Bad Health Day

United Health has had a bad month.  First it is accused by the Department of Justice of a scheme that allowed it and other insurers to improperly overcharge Medicare by “hundreds of millions-and likely billions-of dollars” according to a whistleblower lawsuit which was unsealed recently.

Also, a US District Judge in Minneapolis barred United Health from withholding reimbursements to providers to offset alleged prior over payments for different patients enrolled in other health plans that United Health administers.  The Judge in the case called the practice by United Health “troubling.”

CMS “Voluntary” Self Referral Disclosure-New Form

Effective June 1, 2017, those submitting self disclosures to CMS regarding potential violations of the physician self-referral law, will be required to use the new form.  Since the use of this form is required for any self-referral disclosure, it is hardly voluntary but is necessary.  Please note that any disclosing entity must submit a separate form for each physician for non-compliant financial relationships.

This protocol is to be used in matters where the disclosing party has formed a reasonable belief that a violation of physician self-referral law has occurred.  Note that on self-referral overpayments, the look back period is six (6) years.

If you are even considering any self disclosure under this protocol, you should seek counsel for a detailed determination and strategy.

Suing CMS

CMS has been largely successful in denying providers access to the court system for lawsuits relating to under payment or over payment issues.  Even suits that would seek to require CMS to follow its own rules and regulations have been generally met by judicial reluctance to order the United States to follow its own laws and rules.

It is somewhat surprising then that United Health has, at least in the early stages, been successful in seeking to challenge government regulations for Medicaid Advantage over payments.  The prime issue is the 2014 rule which sought to “clarify” statutory definitions of over payment.  This is generally the basis for the government claiming that an identified over payment not returned within 60 days is a violation of the False Claims Act.  United, in essence, argues that CMS procedures lead to systematic under payments for MA beneficiary care.

You may recall that hospitals and other providers have recently attempted to sue CMS for its refusal to follow laws on provider appeals of CMS or CMS surrogates (think RAC audits) appeals of government under payments or appeals against government claims of over payment to providers.

Charge Masters Again

Disputes continue about charge master rates.  Charge master rates are the claimed “list prices” used by hospitals and other large healthcare providers.  Litigation relating to charge master rates seems to indicate that hospitals seldom, if ever, are paid their charge master rates.  The rare cases where charge master rates might be applicable are those unlucky enough to be uninsured or otherwise unable to be insured.  It appears that health insurers and plans consistently pay much less than the charge master rate.

Does it matter?  A study by the Federal Reserve Board and the American Enterprise Institute is reported to have indicated that higher charge master rates lead to higher payments to hospitals.  The study suggests several reasons why hospitals may want to use charge master prices to maximize revenue and claim that charge master is at its core, a revenue maximizing device.

Hospitals continue to claim that charge master rates are not important, particularly to those insured.  Others claim that the charge master rates often result in surprise or balance billing to patients which would not occur in the absence of what they claim are artificially high charge master rates.

Given the rapid increase in the amount of healthcare payments being made throughout the system, it is likely the charge master rates will remain a subject of study and dispute.

Taking One for the Team

Anthony C. Neal and his father, Dr. Dean Neal, operated an ophthalmology practice in Oregon.  Mr. Neal acted as the medical practice manager.  Mr. Neal recently pled guilty to a 7 year long healthcare fraud scheme.  He was ordered to spend a year and a day in federal prison, pay over $1.7 million in restitution to Medicare and to pay $817,378.00 to the IRS.  Not only did Mr. Neal and his deceased father bill for unnecessary diagnostic tests, fraudulently billed insurance plans, billed for higher costs tests when lower costs tests were actually made and double billed various insurance plans, to make their scheme even more interesting, Mr. Neal and Dr. Neal managed to defraud the IRS by setting up another entity which received most of Eye Care’s actual profits and then used this money to pay almost $3 million personal expenses.  The Neals also failed to file tax returns for the practice or the straw company thereby concealing nearly $8 million in business revenue from the IRS.

It is unusual to see medical practice managers jailed, but in this case the connection was too direct and too close for the Department of Justice to ignore.

This newsletter is edited by Paul Wallace of Jones ∙ Wallace, LLC, a member of the American Bar Association Healthcare Law Section and the American Health Lawyers Association who has been representing physicians and healthcare practices for over 25 years.  Mr. Wallace assists physicians in health practices in contract items, federal legal compliance, creation of practice entities, estate and wealth planning and similar issues.  Please feel free to call if you have any questions on this newsletter or legal matters at (812) 402-1600 or pwallace@joneswallace.com.