Life Science Compliance Update

February 12, 2016

CMS Issues Final 60 Day Payment Rule

The Sixty Day Rule

The Centers for Medicare and Medicaid Services (CMS) has finally issued its final rule related to the reporting and refunding of Medicare Part A and Part B overpayments, also known as the "60 Day Rule." The Final Rule requires healthcare providers to repay an overpayment and to notify the federal government, the state, and any "intermediary, carrier or contractor to whom the overpayment was returned in writing of the reason for the overpayment," within sixty days of first identifying the overpayment. Providers who fail to heed the sixty day reporting and return window can face potential civil monetary penalties and incur False Claims Act liability.

The 60 Day Rule will go into effect 30 days after its publication in the Federal Register, which is likely to be February 12, 2016. As a reminder, Medicare providers and suppliers have had an obligation to report and refund identified Medicare overpayments since the Affordable Care Act's enactment in 2010.


This new rule simply clarifies that an overpayment is considered "identified" when a provider or supplier "has, or should have, through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment." CMS believes that this clarification of the standard should allow for consistency in the application of the 60 Day Rule.

Standard for Knowledge

The standard that CMS is using for knowledge is not "actual knowledge," but instead is when the provider would have identified the overpayment, had it exercised a reasonable level of diligence. This standard is known as the "reasonable diligence" standard, and comes into play, as noted above, once a person has "identified an overpayment when the person has or should have, through the exercise of reasonable diligence, determined both that the person has received an overpayment and quantified the amount of the overpayment."

Some physicians are concerned that when they get a hotline complaint about billing Medicare incorrectly, that hotline complaint is what triggers the countdown, and from that time forward, they only have sixty days to find it and return the money. Tony Maida, JD, Partner in the Health Industry Advisory Group at McDermott Will & Emery, advised CMS on drafting the proposed 60 Day Rule while he was at the Department of Health and Human Services Office of Inspector General, says that is not true. "The clock doesn't start to tick as soon as the call comes in, as long as the physician exercises reasonable diligence in looking into it." Maida continues, stating, "there's an obligation to decide if that call gives you what CMS calls 'credible information' of a potential overpayment and if it does...then the provider should exercise reasonable diligence to look into it and determine whether in fact they have received an overpayment and how much that overpayment is." It isn't until that process is completed that the sixty days to report and return starts to run. However, if you receive a hotline call and fail to investigate it, then CMS may find that you "failed to exercise reasonable diligence and you may be violating" the 60 Day Rule.

How Must Refund Be Made

The Final Rule specifies, "providers and suppliers must use an applicable claims adjustment, credit balance, self-reported refund, or another appropriate process to satisfy the obligation to report and return overpayments." The reason for the government specifying the payment and delivery of the overpayment could possibly be to prevent providers from mailing in the repayment in the hopes that the agency does not notice a potentially more serious bill overpayment.

Look-Back Provision

The 60 Day Rule also provides for a look-back period of six years, instead of the ten years CMS had originally put in its 2012 proposed rulemaking. This means that CMS can review six years of claims for any additional overpayments on top of the original overpayment identified by the provider or supplier.

Tony Maida believes that "reducing the lookback period is a positive move." While a six year period is almost unanimously preferred, some groups are displeased that CMS didn't shorten the lookback period even further. Wanda Filer, MD, MBA, President of the American Academy of Family Physicians (AAFP), for example, expressed her dissatisfaction by saying, "Six years is better than 10 years, but not as good as 3 years which is what we would prefer. We will continue to encourage CMS – maybe once they've got the learning curve established on 6 years, maybe 3 years may become more palatable."

If you are interested, Mintz Levin has provided a "Comparison of the Proposed Rule to the Final Rule Medicare Program; Reporting and Returning of Overpayments," to aid in your review of the changes between the Final Rule and the Proposed Rule.

February 08, 2016

Electronic Health Records and the Meaningful Use Program: Is the End Near?

Let Doctors Be Doctors

Physicians are fed up with ERH, and are organizing with campaigns and creative music videos such as Let Doctors Be Doctors. They have even created an infographic outlining the problems with electronic health records .  The government finally seems to be listening.

While speaking both to members of industry and Congress, Andy Slavitt, Acting Administrator at the Centers for Medicare & Medicaid Services, hinted toward changes coming for the electronic health record Meaningful Use program. Citing the new MACRA law’s upcoming regulations, Slavitt noted the program will be different for physicians, prompting some to believe it will change from an “all or nothing” approach to one that may be more flexible and incentivizes using electronic records rather than offering penalties. CMS will have an important MACRA regulation in March, some speculate on March 25, which will outline changes to the Meaningful Use program, as it becomes a part of the new MACRA Merit-based Incentive Payment System.

The problem with EHRs

All of this is good news, especially to the American Medical Association. According to the AMA and other medical groups, one of their members’ biggest headaches is the rise of electronic health record systems, which they say are drowning physicians in red tape. Physicians say too much of their time is being taken up by clerical tasks. This is patently obvious if one views the website “Let Doctors Be Doctors,” where the voice of physicians uniformly speak against government mandates on electronic health records. This site was created as a forum to “amplify the voices of health care professionals and patients.”

“We need to talk about the elephant in the exam room. Electronic health records (EHRs) are failing to improve the connection between patients and providers—and distracting providers from their real work. With more than two-thirds of doctors saying they wouldn't recommend their EHR and the American Medical Association calling for a ‘major overhaul of EMR systems,’ it's time to demand change,” it further states. This and other campaigns have helped to inspire a significant amount of media attention and creative representations of the struggle faced by physicians, such as this viral YouTube hit “EHR State of Mind”.

The AMA’s campaign, “Break the Red Tape” calls for the government to postpone finalizing the Meaningful Use Stage 3 regulations on electronic health records in order to align the policy with other programs under the new Merit-based Incentive Payment System.

This comes as a new report indicates burnout among U.S. doctors is getting worse, showing physicians are worse off today than just three years earlier. Mayo Clinic researchers, working with the American Medical Association, compared data from 2014 to measures they collected in 2011 and found higher measures on the classic signs of professional burnout. More than half of physicians felt emotionally exhausted and ineffective. More than half also said that work was less meaningful.

Electronic health records play a role in this decline. “Instead of spending my days listening to patients and solving their problems, I feel that I spend most of my time struggling to make unique stories and needs fit into an arcane system of clicks and drop-down menus,” Dr. Laura Knudson, an Indiana family physician, recently told the Chicago Tribune. 

Congress and CMS Act to Expedite Exemptions

There has been some good news, however. Prior to adjourning for the holidays, Congress adopted legislation, S. 2425, the “Patient Access and Medicare Protection Act,” which included a provision granting CMS the authority to expedite applications for exemptions from Meaningful Use Stage 2 requirements for the 2015 calendar year. As described by the AMA in an email to stakeholders, in order to avoid a penalty under the meaningful use program, eligible professionals must attest that they met the requirements for meaningful use Stage 2 for a period of 90 consecutive days during calendar year 2015. However, CMS did not publish the Modifications Rule for Stage 2 of meaningful use until October 16. As a result, eligible professionals were not informed of the revised program requirements until fewer than the 90 required days remained in the calendar year.

A provision of the legislation adopted by Congress would grant CMS the authority to process requests for hardship exemptions to physicians through a more streamlined process, alleviating burdensome administrative issues for both providers and the agency. Members of Congress involved in the passing of the legislation include Rep. Tom Price, MD (R-GA), Sens. Orrin Hatch (R-UT) and Ron Wyden (D-OR), and numerous members of the House and Senate leadership from both parties.

However, this does not go as far as some have requested. In a November 20 letter from the GOP “Doctors Caucus” to Speaker of the House Paul Ryan, the 18-member caucus requested Speaker Ryan’s help in pressing for a delay of Stage 3 along with a blanket hardship waiver exception for Stage 2.

Implementation of more-stringent criteria is likely to create “a chilling effect on further EMR adoption as physicians conclude that the cost of implementation is simply not worth the bureaucratic hassle,” according to the letter. “Members of our caucus, as well as numerous congressional health care leaders, have engaged CMS on these issues to warn them of the potential negative consequences of placing these new requirements on providers in order to meet an arbitrary deadline. CMS has ignored Congress. Congressional action is the only solution left for preserving patient access, choice and quality.”

Additionally, CMS guidance on the legislation indicates the agency intends to focus on streamlining the application process. According to the application process for hardship exemptions from meaningful use penalties in 2015, CMS is allowing providers to check box “2.2.d” of the application for an exemption because the agency published its Stage 2 modification rule so late in the year. The penalties, which hit in 2017, total 3 percent of Medicare payments for providers who fail to attest to meaningful use or to get an exemption. Doctors and other eligible professionals have until March 15 to submit their applications for exemptions; hospitals have until April 1.

Meaningful Use Comments

In October, CMS and the Office of the National Coordinator for Health IT released the final rule for Stage 3 of the meaningful use program, modifications for 2015 through 2017 and the 2015 Edition Health IT Certification Criteria. The proposals for the meaningful use modifications for 2015 through 2017 and Stage 3 were combined into a single final rule, which was published on the Federal Register. Under the final rule, Stage 3 is optional in 2017, and providers who elect to begin Stage 3 that year will be able to attest for a 90-day reporting period. It will be mandatory in 2018 and contains eight reporting objectives for eligible professionals and hospitals, more than 60% of which require interoperability, compared with 33% under Stage 2.

In its comments, the American Medical Association recommended CMS allow for additional flexibilities, including multiple methods to meet the meaningful use program goals, elimination of the pass-fail structure of the program, and removing threshold requirements for performance measures. Other comments of note include the Healthcare Information and Management Systems Society (HIMSS), which expressed support for the rule. HIMSS asked that any changes made by CMS be published by February 29, 2016, so participants have enough time to prepare for the transitional year in 2017.

Health IT Security Concerns in 2016

As legislation moves in Congress and regulatory comments are shaping future health IT policies, stakeholders are outlining some concerns with the security of health records and other health IT programs. According to a report from PricewaterhouseCoopers’ Health Research Institute, the adoption and use of new health care technologies will help drive several new industry trends in 2016. During the year, many consumers will have their first video consults, be prescribed their first health apps, and use smartphones and diagnostic tools for the first time. Cybersecurity will be a major concern for these apps; however, they will help move the health care system away from the fee-for-service model as wireless technology improves. Remote technology will allow physicians to better manage health needs, and new databases will afford health systems the opportunity to analyze large and diverse datasets.

A report from Experian also raises security concerns, noting that data breaches will remain a top concern for the health care industry in 2016. According to the report, 90% of health care organizations have experienced a data breach within the last two years. Attacks will likely be focused on large insurers and health systems; however, “smaller incidents caused by employee negligence will also continue to compromise millions of records each year.”

Other reports echoing health IT security concerns go one step further. DirectTrust, a three-year old, non-profit, competitively neutral, self-regulatory entity created by and for participants in the Direct community, including Health Internet Service Providers (HISPs), Certificate Authorities (CAs), and Registration Authorities (RAs), suggests that Meaningful Use faces an “uncertain future” in 2016 and 2017. They speculate that it could be delayed or entirely phased out. It cites physician groups concerned that Stage 3 does not align well with new health care requirements in the MACRA (Medicare Access and CHIP Reauthorization Act of 2015) law. Providers may be willing to face penalties instead of spending more money on health IT that they may not see adding value to their organization, the report also notes.

These reports come as Congress recently passed the Cybersecurity Act of 2015 as part of the 2016 omnibus spending package. The legislation requires the Department of Health and Human Services to provide the Senate HELP Committee and the House Energy and Commerce Committee with a report within one year. That report is to provide a clear statement concerning who is responsible for leading and coordinating efforts at HHS regarding cybersecurity threats in the healthcare industry and provide a plan from each relevant operating division and subdivision. The legislation also creates a healthcare industry cybersecurity task force.

January 25, 2016

Office of Management and Budget To Revise Fraud Rules by Spring

The White House Office of Management and Budget released their 2016 rule agenda at the close of last year, laying out some of the goals they have for releasing final and proposed rules over the next year. In that agenda, revisions to three healthcare fraud and abuse rules are planned, including one that would increase the Office of Inspector General's ability to impose civil monetary penalties.

Three Rules for Office of Inspector General

Rule Number 0936-AA04, the rule affecting the OIG's Civil Monetary Penalty Rules, implements authority under the Affordable Care Act and authorizes Centers for Medicare and Medicaid Services to assess new penalties. CMS will be permitted to assess fines for failing to grant timely access to the OIG; for ordering and prescribing while excluded; for making false statements, omissions, or misrepresentations in an enrollment application; for failing to return an overpayment; or for making or using a false record or statement that is material to a false or fraudulent claim. The rule also aims to add clarity to the regulatory scheme and provide a blueprint for how to make regulations more accessible to the public. This rule is set to have final action taken by May 2016.

Rule Number 0936-AA05 focuses on Fraud and Abuse, and includes some revisions to the OIG's Exclusion Authorities. As you may recall, the Affordable Care Act expanded the OIG's authority to protect Federal health care programs from fraud and abuse. This Rule will update OIG regulations to codify the changes made by the Affordable Care Act, while also updating and clarifying the regulations pursuant to the Medicare Prescription Drug Improvement and Modernization Act of 2003. This rule will have final action taking place in May 2016.

The last of the three rules set to affect OIG this year by the Office of Management and Budget is Rule Number 0936-AA06. This Rule will amend the safe harbors to the anti-kickback statute and civil monetary penalty rules under the authority of the OIG. This final rule will ad some new safe harbors, some of which codify statutory changes set forth in the Medicare Prescription Drug Improvements and Modernization Act and the Affordable Care Act. The new safe harbors were created to protect certain payment practices and business arrangements from criminal prosecution and civil sanctions under the kickback provisions of the statute. This Rule will also codify the Affordable Care Act's revised definition of "remuneration" and add a gainsharing civil monetary penalty provision. This rule will have Final Action taken by June 2016.

Bonus Rule: Centers for Medicare and Medicaid Services

Another rule set to be released in 2016 is the final version of the sixty-day overpayments rule. The rule will require providers to return overpayments and to notify the agency that the payment was returned within sixty days of first identifying the overpayment. This rule will apply to Medicare Part A and B providers as well as suppliers.

The rule also provides for a ten-year "look back" period on claims that are not identified by a provider. The "look back" period has been harshly criticized from industry participants, arguing that the agency is "overstepping its statutory authority," in part because it conflicts with look back periods for Part C and D overpayments, which are significantly shorter.

This rule was originally slated to go into effect in February 2015, but was pushed back due to "exceptional circumstances" revolving around the rule's complexity and the volume of public comments received. While the rule being pushed back may seem like a positive move, providers and suppliers still must give back overpayments, whether the final rule is in effect or not. Penalties can now include potential False Claims Act liability carrying fines as high as $10,000 per unreturned overpayment and future exclusion from Medicare.

These agenda items and final rules are in addition to the HHS agenda items we have previously written about.


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