Pending Increases for False Claims Act Civil Penalties

The False Claims Act (“FCA”) creates a civil penalty for any person that knowingly submits for payment a false or fraudulent claim to the federal government. This usually includes any government contractor, but will often arise in the healthcare industry. In 2015, for example, the federal government collected over $3.5 billion resulting from these civil penalties, with approximately $1.9 billion from the healthcare industry.

In December of 2015, the Bipartisan Budget Act was enacted and it included a section titled the Federal Civil Penalties Inflation Adjustment Act Improvements Act (“Act”). This Act amends a prior 1990 act, requiring inflation adjustments to the civil penalties in the False Claims Act. Due to the length of time between the last adjustment, the Act requires a catch-up adjustment and annual adjustments thereafter. The Act is slated to be implemented at all federal agencies by July 1st, with the new rates to take effect by August 1st of 2016.

The first federal agency to issue an interim final rule to implement the catch up adjustment was the Railroad Retirement Board, doing so on May 2, 2016. The interim rule changed the minimum FCA civil penalty from $5,500 per violation to $10,781 per violation, nearly doubling the per violation penalty. As the other agencies look to implement this rule, such as the Centers for Medicare and Medicaid, similar increase are expected. For those working on a government contract, especially those submitting claims to the government in the healthcare industry, taking due care in compliance efforts will be magnified because of the pending increases in FCA civil penalties.

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Delay Announced in CMS Star Rating System for Hospitals

Originally, the Centers for Medicare and Medicaid Services (CMS) intended to release a star rating system on hospitals, beginning April 21, 2016. However, CMS recently announced plans to delay the rating system until July, or potentially later. The exact timing will depend upon the development of the methodology for rating a hospital.

When the star rating system was designed, the purpose was to create a simple tool for consumers to evaluate hospitals. This system largely incorporated the previous, more complicated, performance measures that follows more than 100 quality measures. While the new star system will not replace the more complicated system, it will be in addition to the prior measures and make the review process simpler for consumers. The new star system incorporates factors such as readmission rates, mortality rates, timeliness of care, safety of care, and other patient driven statistics.

The delay is largely attributed to hospital and lawmaker complaints that the new rating system will impact consumer perceptions, when it may not have a direct bearing on the specific services sought. Moreover, a concern regarding the quality of the data, including the methodology for ensuring accuracy, remained a significant worry for the hospitals. It is unclear when the star rating system will be implemented, but hospitals and consumers should expect further information, if not the unveiling of the star rating system, this summer.

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Moratorium on Health Insurance Tax

As part of the omnibus budget bill passed by Congress and signed by the President in December of 2015, Congress implemented several delays for pending taxes under the Patient Protection and Affordable Care Act (PPACA). These delays impact the medical device tax, the “Cadillac” tax on high-cost employer health plans, and tax on health insurers.

The tax on health insurers has been delayed for one year and this moratorium is aimed at reducing the potential premium increases to consumers. This delay is for the tax due in 2017, but will have no impact on either the amount or the timing of the tax due in 2018, for calendar year 2017. The “Cadillac” tax and the medical device tax were both delayed for two years.

The health insurance industry reported that the insurer tax could have forced the health insurers to raise premiums by 3% to 4% every year. However, this delay should temporarily help keep premiums relatively stable for those receiving plans from the health exchanges, employer-based insurance, and Medicare advantage plans.  The Centers for Medicaid and Medicare Services issued a Frequently Asked Questions Memorandum on the delay, which can be found at the following link:

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Final rule on Medicaid Prescription Drug Programs

In January of 2016, the Centers for Medicare and Medicaid Services (CMS) issued a final rule on covered outpatient drugs. The rule changes the Medicaid Drug Rebate Program by the Patient Protection and Affordable Care Act (PPACA) and the overall Medicaid drug reimbursement program.  These changes have several goals, including reducing the cost to the federal and state governments and improving beneficiary access to covered outpatient drugs.

CMS claims the changes implemented will help the government save money in the Medicaid Drug Rebate Program, which had been subject to sustainability issues. One key change in the final rule is a definition of the Average Manufacture Price, which in turn gets used to determine rebates and pharmacy reimbursements subject to the federal upper limit. Similarly, the changes to the federal upper limit formula will incentivize pharmacies to use certain generic drugs. The final rules clarify many of the ambiguous sections of the Medicaid Drug Rebate Program by the PPACA, including the manufacturer reporting requirements. The rule also aligns the pharmacy reimbursement system with the actual acquisition cost of the drug.

Overall, the new incentives and changes should improve the reimbursement system and help manage drug costs. This rule becomes effective April 1, 2016, although CMS is allowing comment for 60 days after publication on certain elements of the rule. The new rule can be found at the following link:

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Changes Coming to Meaningful Use

The government program providing incentives to health providers for meaningful use of electronic health records continues to be troubled as the final rule for stage 3  has been delayed until 2018. Coupled with recent comments by the Centers for Medicare and Medicaid Services (CMS), it appears that the entire program will undergo substantive changes in the year ahead. However, CMS notes, it is important to continue under the old program until the changes start being unveiled in the spring of 2016.

When meaningful use started in 2009, the intent was to induce medical providers to use the new technology purchased with the help of the federal government. By providing incentive payments to the physicians that showed they were using the new technology in a meaningful way, the government believed it would improve quality, safety, and efficiency of care through electronic health records. However, CMS has found that the program did not operate as envisioned, resulting in the forthcoming changes to the program, expected to start in the spring of 2016.

While the new program has guiding themes that were issued by CMS, it is unclear what the new program will ultimately look like. However, many of the themes are to focus on the outcome of patient care, with less focus on the use of the new technology, in hopes that complaints by all stakeholders about the meaningful use program will be alleviated. For health providers, the pending changes will take time implement and until such time, the meaningful use program is still the operative requirements. To read more about the changes, please visit the official blog of CMS at:

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CMS announces equitable plan to improve care for under-served Medicare populations.

In an effort to reduce health-care disparities among specific Medicare populations, the Centers for Medicare & Medicaid Services (CMS) has developed the Medicare Equity Plan. Announced on September 8, 2015, the plan is designed to improve upon healthcare disparities, especially for minority populations, in four years. The equity plan, to be implemented in conjunction with other CMS priorities, focuses on improving health-care quality to under-served Medicare groups, especially those with traditionally higher percentages of disease, low quality of care, and high barriers to care.


The six priorities of the Medicare Equity Plan, as outlined by CMS, are as follows:

  •  Priority 1: Expand the Collection, Reporting, and Analysis of Standardized Data
  • Priority 2: Evaluate Disparities Impacts and Integrate Equity Solutions Across CMS Programs
  • Priority 3: Develop and Disseminate Promising Approaches to Reduce Health Disparities
  • Priority 4: Increase the Ability of the Health Care Workforce to Meet the Needs of Vulnerable  Populations
  • Priority 5: Improve Communication and Language Access for Individuals with Limited English Proficiency and Persons with Disabilities
  • Priority 6: Increase Physical Accessibility of Health Care Facilities”


For those that participate in Medicare as recipients or providers, more information may be obtained from CMS at the following location:

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New Regulations for Supplier & Service Provider Enrollment in Centers for Medicare & Medicaid Services

On December 3, the Centers for Medicare & Medicaid Services (CMS) issued a final rule with new provisions for supplier and service provider enrollment in CMS programs. In sum, three provisions are applicable to healthcare providers who participate in CMS billing.

First, CMS expanded the right to deny or revoke CMS enrollment if the provider or supplier has a previous felony conviction in the preceding 10 years. The crimes that qualify include crimes against persons, financial crimes, and malpractice felonies. Each potential violation will be reviewed under the lens of what is detrimental to CMS programs and beneficiaries.

Second, CMS may deny enrollment to a new CMS service provider, supplier, or owner if they had previously had an ownership relationship with an entity that had Medicare debt. This coincides with another rule enabling CMS to revoke billing privileges of a CMS entity if they have a demonstrated practice of submitting claims that do not fully meet Medicare billing requirements.

Third, for ambulatory service providers, the “back bill” provisions have been eliminated. This means that the services rendered while the application to CMS is pending will no longer be billable to CMS. CMS will save approximately $327 million dollars annually with this change.

The CMS rule will be published on December 5 in the Federal Register, becoming effective 60 days later on February 3, 2015. The final rule is available as a PDF at the following link:

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Medicare and Medicaid Requesting Comment on Proposed Changes to Home Health Regulations

A proposed rule issued July 1 by the Center for Medicare and Medicaid Services (CMS) (CMS-1611-P) looks to change payment rates for home health agencies and simplify the  face-to-face encounter regulatory requirements. The decrease in payments to the home health agencies will begin in 2015 and reduce the overall budget .30 percent, equivalent to $58 million dollars.

The Affordable Care Act mandates that individuals shifting from hospital care to home health meet with a physician to certify that the home health services are medically necessary. Current regulation requires that the meeting occur within 90 days prior or 30 days after services begin. Regulations also require documentation with a narrative explaining why the patient requires home services. The proposed rule eliminates the narrative requirement, reduces the CMS review to only the certifying physician’s medical records for initial eligibility, while the physician’s visit to patient’s home for certification would not be covered if the overall claim was not approved.

CMS is requesting comment by September 2, 2014.

Other proposed changes include:  changes to the home health quality reporting program requirements, rebasing of the 60-day payment rate, and simplifying the certification regulatory requirements.

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Tips on Maintaining Medicare Billing Privileges

The process of enrolling in Medicare has become increasingly complex.  Whether you are renewing your application or submitting an initial application, the consequences of not adhering to the guidelines can be severe.  The following are tips to help maintain your Medicare billing privileges.

First, be sure to notify CMS within 30 days of changing any of your practice locations.  This requirement can often be overlooked when changing a satellite location.  If CMS shows up for an unannounced audit and discovers that your location has changed, you could lose your billing privileges.  Also, if your practice relocates or opens up a location in a new state, check to see if it is in the same Medicare jurisdiction.  If your new location is not in the same jurisdiction, you may have to re-start the enrollment process.

Second, notify CMS whenever a physician leaves your practice.  This can be done by filing Form CMS-855R.

Finally, make sure your Medicare enrollment form is correct on the initial submission.  If there are any complications with the application, it can prolong the effective date.  Medicare only allows you to “back bill” 30 days, so any delay in the effective date can limit your ability to charge for previously performed services.

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CMS Issues HIPAA Standard for Electronic Funds Transfers

CMS has issued a new rule that adopts standards for electronic funds transfers (“EFT”) under HIPAA.  The standards could reduce costs for providers by streamlining electronic payments from a health plan to a provider.  The rule requires the use of a trace number that automatically matches a remittance advice (“RA”), or notice of payment, and an EFT payment.  Currently, health plans often send RA’s separately from the EFT payment making it difficult to match up the bill and corresponding payment.  By requiring the trace number to match up the RA and EFT payment, the rule will save providers time by not having to manually reconcile the notice of payments from the EFT payment.  The regulation is effective January 1, 2012.  Covered entities must use the health care EFT standards by January 1, 2014.

The rule can be accessed at:  Adoption of Standards for Health Care Electronic Funds.

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