CHOW Denied Based on Owner's Past Employment Relationship with Medicare Excluded HHA

On October 6, 2010, a Florida appellate court upheld a Florida Agency for Health Care Administration's (AHCA) denial of a change of ownership application (CHOW) based merely on an owner's previous employment as administrator and vice president at a home health agency (HHA) excluded by Medicare. Trust Care Health Servs. v. Agency for Health Care Admin., No. 3D09-2568 (Fla. Dist. Ct. App. Oct. 6, 2010). At issue was Robert Marrero's role at All Med Network Corp., a Florida HHA terminated by Medicare in 2006. Following the Medicare termination, All Med voluntarily surrendered its AHCA issued HHA license. However, neither Medicare nor AHCA took action against Marrero personally.

Marrero subsequently purchased Trust Care Health Services, which in turn filed a CHOW. The application asked whether Trust Care or Marrero had been excluded, suspended, terminated or involuntarily withdrawn from participation in Medicare, Medicaid or any other governmental or private health care insurance program. In addition, the application asked whether Trust Care or Mr. Marrero had been found by any licensing, certifying or professional standards board to have violated the standards or conditions that relate to licensure, certification or quality of care. Trust Care and Marrero answered, "No," to both questions.

Despite answering the questions truthfully, AHCA still denied the CHOW, finding that Trust Care and Marrero made false representations and omissions of material facts given Marrero's position at All Med. Rather than providing any meaningful analysis as to whether Marrero had any true controlling interest while at All Med, the Court instead reasoned that AHCA appropriately broadened the scope of its review in the interest of protecting the public welfare.

This decision highlights some of the pitfalls in the licensing and credentialing process. Medicaid providers need to carefully review licensing and credentialing applications to ensure compliance with the law.

To learn more, please contact Ben Anderson at banderson@jeylaw.com or (404) 995-6792.

CMS Releases Stark Act Voluntary Self-Referral Disclosure Protocol

September 23, 2010, CMS released its Voluntary Self-Referral Disclosure Protocol (“SRDP”), as required by Section 6409 of the Patient Protection and Affordable Care Act (“PPACA”). The PPACA requires that the Secretary of the Department of Health and Human Services establish protocol for healthcare providers and suppliers to disclose actual or potential violations of Section 1877 of the Social Security Act (commonly known as the Stark Act). Under the Stark Act, healthcare providers and suppliers may not refer patients to any entity for certain services if the physician has a financial relationship with the entity, unless an exception for such referral applies.

The SRDP is available to all health care providers of services or suppliers, regardless of whether they are individuals or entities, and is not limited to any particular industry, medical specialty or type of service. The SRDP provides guidelines and a process for health care providers and suppliers to self-report actual or potential violations of the Stark Act in exchange for potentially (although not guaranteed) more lenient and less formal settlement proceedings. 

The SRDP is a tedious process involving careful legal and financial analysis of a provider or supplier’s business. Providers and suppliers should be cautious in self-disclosure to avoid waiving future appeal rights or reporting conduct which may raise potential liability for violations of other federal criminal, civil or administrative laws. Providers and suppliers are urged to seek legal counsel if an inappropriate referral or Stark Act violation has occurred to determine the most appropriate course of action.

For more information on the SRDP process or how to address potential Stark Act violations, please contact Jill Shotzberger at jsberger@jeylaw.com or (404) 995-6792.

CMS Issues Guidance on Hospice Care for Children

CMS issued a letter to State Medicaid directors on September 9, 2010 regarding the implementation of the Affordable Care Act (ACA), as it relates to children’s hospice care. The ACA removes the prohibition of receiving curative treatment upon the election of hospice benefits by or on behalf of a Medicaid or Children’s Health Insurance Program (CHIP) eligible child. Prior to this change, curative treatment of life-limiting illnesses ceased upon election of the hospice benefit. The change was effective on March 23, 2010. CMS is now directing the States to revise State Medicaid and CHIP Plans to reflect the change. As a result, hospice providers may see an increase in demand for their services as families no longer have to choose between curative and palliative care for their child.

To learn more, please contact Ben Anderson at banderson@jeylaw.com or (404) 995-6792.

HHS Introduces Proposed Modifications to the HIPAA Rules

On July 14, 2010, the United States Department of Health and Human Services ("HHS") published notice in the Federal Register of proposed rulemaking aimed at strengthening the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") privacy, security and enforcement regulations and as required by the Health Information Technology for Economic and Clinical Health Act ("HITECH Act"), which was enacted as a part of the American Recovery and Reinvestment Act of 2009. Upon introducing the proposed rule, Secretary Sebelius emphasized that as health information technology systems assist the United States in moving the health care system forward, "the privacy and security of personal health data is at the core of all our work."

Although the proposed rules were only expected to implement changes required by the HITECH Act, HHS took the opportunity to make changes in several areas that were not require by law. HHS states that the changes were based on its experience and the feedback received on the privacy, security and enforcement regulations since the original drafting, as well as changes in other laws- including the Patient Safety and Quality Improvement Act of 2005.

The proposed rule includes, among other things, numerous additions to the requirements for business associates and their downstream "subcontractors," several helpful examples of "willful neglect" and the penalties associated with HIPAA violations, important changes to individual rights requirements, and changes to notices of privacy practices content provisions. While the proposed rule has yet to become final, Medicaid providers should remain vigilant in monitoring the issue and reviewing their own HIPAA compliance plans as developments unfold.

The proposed rule is available in the Federal Register, Vol. 75, No. 134. The issues mentioned above are only some areas that are addressed in the proposed rule. For more comprehensive analysis, please contact Jill Shotzberger at jsberger@jeylaw.com or 404.995.6792.

Medicaid Claims Under Investigation for Provider Fraud Remain Part of Federal PERM Audits

CMS issued a final rule implementing changes to Payment Error Rate Measurement (PERM) in Medicaid and the Children's Health Insurance Program (CHIP). The final rule appears in the August 11, 2010 Federal Register (75 Fed. Reg. 48816).

According to a CMS press release, PERM measures improper payments in Medicaid and CHIP, and produces national-level error rates for each program. These reviews are conducted to determine whether the sampled cases meet appicable Medicaid and CHIP fee-for-service, managed care, and eligibility requirements.

PERM reviews sample claims from a defined set of Medicaid and CHIP claims. The final rule leaves Medicaid and CHIP claims under investigation for provider fraud in the set of claims to be sampled. Because claims under fraud investigation are subject to PERM review, providers can expect states to remain aggressive in handling the investigation and any subsequent legal action.

To learn more, please contact Ben Anderson at banderson@jeylaw.com or 404.995.6792.