such as discussions at staff meetings regarding erroneous or fraudulent conduct issues and community bulletin boards, to keep practice employees updated regarding compliance activities; and 7) enforcing disciplinary standards through well-publicized guidelines.

The final guidance identifies four specific compliance risk areas for physicians: 1) proper coding and billing; 2) ensuring that services are reasonable and necessary; 3) proper documentation; and 4) avoiding improper inducements, kickbacks and self-referrals. These risk areas reflect areas in which the OIG has focused its investigations and audits related to physician practices.

The final guidance also provides direction to larger practices in developing compliance programs by recommending that they use both the physician guidance and previously issued guidance, such as the Third-Party Medical Billing Company Compliance Program Guidance or the Clinical Laboratory Compliance Program Guidance, to create a compliance program that meets the needs of the larger practice.

The final guidance includes several appendices outlining additional risk areas about which various physicians expressed interest, as well as information about criminal, civil and administrative statutes related to the Federal health care programs. There is also information about the OIG's provider self-disclosure protocol and Internet resources that may be useful to physician practices."

Renegotiation of Contract vs. Antitrust Allegations:  Battle of Giants

11-15-02:  Per Crain's Chicago Business:  The parties have entered into a settlement agreement and terms not made public other than Blue Cross Blue Shield of Illinois agreed to dismiss its antitrust lawsuit against Advocate health Care based on the negotiated settlement.  (For more details see class 7).

10-28-02:  Blue Cross and Blue Shield of Illinois filed an antitrust case against Advocate Health Care in Illinois as Advocate's contracts with Blue Cross are up for renewal at the end of this year and negotiations for renewal have stalled.  Advocate took out a full page advertisement in today's Chicago Tribune as "An open letter to employers who carry Blue Cross and Blue Shield health insurance" stating that "Advocate Health Care, our 10 hospitals, doctors and all 24, 500 employees ...we serve more patients than any other health care provider in the area - touching two million lives every year."  Advocate states that "We have offered to negotiate all contract issues through an independent, impartial mediator selected by a third party, but Blue Cross has rejected that offer."  [See Class 7 for more on Provider Contracts]

More Antitrust Issues

5/14/02:  Per Modern Healthcare:  Two Denver-area physician groups settled Federal Trade Commission (FTC) charges alleging a wide range of anticompetitive activity, including price fixing and orchestrated boycotts. The FTC complaints name 41-member Physician Integrated Services of Denver, 45-member Aurora Associated Primary Care Physicians and a consultant who negotiated with payers on behalf of both groups. The settlement does not impose monetary penalties but restricts how the groups deal with insurance companies in contract negotiations.

5/21/02:  Per Modern Healthcare: U.S. Justice Department said it would not stand by an agreement with the Federal Trade Commission to divide antitrust duties by industry, citing the objections of Sen. Ernest Hollings (D-S.C.) and concerns over budgetary cuts if the agreement were to continue.

1/29/02:  According to Crain's Chicago Business, "Waukegan Hospitals Write Their Own Rate Rx" by Sarah A. Klein, with sub-caption "But Push to Up Insurers Fees Draws Attention of Feds," the newly formed venture Vista Health, combining Provena St Therese Medical Center and Victory Memorial Hosptial is under investigation by the Federal Trade Commission (FTC) for alleged federal antitrust laws violation in seeking rate increases from insurers. 

8/01:  An opinion issued by the Department of Justice Antitrust Division cleared a proposal by a group of doctors in El Paso, Texas to form a joint venture.  According to the Department of Justice opinion, the Rio Grande Eye Associates (REGA) is an Independent Practice Association established as a professional association under Texas law. RGEA's network of eight ophthalmologists will provide ophthalmologic services at reduced prices to managed care plans and other third-party purchasers of ophthalmologic services in the El Paso, Texas area. RGEA will also provide utilization review and quality assurance services. RGEA will be a non-exclusive physician network and its member ophthalmologists will be free to compete with RGEA, both individually and through other provider networks. RGEA will implement a 20% fee withholding arrangement whereby RGEA's providers will recoup some or all of the fees withheld only if the members of RGEA, as a group, meet pre-established cost containment and quality utilization goals. The joint venture will include less than 30 percent of the ophthalmologists in the El Paso area.

7/17/00:  According to Modern Healthcare:  Two Florida hospital systems will pay fines totaling almost $500,000 for sharing sensitive pricing and managed-care information in violation of a 1994 antitrust settlement.  A lawsuit brought by the U.S. Justice Department and the state of Florida was filed in May, 1994 in U.S. District Court in Tampa, Florida.  This lawsuit claimed that a merger of the 258 bed Mease Hospital in Dunedin, Florida and 100 bed Mease Countryside Hospital, Safety Harbor, Florida would violate Section 7 of the Clayton Act, which bars deals that reduce competition.  According to data from the American Hospital Association, the two systems combined control 34% of the acute care beds in Pinellas County.

A consent decree was entered into which expires in 2004, that prevents the two systems from merging but allows them to partner on some clinical and administrative services including outpatient services, information systems, and other ancillary services.  The intent of the decree hailed as trend-setting by the U.S. Department of Justice was to allow the systems to consolidate some services while remaining competitors.  The hospitals admitted to violating some of the terms of the consent agreement.  According to settlement documents, the systems violated their consent decree by jointly selling outpatient services to managed-care plans, coordinating their managed-care contracting and sharing pricing information.  The court order prohibits the systems from even considering a full merger for 3 years.

The order requires the hospital systems to give some payers the opportunity to cancel contracts, and the hospitals will have to change the way they contract with health plans and discontinue joint ownership is some outpatient facilities.    

Physicians Active in Politics:

6/10/02:  According to the American Medical Association - 30 state legislatures had physicians in office this past term:

House or assembly:  One physician: Arizona, Maryland, Minnesota, Tennessee, Texas, Virginia, Washington, New Hampshire, Alabama, Colorado Two physicians: Mississippi, South Dakota, Wisconsin, Maine, New Jersey, California, Indiana

Senates:  One physician: Utah, Alaska, North Dakota, Kansas
Two physicians: Louisiana, North Carolina, New Mexico, Florida, Georgia

Both:  One physician in each the house and senate: Kentucky, Michigan, Missouri, Iowa

Patient Safety Related Laws

Per Modern Healthcare (10-4-02):  "Sen. Edward Kennedy (D-Mass.) introduced a bill to create a national medical-errors reporting system similar to proposals approved by House committees earlier this month. Under both Kennedy's bill and the House proposals, providers would voluntarily submit data on medical errors and patient safety to new patient-safety organizations, which would compile and disseminate the information. All the proposals include protections for workers reporting errors and would not override stricter state laws. However, unlike the House bills, Kennedy's would provide grants for hospitals to implement technology that can improve patient safety."

Some U.S. Supreme Court Cases Impacting Healthcare Industry to Watch:

Nearly 50% of states have "any willing provider" laws.  In Kentucky Association of Health Plans v. Miller, the state HMO lobby has challenged Kentucky's "any willing provider" law, which says health plans must accept all qualified physicians willing to abide by the plans' contractual terms. The health plans claim that the law is pre-empted by the federal Employee Retirement Income Security Act of 1974 ("ERISA") and that it raises healthcare costs and reduces quality. State officials, claim ERISA does not govern the insurance industry.  

In the case, Pharmaceutical Research and Manufacturers of America v. Concannon, a 1999 Maine law will be reviewed allowing the state to act as a pharmacy benefit manager for residents without prescription-drug coverage. Under the law, the state can choose to enact price controls if it decides rebates negotiated with drugmakers have been insufficient.

In a managed care-related ruling earlier this year, the court held that patients in 42 states can demand a second opinion when their HMO rejects coverage of surgery or treatment.

Other Cases to watch

"Silent PPO" type of cases - see New News - Class 2

Antitrust

FTC:  Concerns About Ohio Legislation That Would Allow Physician Collective Bargaining

10-28-02:  The Federal Trade Commission (FTC) has prepared a comment in response to a request from Ohio Representative Dennis Stapleton (R) in regard to a bill pending before the Ohio House of Representatives (H.B. 325), which would authorize physicians to engage in collective bargaining with health plans over fee-related and non-fee-related contract items. According to the FTC, an antitrust exemption for physician collective bargaining (1) would authorize physician price-fixing, which is "likely to raise costs and reduce consumer access to care," and (2) would not improve quality of care. FTC has consistently opposed similar legislation on the federal level.  The FTC comment concludes, "House Bill 325 poses a substantial risk of harm to Ohio citizens. By authorizing price fixing by health care providers, the bill is likely to increase costs and reduce access to care, without any assurance that the state's interest in promoting quality health care would be furthered."

See text of the legislation at:  http://www.legislature.state.oh.us/search.cfm and search on H.B. 325
See FTC's press release at:  http://www.ftc.gov/opa/2002/10/physicians.htm

10-27-02:  According to Chicago Tribune "FTC Probes hospital Mergers" with subtitle "Evanston healthcare, Waukegan deals part of National Investigation," the Federal Trade Commission has launched a nationwide investigation into hospital mergers in the last decade seeking to determine whether such deals have reduced competition and driven up medical costs.  Evanston Northwestern Healthcare's takeover of Highland Park hospital in 2000 and the merger of Waukegan's only two hospitals, Provena St. Therese Medical Center and Victory Memorial Hospital in the same year are being investigated.  Hospital costs have grown to more than half of overall health care spending outpacing prescription drugs.  Critics claim hospitals are using their clout to demand rate hikes from insurers as high as 40% in some parts of the the country.  These claims have gained credibility with the FTC as the number of independent community hospitals are reduced as a result of the mergers.  FTC wants to look at the extent that hospitals have been successful by creating efficiencies or synergies - looking at if merger is anti-competitive.  The most serious penalty any of the hospitals under scrutiny might face would be a breakup of their systems, divesting the respective hospital subject to the probe.  

For example a clear indication of concern according to an assistant director of FTC would be if there was a hospital merger in 1999 and across the country hospital prices went up 5% and if the merged system raised prices by 25%.  The federal government has failed in its last seven attempts at challenging hospital mergers that were challenged by the FTC or U.S. Justice since the mid-1990s.  

In a major metropolitan area it is not easy to prove that there is not competition.

Hospital costs are rising for many reasons such as:  (1) Some say a lot of access to hospitals increases cost for everybody; (2) consumers demand latest and often most expensive medical technology to treat their illness, (3) as political winds favor more mandates for insurers to ease restriction on hospital procedures and treatments which trigger higher costs as managed care companies cede more control to hospitals.

Per American Hospital Association and Center for Studying Health Systems Change the number of U.S. Hospitals has dropped from 1994 : 5,229 and 2000: 4915 and the number of hospitals operating within a system has increased form 1994: 1,956 to 2000: 2,217.

8-14-02:  Privacy Rule

HHS Secretary Tommy G. Thompson today issued the first-ever comprehensive federal regulation that gives patients sweeping protections over the privacy of their medical records. The final regulation, which takes effect April 14, 2003.  The federal privacy regulation empowers patients by guaranteeing them access to their medical records, giving them more control over how their protected health information is used and disclosed, and providing a clear avenue of recourse if their medical privacy is compromised.  The rule will protect medical records and other personal health information maintained by certain health care providers, hospitals, health plans, health insurers and health care clearinghouses.

Under the privacy rule:

Office for Civil Rights (OCR)

Per HHS Weekly Report (8-5-02):  Secretary Thompson named Richard M. Campanelli as the new director of HHS' Office for Civil Rights (OCR).  OCR also has responsibility for medical privacy issues and OCR's mission is to "promote and ensure that individuals have equal access and opportunity in all HHS programs, without facing unlawful discrimination". 

(Per HHS press release:)  HHS Secretary Tommy G. Thompson named Richard M. Campanelli as the new director of the department's Office for Civil Rights (OCR). Campanelli began his law career as a trial attorney in the Special Litigation Section of the Civil Rights Division, U.S. Department of Justice (DOJ), investigating and litigating unconstitutional conditions at mental health institutions and prisons pursuant to the Civil Rights of Institutionalized Persons Act.  In addition, he participated in litigation on behalf of DOJ to eliminate race-based segregation in state prison systems.  Following his initial work at DOJ, Campanelli joined the South Africa Working Group at the U.S. Department of State, where he assisted in developing and implementing U.S. initiatives to end apartheid.   From 1987 to 1989, he served as senior special assistant to the attorney general, including service as deputy chief of staff.  Campanelli has spent the past 13 years as an attorney at Gammon & Grange, PC, in McLean, Va., especially representing non-profit organizations.  He has also served as adjunct professor at George Mason University, teaching non-profit law, governance and ethics in the university's department of public affairs.  Campanelli received a bachelor's degree in economics from the University of Virginia and completed his Juris Doctor from the University of Virginia Law School.  Prior to entering law school, he directed a program in Vermont for at-risk youth.

For HIPAA update:  The Centers for Medicare & Medicaid Services has announced the planned broadcast of another HIPAA program--"Meeting the HIPAA Challenge: Implementing the HIPAA Standards and the Administrative Simplification Compliance Act." This program will be a satellite broadcast and webcast. The webcast will be available for 90 days after the initial broadcast, which will occur on June 18, 2002, from 2:00-3:30 P.M. (EDT).
See:  http://www.hcfa.gov/medlearn/broadcst.htm

NOTE:  More HIPAA Information below

JCAHO Supports Proposed Legislation for Confidentiality Protections for Reports of Serious Adverse Events

6-10-02:  Per JCAHO:  The "Patient Safety Improvement Act of 2002," H.R. 4889, introduced in the House last week by House Ways and Means Subcommittee on Health Chairman Nancy Johnson, affords confidentiality protections for reports of serious adverse events and the analyses of their underlying causes.  Provisions in the "Patient Safety Improvement Act of 2002" would offer full federal privilege to patient safety information provided to patient safety organizations such as JCAHO.  

JCAHO maintains one of the nation's most comprehensive databases of reported serious adverse events and their underlying causes.  Information from this database is regularly shared with accredited organizations to help them take appropriate preventive steps.  The number of reports to JCAHO each year represents less than one percent of the actual number of adverse events that experts estimate occur in this country each year.  The proposed legislation should expand the volume of reports and the opportunities for improving patient safety substantially.  

Founded in 1951, the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) seeks to continuously improve the safety and quality of care provided to the public through the provision of health care accreditation and related services that support performance improvement in health care organizations. The Joint Commission evaluates and accredits more than 17,000 health care organizations and programs in the United States, including approximately 9,000 hospitals and home care organizations, and 8,000 other health care organizations that provide long term care, assisted living, behavioral health care, laboratory and ambulatory care services. The Joint Commission also accredits health plans, integrated delivery networks, and other managed care entities. An independent, not-for-profit organization, the Joint Commission is the nation's oldest and largest standards-setting and accrediting body in health care.

For Residents - Limit Working Hours

Per Modern Healthcare (6-26-02):  Under the 1989 New York state law, physicians enrolled in residency training programs can work no more than 80 hours per week average over a 4-week period and no more than 24 consecutive hours.  Emergency department residents are limited to no more than 12 hours without time off.  New York is the only state that limits residents' work hours and the Accreditation Council for Graduate Medical Education plans to adopt similar requirements in 2003.  State health officials are reviewing results of inspections to see if fines are warranted and so far 734-bed New York University Medical Center was fined $24,000 for recurring violations.

2/22/02:  According to a news release from Health Systems Change (HSC):  At least 7.4 million working-age Americans with chronic conditions - including diabetes, heart disease and depression - lacked health insurance in 1999, according to a new HSC study. And two-thirds also had low incomes, putting them in triple jeopardy.

For more information, see:  news release, at  http://www.hschange.org/CONTENT/413
Issue Brief No. 49, Triple Jeopardy:  Low Income, Chronically Ill and Uninsured in America, at http://www.hschange.org/CONTENT/411/
Issue Brief No. 50, Options for Expanding Health Insurance for People with Chronic Conditions, at http://www.hschange.org/CONTENT/412/

Re:    More on Health Insurance Portability and Accountability Act (HIPAA)

7-24-02:  What Does HIPAA Say About Terminations? The security rule addresses termination directly. Section 142.308(a)(11) requires termination procedures - formal, documented instructions for ending employment and closing off internal and external access. Remember to immediately stop access to voice mails, emails, telephone service.

5-21-02:  The Centers for Medicare & Medicaid Services has announced the planned broadcast of another HIPAA program--"Meeting the HIPAA Challenge: Implementing the HIPAA Standards and the Administrative Simplification Compliance Act." This program will be a satellite broadcast and webcast. The webcast will be available for 90 days after the initial broadcast, which will occur on June 18, 2002, from 2:00-3:30 P.M. (EDT).

For more details on how to receive/view the program and/or webcast,see:  http://www.hcfa.gov/medlearn/broadcst.htm

5-7-02:  Per AMED News.com (5-13-02):  By Oct. 15, physicians, hospitals and health plans that transmit health care data electronically will have to either comply with the new HIPAA transactions standards and code sets or submit a form to Health and Human Services (HHS) asking for an extra year to meet the standards. HHS officials acknowledge that there is a great deal of anxiety in the health care system right now about completing the compliance plan correctly and on time.  But there's no need to hurry and there's no need to panic, said Karen Trudel, director of the HIPAA project staff at the Centers for Medicare & Medicaid Services.  The compliance plan is basically designed to ask questions that get people thinking about what they need to be doing, such as whether the health care "entity" has completed various requirements for coming into compliance - such as staff training and software installation - or, if not, when they expect to do so.

3-22-02:  See proposed changes to to be published in the Federal Register March 27, 2002 with a 30-day comment period regarding HIPAA compliance per HHS Press Release and Fact Sheet on the Privacy Rule.

See:  http://www.hhs.gov/ocr/hipaa

3-12-02:  For an overview about HIPAA see:

http://www.hhs.gov/news/press/2001pres/01fsprivacy.html

Also, see: http://www.ncpdp.org/news_hipaa.asp

2-25-02:    The Centers for Medicare & Medicaid Services (CMS) has complied a list of frequently asked questions (FAQs) to clarify certain requirements of the Administrative Simplification Compliance Act (ASCA), which was signed into law on December 27. The ASCA delays for one year the deadline for certain healthcare plans, providers, and clearinghouses to comply with a rule, mandated by the Health Insurance Portability and Accountability Act (HIPAA), on national standards for exchanging healthcare data electronically. The ASCA sets a new compliance deadline of October 16, 2003. Among the questions addressed by CMS are those regarding the ASCA's requirement that covered entities submit to the Department of Health and Human Services (DHHS) before October 16, 2002 a plan detailing their strategies for achieving compliance by the new deadline.

To read the FAQs, see: http://www.healthlawyers.org/ofnotes/ofnote_cmsascafaq.cfm

HIPAA Forms

The following DRAFT forms are provided by the AMA Health Law Division to assist physicians in HIPAA compliance efforts. Reproduction and use of the forms by physicians and their staff is permitted. Any other use, duplication or distribution of the forms by any other party requires the prior written approval of the American Medical Association, Health Law Department.

Derived From American Health Lawyers Association, Health Law Highlights, 12-17-01:

Congress Votes To Delay HIPAA Transaction Standards

Congress voted to delay for one year the Health Insurance Portability and Accountability Act's (HIPAA) deadline for health plans, clearinghouses, and providers to comply with the administrative simplification standards for electronic transactions and code sets in all electronic billing and records. The compliance deadline will now be October 16, 2003. The delay will not affect the April 14, 2003, deadline for health plans, clearinghouses, providers, and suppliers to comply with the new rules protecting the privacy of individual medical records (small health plans will get an extra twelve months to comply). The bill, the Administrative Simplification Compliance Act (H.R. 3323), sped through both houses without a dissenting vote after lawmakers heard from both private health plans and some state Medicaid agencies that it would be hard for them to meet the October 2002 deadline. The House voted 410-0 on December 4 in favor of H.R.  3323, authored by Rep. David L. Hobson (R-OH), who began the push to standardize healthcare transactions back in 1993. The Senate then accepted Dobson's version by unanimous consent without amendment on December 12, as lawmakers rushed to finish business for the year.

The standards cover transactions including the submission of healthcare claims, healthcare payments and remittances, coordination of benefits transactions, enrollment and disenrollment, referrals and authorizations, and injury reports. Before the House acted, Hobson scrapped a controversial, provision that would have imposed a $1 fee on every paper claim submitted to Medicare. Instead, the bill requires providers to bill Medicare electronically (with exceptions for facilities with fewer than twenty-five full-time employees or a physician practice with fewer than ten employees).  Any plan or provider seeking to take advantage of the one-year delay must file a plan with the Secretary of the Department of Health and Human Services (DHHS) explaining the steps they will take to reach compliance by October 16, 2003. The bill also would authorize DHHS to spend $44 million to help Medicare prepare for the transition. Those funds would help DHHS finish
writing the standards, provide education and assistance, and pay for
enforcement.

See http://thomas.loc.gov/ and search under H.R. 3323.

On November 27, the U.S. Senate passed a bill (S. 1684) that will provide a one-year extension for compliance by certain covered entities with the administrative simplification standards for electronic transactions and code sets issued under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The bill, sponsored by Senator Byron Dorgan (D-ND) will delay the deadline for compliance until October 16, 2003. The standards set uniform national formats for the electronic exchange of patient data. 

See S. 1684, at http://thomas.loc.gov, and search by
bill number on "S. 1684".

www.hcfa.gov/medicaid/hipaa/default.asp has a link to an interactive tool, HIPAA OnLine, that helps consumers, employers, state regulators, and self-funded plans answer questions about rights and protections under the Health Insurance Portability and Accountability Act ("HIPAA").  HIPAA OnLine guides you to an answer by asking you questions about your health coverage and situation. 

Re:  HIPAA effective date extended

2/23/01:  Secretary of Health and Human Services Tommy Thompson said the department is reopening the Health Insurance Portability and Accountability Act (HIPAA) privacy act regulations for a new, 30-day comment period.  Thompson said, "Our goal is to achieve privacy protection that works. I believe we should be open to the concerns of all those who care strongly about health care and privacy. And after we hear those concerns, our commitment must be to put strong and effective patient privacy protections into effect as quickly as possible." Thompson confirmed that the effective date of the  privacy regulations has been extended to April 14 due to bureaucracy reasons.

Note:  The following may be accessible to Hospital Association members only:  For sample of model consent and notice forms for hospitals to help evaluate current practices on use and disclosure of protected health information under the final Privacy Rule issued in December 2000, which goes into effect February 26, 2001, with full compliance required by February 26,2003 as posted on the American Hospital Association ("AHA") Web site; See:

 http://www.aha.org/hipaa/resources/Content/ModelPrivacyNotice.doc

Re: Challenging HIPPA

7-31-01:  The Association of American Physicians and Surgeons ("AAPS") said it would sue the Department of Health and Human Services ("DHHS") in federal district court in Houston to block implementation of the final privacy rule issued in December 2000 pursuant to the Health Insurance Portability and Accountability Act ("HIPAA"). AAPS alleges the regulations are unconstitutional based on their content and outcomes (a different theory from the suit filed earlier in July by two state medical associations - South Carolina Medical Association and another medical association - that challenged Congress' authority to delegate to DHHS the authority to write the regulations). AAPS claims the regulations violate the Fourth Amendment by requiring physicians to allow government access to personal medical records without a warrant and authorizing the government to construct a centralized database of personal medical records with personal health identifiers and that the regulations violate HIPAA and lack statutory authorization to the extent they regulate medical records other than electronic transmissions. 

4-8-02:  Tom Scully, the Administrator of the Centers for Medicare & Medicaid Services (CMS), summarized the Bush Administration's priorities on healthcare at a conference held by the  American Health Lawyers Association this April in Baltimore, MD:  (1) a top healthcare goal is to "modernize" Medicare - as making the Medicare system work more like the government's Federal Employees Health Benefits Program. and this program would probably remain predominantly fee-for-service; (2) need for Medicare prescription drug benefit - however, Medicare program must be reformed to add expense of such a major benefit. Scully listed the following goals as key to modernizing Medicare:  subsidizing a prescription drug benefit (especially for low income individuals); providing better coverage for preventative care; providing stronger health insurance options for beneficiaries; strengthening the long term financial security of the program; updating and streamlining Medicare regulations and processes; and making needed improvements in the fee-for-service program.

6-21-02:  See U.S. Supreme Court decision on the Moran case as specified under New News in Class 5 - upholding Illinois law for independent third party medical reviewers and discussing ERISA preemption issue.

See:  Rush Prudential HMO, Inc. v. Moran etal.; certiorari to the united States Court of Appeals for the Seventh Circuit, No. 001021 - Argued January 16, 2002 - Decided June 20, 2002

1/21/02:    The U.S. Supreme Court heard oral arguments on January 16, 2002 in a case involving ERISA and the law in Illinois regarding independent third party medical reviewers - on whether section 4-10 of the Illinois Health Maintenance Organization Act (HMO Act), which
requires HMOs to provide an independent medical review when a patient's primary physician and an HMO disagree over a course of treatment, was pre-empted by the Employee Retirement Income Security Act (ERISA) of 1974.  Rush is claiming the state of Illinois breached the federal law of ERISA by imposing on health plans its own remedy for dealing with dissatisfied customers.  Moran's attorney argued that the HMO Act was simply "a state insurance law."  Thirty-seven states have similar statutes as in Illinois. In this particular case, the plaintiff, Debra Moran sued her HMO, Rush Prudential HMO Inc. (Rush), in Illinois state trial court after the HMO denied coverage of a surgery recommended by a non-network specialist and refused to comply with Sect. 4-10 of the HMO Act. Rush removed the case to federal district court, arguing ERISA pre-empted Moran's claim. After additional proceedings, the district court agreed with Rush. On appeal, the Seventh Circuit reversed, holding that Sect. 4-10 avoided pre-emption within ERISA's savings clause because it regulated insurance.  Justice David H. Souter at one point said, "The facts do not put this in a clear category."

See:    Moran v. Rush Prudential HMO, Inc., 230 F.3d 959 (7th Cir. Oct. 19, 2000).

1-23-02:    Chicago Tribune article "California Sets Nurse-patient Ratios," reports that California is the first state to pass a law specifying mandatory staffing standards of registered nurses in emergency room and at the bedside.  The California Healthcare Association claimed cookie-cutter standards should not be dictating minimum staffing decisions.  The law established minimum nurse-to-patient ratios in 22 categories, such as one nurse for every infant under anesthesia, one nurse for every six patients on general medical wards and a nurse for every trauma patient in the emergency room.  Federal inspection reports at the U.S. Department of Health and Human Services show that California hospitals and at least four Illinois facilities have assigned just one nurse for up to 20 patients, sometimes with "disastrous results".  According to this article, this law represents a victory for organized labor groups seeking to bolster ranks.  

Per HHS Weekly Report (8-5-02):  Margaret J. Giannini, M.D., F.A.A.P., currently the principal deputy assistant secretary for aging at the Administration on Aging, has been appointed to lead the new office of HHS Office on Disability to oversee the coordination, development, and implementation of programs and special initiatives within HHS that impact people with disabilities. 

HCFA GETS A NEW NAME

June 14, 2001 According to a press release from HHS:

HHS Secretary Tommy G. Thompson announced in an effort to reform the Health Care Financing Administration (HCFA) the federal agency that runs the Medicare and joint federal-state Medicaid programs that HCFA will now be named the Centers for Medicare & Medicaid Services.  Thomas Scully is the new Administrator CMS formerly known as Health Care Financing Administration ("HCFA").

There are nearly 70 million Medicare and Medicaid beneficiaries.

The new name reflects the increased emphasis at the Centers for Medicare & Medicaid Services on responsiveness to beneficiaries and providers, and on improving the quality of care that beneficiaries receive in all parts of Medicare and Medicaid.

BIOTERRORISM - For Your Information:

On 12/12/01 the House passed legislation (H.R. 3448) to combat Bioterrorism authorizing nearly $3 billion to improve the nation's ability to prevent, prepare for, and respond to biological attacks.  The measure  provides $1 billion for preparedness grants to states and other public or private entities; $1 billion for DHHS to augment the nation's stockpiles of drugs and vaccines; $100 million for food safety; and $100 million to protect drinking water.  The bill also authorizes $450 million for the Centers for Disease Control and Prevention to use in upgrading its facilities.

See:    http://www.house.gov/house/Legproc.html, click on Bill Status, and type in H.R. 3448 under Bill Number

From JCAHOnline - December 2001:    JCAHO Issues Special Perspectives on Emergency Preparedness - On Nov. 15, 2001, JCAHO issued a special 24-page Joint Commission Perspectives,the official JCAHO newsletter, that provides guidance to health care organizations in preparing for terrorist attacks that may involve nuclear, biological or chemical incidents. It also offers lessons learned from hospitals located near the World Trade Center and the Pentagon. As part of this effort, JCAHO is paying particular attention to emergency management planning during its ongoing, onsite evaluations of health care organizations.  See:  http://www.jcrinc.com/perspectivesspecialissue

"HHS PRESS RELEASE--ADDITIONAL $1.5 BILLION PROPOSED TO COMBAT BIO TERRORISM"

[This is from a HHS Press Release on 10/17/0]    President Bush's $20 billion emergency relief budget request includes $1.5 billion for HHS to further strengthen the nation's ability to respond to and treat potential bioterrorism attacks.  The  emergency budget request will support efforts at the Centers for Disease Control and Prevention (CDC), the Food and Drug Administration (FDA), other HHS agencies, and state and local efforts. Key elements include:

Expanding the National Pharmaceutical Stockpile; Expanding smallpox vaccine supplies; Speeding the development of new bioterrorism tools; Increasing state and local readiness; Expanding HHS response capabilities; Improving food safety; and other recovery and
non-bioterrorism efforts.

In a bioterrorism event, HHS has special responsibilities, including
detecting the disease, investigating the outbreak, and providing stockpiled drugs and emergency supplies in the large amounts needed. In July, Secretary Thompson named Scott Lillibridge, a physician who had coordinated the Centers for Disease Control and Prevention's bioterrorism response efforts, as special advisor to lead the department's coordinated bioterrorism initiative.

10/8/01:    Janet Rehnquist, Inspector General ("IG") for the Department of Health and Human Services ("DHHS") was the keynote speaker at the AHLA/HCCA Fraud and Compliance Forum on Monday, October 1. Rehnquist indicated that she intends to focus on corporate integrity agreements ("CIAs") and that she would work to make some changes including increasing flexibility as that she was aware of the significant financial burden on providers in complying with the False Claims Act.  She urged providers to make an investment upfront and bring themselves into compliance, rather than run the risk of spending more money after a CIA is in place. She also said a priority is streamlining the settlement process for False Claims Act cases and that Office of Inspector General ("OIG") will focus on improving the quality of care in nursing homes. On the same day, the OIG released its work plan for fiscal year 2002 which introduced new initiatives such as examining whether inconsistent coding of outpatient services by hospitals and physicians for the same service is a persistent problem, developing a national payment error rate for Medicare fee-for-service mental health claims, and increasing joint initiatives between the OIG and other federal and state agencies.

See OIG's FY 2002 work plan at:    http://www.hhs.gov/oig/wrkpln

The Office of Inspector General (OIG) Work Plan is set forth in four    chapters encompassing the various projects to be addressed during Fiscal Year (FY) 2002 by the Office of Audit Services, Office of Evaluation and Inspections, Office of Investigations, and Office of Counsel to the Inspector General.

9/01:    One of the Federal Trade Commission's ("FTC") top priorities, according to the FTC's Howard Beales to the Senate Special Committee on Aging during a September hearing is to combathealth fraud, particularly deceptive acts or practices affecting the elderly.  According to Beales the elderly in particular are susceptible to fraudulent claims for products marketed as treatments for serious illness because of the higher incidence of such health problems among older Americans and that in addition to aggressive law enforcement, the FTC would continue its efforts to educate the public on how to identify and avoid health fraud.

Re:    Patient's Bill of Rights

10/26/01:  Recently, North Carolina Governor Mike Easley (D) signed into law a bill (S.B. 199) that is widely viewed as the strongest piece of
patients' rights legislation in the nation.  This act states that it is:

"AN ACT TO IMPROVE PATIENT ACCESS TO HEALTH CARE ADVICE, INFORMATION, AND SERVICES TO COVERED PERSONS UNDER HEALTH BENEFIT PLANS BY PROVIDING FOR: CONTINUITY OF CARE IN HMOS, EXTENDED OR STANDING REFERRAL TO A SPECIALIST, SELECTION OF SPECIALIST AS PRIMARY CARE PROVIDER, DIRECT ACCESS TO PEDIATRICIANS, ACCESS TO NONFORMULARY AND RESTRICTED ACCESS PRESCRIPTION DRUGS, ESTABLISHMENT OF THE MANAGED CARE PATIENT ASSISTANCE PROGRAM, PATIENT'S RIGHT TO CHOOSE THE PROVIDER OF SERVICES UNDER A HEALTH BENEFIT PLAN AND PROHIBITION OF DISCRIMINATION AGAINST PROVIDERS AS PARTICIPATING PROVIDERS BASED ON THE PROVIDER'S LICENSE OR CERTIFICATION, PROHIBITION ON CERTAIN MANAGED CARE PROVIDER INCENTIVES, MANAGED CARE REPORTING AND DISCLOSURE REQUIREMENTS, PROVIDER DIRECTORY INFORMATION, DISCLOSURE OF PAYMENT OBLIGATIONS, MANDATED COVERAGE FOR CLINICAL TRIALS AND NEWBORN HEARING SCREENING, AND STANDARDS FOR INDEPENDENT REVIEW OF NONCERTIFICATIONS BY AN INSURER OR MANAGED CARE PLAN; AND TO HOLD MANAGED CARE ENTITIES LIABLE FOR HARM CAUSED TO INSUREDS OR ENROLLEES BY THE FAILURE TO EXERCISE ORDINARY CARE IN MAKING HEALTH CARE DECISIONS."

See: http://www.ncga.state.nc.us then enter S199

8/13/01: Illinois Representative Mary Flowers (D-Chicago) writes in the Editorial section of the Chicago Tribune (August 13, 2001) that as a chief sponsor of the Illinois Managed Care Reform and Patients' Rights Act that the creation of the Office of Consumer Health Insurance under the Illinois Department of Insurance is a critical element of the Act because it can help (as she writes in terms of seemingly suggesting this type of approach for the national patient's bill of rights process currently underway) "patients cut through the large, complex bureaucracies and red tape, and to better understand and exercise their rights".

8/3/01:    According to an article in the Chicago Tribune on August 3, 2001, "Patients' Rights Bill OK'd by House," the House bowed to President Bush's veto threat and narrowly approved his patient's rights legislation.  This plan gives Americans greater rights to sue health plans but limits financial penalties insurers could suffer.  Patients denied treatment would be allowed to sue for punitive damages but only when an HMO had refused to abide by the ruling of an independent review board.  Punitive damages would be capped at $1.5 million.  Damages for pain and suffering would be capped at $1.5 million.  

This article looks at some of the behind the scenes politics in the passing of this bill by the House involving Charlie Norwood (R-Ga.), a dentist, the "conservative who has led the fight for patients' rights legislation.  Democrats said this bill resulting from a compromise between Norwood and Bush was not bipartison because it was worked out without the consent of Norwood's co-sponsors (John Dingell (d - MI) and Greg Ganske (R- Iowa).  It received only three votes from Democrats.

6/19/01:    According to an article in the Chicago Tribune on June 19, 2001, "Senate Takes on Patient's Rights Bill" with sub-title "Bush Threatens Veto if HMO suits aren't limited" indicates that some believe, such as the proposal of Sens. Edward Kennedy (D-Mass), John McCain (R-Ariz.) and John Edwards (D -N.C.) that there should be legislation subjecting HMOs to the same liability for the consequences of their negligent behavior as others and guaranteeing access to specialists and emergency room care and the right to appeal HMOs decisions on coverage and treatment and the right to sue in state and federal courts while others believe as indicated by the statements of the president of the American Association of Health Plans group that such legislation would be a boon for trial layers and result in increased health insurance premiums for consumers.

7/5/01:    HHS is about to issue privacy "guidances" for Privacy, Security & Internet Security, Enforcement.  They are expected to address several contentious issues, including the right of family members or friends to pick up prescriptions, oral communications, patient consent provisions and "minimum necessary" disclosures.

Task force

Secretary Thompson announced that a cross-Departmental Task Force on Regulatory Reform is being created immediately to steer an ongoing review of HHS regulations and to oversee changes in regulations. The regulatory reform effort will include expanded review of Medicare and Medicaid regulations as part of a reform of the HHS' Health Care Financing Administration.  "At the very time when we are trying to attract more managed care plans to offer their services to Medicare beneficiaries, do we really need 854 pages of regulations standing in the middle of the front door to the program?" Thompson said. "And today, 15 years after we moved away from cost-based reimbursement, do we still need to require hundreds of pages of cost information from every Medicare hospital? We need to examine our real needs and be sure we're not imposing unnecessary burdens on our health care providers."

6/11/01:    52 Senior Medicare Patrol Project grants administered by the
Administration on Aging (AoA) were issued to help educate and train senior volunteers in reviewing health care benefit statements and outlining the steps seniors can take to protect themselves.  This is considered an important role in helping the Medicare program avoid unintended errors and detect deliberate abuses.

HHS ISSUES FIRST GUIDANCE ON NEW PATIENT PRIVACY PROTECTIONS

July 6, 2001:  Department of Health and Human Services (HHS) issued the first in a series of guidance materials on new federal privacy protections for medical records and other personal health information.  Providing this guidance is part of an ongoing process to help health care providers and health plans come into compliance with the regulation by April 14, 2003.  The guidance – available on the Web at http://www.hhs.gov/ocr/hipaa – answers common questions about the new protections for consumers and requirements for doctors, hospitals, other providers, health plans and health insurers, and health care clearinghouses.

Patient Privacy Rule issued by President Bush

APRIL 12, 2001:  HHS announced that it will will immediately begin the process of implementing President Bush's patient privacy rule dealing with patient privacy protections and keeping medical records confidential.  This rule is to give patients greater access to their own medical records and more control over how their personal information is used.

Re:  Patient Bill of Rights

The following is from a press release by HHS on 8/16/01:  HHS PROPOSES NEW MEDICAID MANAGED CARE REGULATION TO ENSURE PATIENT RIGHTS' PROTECTIONS FOR BENEFICIARIES

HHS Secretary Tommy G. Thompson today proposed new regulations to give Medicaid beneficiaries in managed care plans the same types of protection that participants in managed care plans would receive under patient rights' legislation now pending in Congress.

The regulations, which Secretary Thompson pledged to have in place by early next year, will guarantee Medicaid beneficiaries access to emergency room care, a second opinion when needed, a timely right to appeal adverse coverage decisions, and other essential patient protections. At the same time, the rule will give states flexibility to provide these protections in a workable manner.

"Medicaid beneficiaries deserve the same rights and protections as all other Americans enrolled in managed care plans," Secretary Thompson said. "This proposed rule provides needed patient protections and gives states flexibility to implement these protections without jeopardizing Medicaid beneficiaries' access to health care."

The proposed regulations build on protections for Medicaid beneficiaries
that were created under the Balanced Budget Act of 1997.

The proposed rule retains and expands upon all the protections already
available to Medicaid beneficiaries under the 1997 statute. Under the rule, beneficiaries will have the following rights:
· Emergency Room Care. Health plans must pay for a Medicaid beneficiary's emergency room care whenever and wherever the need arises.
· Access to second opinion. All beneficiaries will be allowed to get a
second opinion from a qualified health professional.
· Direct access for women's health services. Women will be allowed to
directly access a woman's health specialist in the network for the care
necessary to provide routine and preventive health care services as already available in Medicaid fee-for-service.
· Patient-Provider Communication. Managed care plans will be prohibited
from establishing restrictions, such as gag rules, that interfere with
patient-provider communications.
· Network Adequacy. Managed care plans will be required to assure that they have the capacity to serve the expected enrollment in their service area.
· Marketing Activities. States will be required to approve marketing
materials used by the managed care plans to enroll Medicaid beneficiaries.
Plans are prohibited from using door-to-door, telephone, and other forms of "cold call" marketing.
· Grievance Systems. All managed care plans must have a system in place to accommodate enrollee grievances and appeals. Grievances must be resolved within state established timeframes that may not be longer than 90 days and must be resolved by managed care organizations within 45 days. However, expedited timeframes exist for resolving appeals when the life or health of the enrollee is in jeopardy.

Managed care plans serving Medicaid beneficiaries also must provide
consumers with comprehensive, easy-to-understand information about the managed care plan in which they are enrolled.

The proposed regulations will replace a rule put forth by the Clinton
administration last January. Under the new regulations, states will have
significantly more flexibility to decide how best to provide patient
protections and use managed care in their Medicaid plans. The new rule's provisions are more concise and understandable and will reduce the regulatory burden on the states and health plans.

In addition, the rule will allow states, many of which have already
implemented protections through state laws and regulations, to keep in place important aspects of their existing programs. The new rule also will require states to submit to HHS clear plans for providing beneficiaries with high quality care and to measure the quality of the care that is actually provided.

"I want to have patient protections in place as quickly as possible.
However, the previously issued rule went far beyond what Congress intended with the Balanced Budget Act, and its excessive mandates actually threatened beneficiaries' access to care under Medicaid," Secretary Thompson said.  "The new proposed rule will ensure that states have the flexibility they need to protect patients while protecting the programs they may already have established."

The proposed regulation will be published in the Federal Register on Monday, Aug. 20 and will be available online today at www.hcfa.gov/medicaid/omchmpg.htm. The 60-day comment period for the proposed rule will end on Oct. 19, 2001. CMS will review those comments for the final regulation, which will be issued early next year.

According to Chicago Tribune (March 22, 2001), section 1, page 11, "Bush Urges Tight Caps on Patients' Lawsuits":  It appears that overall there is agreement by lawmakers in Congress that:  Americans deserve comprehensive patient protection and:  should be allowed to see obstetricians, gynecologists and pediatricians without first going through a primary care physician, health plans should be required to offer access to other sorts of specialists, and that patients should be able to go to the nearest emergency room without worrying about health insurance coverage.  However, there is a disagreement on the issue of the ability to sue HMOs in state courts and if able to then the damages limit for pain and suffering.

Bipartisan Patient Protection Act

On February 6, 2001 federal legislators introduced "Bipartisan Patient Protection Act(s) of 2001".  Senators John McCain (R-AZ), John Edwards (D-NC), Edward Kennedy (D-MA), Lincoln Chafee (R-RI), Tom Harkin (D-IA), and Bob Graham (D-FL) introduced the Senate bills and Representatives Greg Ganske, M.D., (R-IA) and John Dingell (D-MI) introduced the House bills. The proposed legislation aims to: give every American the right to choose their own doctor; cover all Americans with employer-based health insurance; ensure that all external reviews of medical decisions are conducted by independent and qualified physicians; and hold a plan accountable when the plan makes a decision that harms or kills someone.  The proposed law would respect state-enacted patient protections; provide a federal cause of action for negligent plan administration (which will provide uniformity on how the health plans are administered); protect businesses from frivolous lawsuits; and hold insurers accountable for injuries arising from their actions.     

See:    Senator McCain's press release on the new bills at: http://www.senate.gov/~mccain/pbor01.htm

See the bills, posted on Senator McCain's Web site at: http://www.senate.gov/~mccain/ and click on S. 283 and S. 284

As of press time, these bills had not been posted on the Library of Congress Web site at:  http://thomas.loc.gov. 

On the day after bipartisan patient rights legislation was introduced in the Senate and the House, President George W. Bush issued a press release containing "Principles for a Bipartisan Patients' Bill of Rights" including the following: patient protections should apply to all Americans enrolled in health plans; a federal patients' rights law should provide rights such as access to emergency room and specialty care, direct access to certain doctors, access to needed prescription drugs and approved clinical trials, and a prohibition on "gag clauses"; patients
should have a rapid medical review process for denials of care; physicians should make medical decisions and patients should receive care in a timely manner; federal remedies should be expanded to hold health plans accountable for wrongful denial of care; and employers should be protected from frivolous or unnecessary lawsuits. 
    

See:  President's February 7 press release at:  http://www.whitehouse.gov/news/releases/20010207-2.html

See:    Letter from President to House and Senate Democratic Leaders at:  http://www.whitehouse.gov/news/releases/20010207-3.html

See:  Letter from the President to the House Speaker and Senate
Majority Leader at:  http://www.whitehouse.gov/news/releases/20010207-4.html

5-14-02:  Geneva, Switzerland -- HHS Secretary Tommy G. Thompson signed a Memorandum of Understanding (MOU) with Canadian Minister of Health A. Anne McLellan to improve the health status of indigenous communities through enhanced international collaborations, identification and reinforcement of best practices, and through innovative approaches to learning opportunities

GLOBAL HEALTH

8--17-01:  HHS today announced the launch of a new Web site that addresses the link between domestic and international health issues with global health issues and worldwide health statistics, reports and
publications, and links to the department's global health partners.  This website is administered by HHS' Office of International and Refugee Health.  With the ease of travel in today's global economy means that no nation can be isolated from global health threats. The movement of more than 2 million people each day across national boarders and the growth of international trade in goods are responsible for increased health risks, including infectious diseases, contaminated foods, and biological and chemical threats.

See:  www.globalhealth.gov

HHS Press Releases

10/10/01:    U.S. AND U.K. SIGN AGREEMENTS TO COLLABORATE
ON HEALTH CARE QUALITY AND FIGHTING BIOTERRORISM

Under the quality agreement, the U.S. and U.K. plan to share data and
experiences related to quality of care, including efforts to enhance the use of information technology, expand common criteria for measurement of quality of care, and achieve mutual quality research goals. Efforts will be aimed at improved monitoring and reporting, including reporting on medical errors and patient safety; improving primary care and cost effectiveness of care; and reducing disparities in the care available to patients.

10/10/01:    Life expectancy for the U.S. population reached a record high of 76.9 years in 2000 as mortality declined for several leading causes of death. 

8/16/01:  "HHS PROPOSES NEW MEDICAID MANAGED CARE REGULATION
TO ENSURE PATIENT RIGHTS' PROTECTIONS FOR BENEFICIARIES": HHS Secretary Tommy G. Thompson today proposed new regulations to give
Medicaid beneficiaries in managed care plans the same types of protection that participants in managed care plans would receive under patient rights' legislation now pending in Congress.

According to this press release: "The proposed rule retains and expands upon all the protections already available to Medicaid beneficiaries under the 1997 statute. Under the rule, beneficiaries will have the following rights:

· Emergency Room Care. Health plans must pay for a Medicaid beneficiary's emergency room care whenever and wherever the need arises.
· Access to second opinion. All beneficiaries will be allowed to get a
second opinion from a qualified health professional.
· Direct access for women's health services. Women will be allowed to directly access a woman's health specialist in the network for the care necessary to provide routine and preventive health care services as already available in Medicaid fee-for-service.
· Patient-Provider Communication. Managed care plans will be prohibited from establishing restrictions, such as gag rules, that interfere with patient-provider communications.
· Network Adequacy. Managed care plans will be required to assure that they have the capacity to serve the expected enrollment in their service area.
· Marketing Activities. States will be required to approve marketing
materials used by the managed care plans to enroll Medicaid beneficiaries.  Plans are prohibited from using door-to-door, telephone, and other forms of "cold call" marketing.
· Grievance Systems. All managed care plans must have a system in place to accommodate enrollee grievances and appeals. Grievances must be resolved within state established timeframes that may not be longer than 90 days and must be resolved by managed care organizations within 45 days. However, expedited timeframes exist for resolving appeals when the life or health of the enrollee is in jeopardy.
Managed care plans serving Medicaid beneficiaries also must provide
consumers with comprehensive, easy-to-understand information about the managed care plan in which they are enrolled.  The proposed regulations will replace a rule put forth by the Clinton administration last January. Under the new regulations, states will have significantly more flexibility to decide how best to provide patient protections and use managed care in their Medicaid plans. The new rule's provisions are more concise and understandable and will reduce the regulatory burden on the states and health plans.  In addition, the rule will allow states, many of which have already implemented protections through state laws and regulations, to keep in place important aspects of their existing programs. The new rule also will require states to submit to HHS clear plans for providing beneficiaries with high quality care and to measure the quality of the care that is actually provided."

Medicare-endorsed prescription drug discount card 

July 12, 2001:  President Bush today announced a new Medicare-endorsed prescription drug discount card program designed to immediately help Medicare beneficiaries lower their out-of-pocket drug costs. Enrollment in the Medicare Rx Discount Card Program will begin as early as November 1.

Discount cards are expected to save Medicare beneficiaries some 10 percent to 25 percent on prescription drug prices. Medicare serves about 40 million beneficiaries, and over 10 million of them do not have prescription drug coverage in addition to their Medicare coverage. 

Re: Arbitration

The United States Supreme Court case, Circuit City Stores, Inc. v. Adams", legitimized and endorsed mandatory arbitration of 
employment-related claims under the Federal Arbitration Act. This case has generated renewed interest in mandatory arbitration programs among healthcare employers.

Health and Human Services (HHS) has released a final regulation establishing for the first time national standards to protect patients' personal medical records.  For a summary of the final regulation see the fact sheet issued December 20, 2000 at:  

http://www.hhs.gov/news/press/2000pres/00fsprivacy.html

On December 29, 2000, HCFA issued technical corrections to the regulations protecting the privacy of patients' medical records (65 Fed.
Reg. 82944), addressing language that had been inadvertently excluded from the preamble of the Standards for Privacy of Individually Identifiable Health Information, which were published on December 28, 2000 (65 Fed. Reg. 82462).  The regulations will not be enforced before those dates, nor will the regulations pre-empt state laws before those dates.  

See technical corrections to final rule, at:  http://www.access.gpo.gov/su_docs/fedreg/a001229c.html 

See final privacy rule as published in Federal Register, at:  http://www.access.gpo.gov/su_docs/fedreg/a001228c.html

3/24/01:  HHS press release announced that President Bush intends to nominate Claude Allen as deputy secretary of the Department of Health and Human Services.  Allen led Gov. Gilmore's initiative for Virginia's Patients Bill of Rights passed in 1999 that gave patients the right to appeal adverse coverage decisions made by their health plan and receive direct access to physician specialists. 

3/14/01;  According to the article "Without 'Barefoot Doctors,' China's Rural Families Suffer" by Elisabeth Rosenthal, many of China's 800 million rural residents have stopped seeing doctors except in extreme emergencies because they cannot afford the health care costs that have increased 400 to 500 percent from 1990 to 1997.  The number of tuberculosis cases has quadrupled in 15 years, infant mortality is starting to increase though for the past 40 years it had been basically declining steadily and immunization rates have started to drop.

2/27/01:    According to Health and Human Services (HHS) nine more states have received grants to develop plans extending health insurance coverage to all citizens.  HHS Secretary, Tommy G. Thompson, stated that "The grants will help states identify who remains uninsured, why they are uninsured and develop ways to get them the coverage they need."

See:  http://www.hcfa.gov/medlearn/faqphys.htm for answers to frequently asked questions regarding the physician referral law.

Freedom of Speech - First Amendment Rights - Advertising

An Illinois Appellate court reversed a trial courts decision by claiming that the trial court erred in affirming sanctions imposed against a chiropractor for violation of Section 26 of Medical Practice Act.  Prohibition against using testimonials in advertising violates first amendment rights. The court found that this particular regulation of commercial speech is more extensive than is reasonable necessary because testimonials are not "inherently misleading."

See:  4th Dist. Snell v. Dept. of Prof. Reg. No. 4-99-0876 (January 26, 2001) Champaign County. 

According to the Chicago Tribune ((January 9, 2001),section 1, page 8, "Canada Doctors Strike Over Governmental Fees":  Doctors in eastern Canadian province of New Brunswick turned away patients in a dispute over how much they get paid by government-run health insurance.  No figures were available of how many of the province's 1300 doctors closed their offices.  Some Hospitals reported an increase in their emergency rooms activity.  The government offered the doctors a fee increase of about 12.5% or $15,333, over four years but the physicians want a 30% increase. 

According to HHS OIG posting, Inspector General June Gibbs Brown retired January 3, 2001 and until a replacement is named, Michael F. Mangano, Principal Deputy Inspector General will serve as the Acting Inspector General

Re:    ERISA

Note: for HMO Liabiality under ERISA see Class 9 New News

Health Plan Appeals

Department of Labor (DOL) Pension and Welfare Benefit Administration issued a final regulation (65 Fed. Reg. 70246) for benefit claims procedures of employee benefit plans covered by Title I of the  Employee Retirement Income Security Act of 1974 ("ERISA"). 

The regulation was issued by the Clinton administration after it became unlikely that Congress would enact a patients' bill of rights this session.  This regulation revises the minimum requirements for benefit claims procedures of the 130 million employees enrolled in employee benefit plans covered by Title I of ERISA.  This regulation establishes new standards for processing claims under group health plans and plans providing disability benefits and further clarifies existing standards for all other employee benefit plans. Plans will have seventy-two hours to tell patients whether treatments in potentially life-threatening situations would be covered, and fifteen days for advance clearance of routine operations. Patients could appeal those decisions to the health plan, which would have to respond within an expedited timetable. The new standards are intended to ensure more timely benefit determinations, to improve access to information on which a benefit determination is made, and to assure that participants and beneficiaries will be afforded a full and fair review of denied claims. This regulation applies to all claims filed on or after January 1, 2002.

Note:    Be careful with medical records releases, even if signed, as there may be certain laws requiring specific types of information to permit the release of the records without breach of confidentiality.  See Illinois case in which a hospital relying on a generic medical records release signed by plaintiff released records to insurance company containing reference to plaintiff's prior treatment for alcohol abuse.  Illinois Appellate Court held that the trial court erred in dismissing the claim filed by plaintiff against hospital for breach of confidentiality for releasing records because the released did not contain sufficient detail to authorize hospital to divulge information about previous treatment for alcohol abuse, as required by 42 C.F.R. section 1.01. 

See:  M.A.K. v. Rush-Presbyterian St. Luke's Medical Center No.
3-99-0618 (October 11, 2000) Will County (BRESLIN) Reversed and
remanded. CIVIL INSURANCE MEDICAL RECORDS 3rd Dist. 
<http://www.state.il.us/court/2000/3990618.htm>

10/26/00:  According to the article by Thomas M. Burton, "Doctors Raise Warnings About a Form of Clozapine" with sub-heading "FDA-Approved Generic Version of Schizophrenia Drug Has Disturbing Effects in Studies," in The Wall Street Journal (October 24, 2000) pages B1 and B4:  This article looks at how there is increasing evidence that a generic pill for schizophrenia varies in some notable way with the brand-name drug.  This article illustrates some possible varying positions between brand name drug companies and generic drug companies.  For example, generic drug companies may claim that certain research is misinformation and based on phony studies that brand companies use to deceive patients into paying high prices.  Federal regulators say the this is a very unusual case and that people need not be suspicious of other generics in their medicine cabinets. the brand name drug company.

See the Department of Health and Human Services strategic plan for the next five years at its website at:  http://www.aspe.hhs.gov/hhsplan/index.htm.

Some health care issues getting various attorney's attention, as indicated by an Internet memo dated October 13, 2000 sent by James Sheehan, vice-chair of American Health Lawyers Association's Healthcare Fraud and Abuse Compliance and Enforcement program informing readers about an upcoming seminar:  

Prescription drug issues affecting physicians, hospitals, health plans,
employer sponsors, pharmacy benefit managers, and manufacturers. The commitment of both presidential candidates to Medicare prescription drug plans will result in greatly increased scrutiny of the relationships in these areas by law enforcement. Get ready to advise your clients on how to prepare for this scrutiny.

-- Privacy issues arising out of the new HIPAA privacy regulation, promised for late October. It is likely that this will be the first conference in which the speakers have had a chance to digest the new mega-regulation, and its impact on healthcare fraud enforcement, defense, and compliance.

-- Issues relating to corporate integrity agreements - -over a thousand health care providers are now party to these agreements, and some are now the subject of second investigations and prosecutions. How should counsel and managers assure compliance with agreements? How independent must the independent reviewer of corporate integrity be? Can you insist on seeing and changing the "independent reviewer's" independent review before it goes to the government? 

Mike Hash, Acting Administrator of the Health Care Financing Administration ("HCFA"), announced on December 1, 2000 his resignation effective December 15. He did not announce his future plans. Hash had been promoted from Deputy Administrator to Acting Administrator when former Administrator Nancy-Ann Min DeParle left HCFA October 1.  Dr. Robert Berenson, Director of HCFA's Center for Health Plans and Providers, will assume the position of Acting Deputy Administrator and will run HCFA pending the search for a new Administrator.

The Wall Street Journal, September 12, 2000, "Health-Care Agency Chief to be Fellow at Harvard":  Nancy-Ann DeParle took over the Health Care Financing Administration, the federal agency that oversees Medicare and Medicaid in 1997 and has announced that she ahs accepted an offer to become a fellow at Harvard University's John F. Kennedy School of Government for the fall semester, lasting one year, beginning Oct. 1.

According to Crain's Chicago Business, September 11, 2000, "Physicians' Records Accessible on Web,"  activists, such as from the Chicago-based Coalition for Consumer Rights, say the Illinois Department of Professional Regulation's (DPR) decision last month to post physicians' disciplinary records on the Internet of reprimands and license revocation in Illinois within the last 10 years is not enough and want malpractice data as well as used in Massachusetts and New York.  DPR and doctor groups claim that the malpractice information will be misconstrued because there is not "necessarily a correlation between being sued and being a bad doctor," says Dr. LeRoy Sprang, president of the Illinois State Medical Society, that a physician who takes on sicker and higher-risk patients may be sued more often than a doctor who doesn't.

See:  Bush's fact sheet on the prescription drug plan, at: http://www.georgewbush.com 

See:  Gore-Lieberman "Prosperity for America's Families," economic plan, at:
http://www.algore.com/

George W. Bush, Republican presidential candidate, released on September 5 a $158 billion plan to pay at least 25% of Medicare beneficiaries' prescription drug costs and to improve Medicare benefits. Key elements of the plan include spending $110 billion over ten years to modernize Medicare and giving $48 billion to states over the next four years to fund the prescription drug program.  Bush's plan also  restores $40 billion in Medicare cuts made by the Balanced Budget Act of 1997.  Al Gore, Democratic presidential candidate, has proposed spending an estimated $253 billion over ten years to add a prescription drug benefit to Medicare, an economic plan of "Prosperity for America's Families," which, among other actions, puts Social Security and Medicare surpluses in a lockbox for use for Social Security and Medicare only and it predicts that such action would protect the solvency of Social Security for fifty-five years and Medicare for thirty
years.

Advocate Health Care System sued the Service Employees International Union (SEIU) for "defamatory" statements about Advocate’s pricing and bill-collection practices.  Advocate runs a network of 10 hospitals in the Chicago area claims the union released inaccurate reports about the hospital chain's prices to pressure Advocate into letting SEIU to organize its employees.  (Crains 2-20-04)

"Medical Residents Get More Benefits," Chicago Tribune (September 8, 2000):  Northwestern Memorial Hospital is offering residents retirement plans, expanded health insurance coverage and other benefits typically reserved for conventional employees in an attempt to defuse the residents push for unionization.

According to The Korea Times on August 19, 2000:

An ongoing strike by doctors protesting against medical reforms in South Korea.  The leader of the collective action, Shin Sang-Jin, a representative of a committee of the Korean Medical Association (KMA), was arrested for "masterminding the illegal strike".  There are about 45,000 doctors par of the KMA.

Most general hospitals were refusing to accept new patients due to the strike, while maintaining only the operation of emergency rooms, intensive care units and infant delivery rooms.  Many patients complained that they were left without proper medical care and that medical professionals were taking people as hostages to put forward their own demands.

Allegedly, a growing number of doctors running clinics returned to work after the arrest of their leader, Shin Sang-jin.  Around 12,000 interns and residents at general hospitals continued to go on strike Friday.    

According to Crain's Chicago Business, August 7, 2000:

See:  Issues 2000 at www.issues2000.org for presidential and all other candidate's views on issues including health care.  You can find the candidate that most matches your own views by choosing "votematch", answering questions to determine your political views and then a computer will match you with a candidate who most agrees with your opinions.

According to Crain's Chicago Business, September 4, 2000:

The Chicago based American Medical Assn. leads all health care interest groups in donations to congressional campaigns across the country with more than $1 million in contributions so far in the 2000 election.

See Massachusetts newly enacted Genetic Privacy law at:

http://www.state.ma.us/legis/laws/seslaw00/sl000254.htm.

On August 22, 2000, Massachusetts enacted a law protecting the
privacy of genetic test results and prohibiting employers and insurers from requiring such tests (Ch. 254 of the Acts of 2000). Among its provisions are: prohibiting disclosure of results of genetic tests without the consent of the person to whom the information pertains; prohibiting the requirement of such results of genetic tests as a condition of employment or insurance; and prohibiting discrimination by insurance institutions based on the use of such results of genetic tests. The law  states that "it is the goal of the commonwealth to achieve these purposes without limiting the potential for medical research and permitting certain uses for life insurance underwriting"; a commission is to be created to investigate the feasibility of the use of genetic tests in insurance underwriting.

Bioethics Council

11/30/01:  According to a HHS press release:  Dean Clancy, a senior policy advisor in Congress, will serve as the first executive director of President Bush's new national Bioethics Council, HHS Secretary Tommy G. Thompson announced today.  Clancy will oversee the administrative functions of the new council, which will advise the President on the ethical and moral implications of biomedical research and new technologies, including embryonic stem-cell research and human cloning.  President Bush created the council through a Nov. 28 executive order. The council will have up to 18 members drawn from the fields of science and medicine, law and government, philosophy and theology, and other areas of the humanities and social sciences. As part of its mission, the council may investigate and advise the President about issues related to specific biomedical technologies and research, as well as general bioethical issues such as appropriate protections for human research subjects.

Other Countries

According to "Quality of Care for Coronary Heart Disease in Two Countries," by Dr. Ayanian and Thomas Quinn in Health Affairs (May, 2001), the United States and England have different quality improvement (QI) strategies for improving care for coronary heart disease, the leading cause of death in both countries.  The US is strong in evaluating the effectiveness of various QI strategies for improving cardiac care and lacks in comprehensive national standards and monitoring systems to determine whether cardiac care is actually improving.  In contrast, England has implemented more rapidly national and regional standards for cardiac care and evaluative mechanisms are still under development.  Compliance with coronary care clinical guidelines is mandatory in England and voluntary in the US.  Due to the centralized nature of health care funding and planning in the British National health Service, national standards for cardiac care is a much more prominent QI strategy in England.  

Internet Resources

Office of Inspector General--U.S. Department of Health and Human Services (www.hhs.gov/oig)

This website includes a variety of information relating to Federal health care programs, including the following:

Advisory Opinions Anti-Kickback Information Compliance Program Guidance Corporate Integrity Agreements Fraud Alerts Links to web pages for the: Office of Audit Services (OAS) Office of Evaluation and Inspections (OEI) Office of Investigations (OI) OIG List of Excluded Individuals/Entities OIG News OIG Regulations OIG Semi-Annual Report OIG Workplan

Health Care Financing Administration (www.hcfa.gov)

This website includes information on a wide array of topics, including the following:

Medicare National Correct Coding Initiative Intermediary-Carrier Directory Payment Program Manuals Program Transmittals & Memorandum Provider Billing/HCFA Forms Statistics and Data Medicaid HCFA Regional Offices Letters to State Medicaid Directors Medicaid Hotline Numbers Policy & Program Information State Medicaid Contacts State Medicaid Manual State Survey Agencies Statistics and Data

HCFA Medicare Training (www.medicaretraining.com)

This site provides computer-based training on the following topics: HCFA 1500 Form Fraud & Abuse ICD-9-CM Diagnosis Coding Adult Immunization Medicare Secondary Payer (MSP) Women's Health Front Office Management Introduction to the World of Medicare Home Health Agency HCFA 1450 (UB92)

Government Printing Office (www.access.gpo.gov)

This site provides access to Federal laws and regulations pertaining to Federal health care programs.

The U.S. House of Representatives Internet Library (uscode.house.gov/ usc.htm) 

This site provides access to the United States Code, which contains laws pertaining to Federal health care programs.