Senate Bill 454: Time to Rethink Your Participation Status?

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  • June 1, 2011
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The cost of the proposed bill may hit Medicare and Medicaid participants too hard.

By Michael D. Miscoe, Esq. CPC, CASCC, CUC, CCPC, CPCO, CHCC
For most physicians and health care providers, the decision whether to participate with Medicare and Medicaid has not traditionally required much thought—until now, maybe.
On March 2, Senator Charles Grassley—well known for leading the charge against fraud, waste, and abuse in the Medicare program—proposed S454, the Strengthening Program Integrity and Accountability in Health Care Act of 2011 (SPIAHCA). Eliminating fraud, waste, and abuse in Medicare is a fiscal necessity. S454 is intended to give the secretary of the U.S. Department of Health and Human Services (HHS) more tools to end the days of “pay and chase,” and to take a proactive approach toward reducing improper payments under Medicare. This is a desirable goal, but study of the proposal raises the question, “At what cost?”
S454 contains nine sections, each of which gives the secretary of HHS substantial additional authority in the detection and prevention of fraud, waste, and abuse. These include:

  1. provisions to enhance existing Medicare and Medicaid program integrity provisions
  2. reporting requirements for the HHS Office of Inspector
    General (OIG)
  3. medical identification (ID) theft information sharing
  4. expanded permissive exclusion provisions
  5. provisions to make Medicare claims data relative to providers public
  6. restrictions on Medicaid participation for entities with certain ownership
  7. control and management affiliations
  8. restrictions on payments for illegal unapproved drugs
  9. a requirement for participating individuals or entities with
    federal health care programs to comply with certain congressional information requests

Among these, the enhanced program integrity and permissive exclusion provisions are potentially the most onerous.

Enhancements to Program Integrity

This section of the act contains two key provisions. The first requires mandatory suspension of Medicare and Medicaid payments pending investigation of “credible allegations of fraud.” The current statutory provision gives the secretary discretion to suspend payments in such a circumstance, presumably based on case-specific facts and analysis. The Grassley proposal now makes such a suspension of payment mandatory. Even in a circumstance where a former employee (for example) makes what the government believes to be a “credible allegation of fraud,” payments to that provider or entity must be suspended pending an investigation that could take years.
It is unclear whether this provision would be triggered by the filing of a qui tam (whistleblower) case, or whether suspension of payment would occur only if the government decided to intervene. Either way, because these cases are filed under seal, payment could be suspended long before the provider even knows of the allegations or is afforded the opportunity to demonstrate that the allegations lack merit. In the meantime, without the ability to be paid (at least by Medicare/Medicaid), it is more likely that the practice would be forced into bankruptcy before unfounded allegations could be dismissed. As a result, qui tam relators would have substantial leverage in forcing providers to settle should this proposal be enacted into law.
The second change under this provision allows for an extension of the time frame in which Medicare claims must be paid. Under this provision, the time frame in which claims must be paid can be extended to 365 days by the HHS secretary in cases where there is merely a “likelihood of fraud, waste, or abuse involving a particular category of providers of services or suppliers, categories of providers of services or suppliers in a certain geographic area, or individual providers of services or suppliers.” Although targeting individual providers or suppliers whose billing patterns suggest improper billing might warrant extending the time-period for payment, mere membership in a provider category or being in a particular geographic location does not appear to be a prudent means of enforcement—unless the goal is to drive honest providers out of the system.
If this bill passes, providers who are members of a specialty with a high error rate must consider the possibility of seeing payment delays of up to a year, assuming payment will be forthcoming at all. Because denials of otherwise compensable claims are common for providers on pre-payment review for trivial or perceived documentation errors, the potential of such payment suspensions or delays under this provision of the Grassley proposal does not bode well for continued Medicare participation.

Expansion of Permissive Exclusion Authority

Section five of the Grassley proposal expands the authority of HHS OIG to exclude individuals found to have violated federal health care program requirements in a significant way, and “any individual” who had an ownership interest, or who is an officer or managing employee in a sanctioned entity at the time the conduct responsible for conviction or exclusion occurred. In addition to being an owner, officer, or managing employee, the government must also show that the individual knew or “should have known” of the conduct.
Beyond individuals, permissive exclusion can occur to “affiliated entities,” who are persons or entities with an ownership or control interest in the sanctioned entity, or who are officers or managing employees in the sanctioned entity at the time of the relevant conduct.
To help put this in context, assume you are the billing manager or vice president of compliance. An issue arises—possibly one that you raise (meaning you knew of the conduct)—and the entity you work for, for whatever reason, is excluded from Medicare as an ultimate result. Based on such a result, because of your position and knowledge of the issue, you also face permissive exclusion as a sanction. A similar result holds for a physician partner in a clinic that gets excluded. Even though the “bad actor” was another physician, if the government can show that any of the other owners knew or “should have known” of the conduct, the physicians not involved in the conduct leading to exclusion can be excluded, as well.
The Grassley proposal significantly strengthens the tools the government has to combat fraud, waste, and abuse. Looking ahead, if fully implemented as written, consider the practical effect on the majority of providers and suppliers who are trying to do things properly. Could they be caught in the dragnet and forced out of participation? If so, who will be left? While eliminating all or most of the providers and suppliers from the system is a surefire way to reduce health care costs, this approach seems analogous to killing the patient to treat the disease.

Miscoe has a bachelor’s of science degree from the U.S. Military Academy, a juris doctorate degree from Concord Law School, is the President of Practice Masters, Inc., and the founding partner of Miscoe Health Law, LLC. He is a past member of the AAPC National Advisory Board (NAB) and is a member of the AAPC Legal Advisory Board. He is admitted to the Bar in California and to the practice of law before the U.S. District Courts in the Southern District of California and the Western District of Pennsylvania. Miscoe has nearly 20 years experience in health care coding and over 13 years as a compliance expert testifying in civil and criminal cases. He has an extensive national speaking background and has been published in numerous national publications on a variety of coding, compliance and health law topics.


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