Washington State Court Recognizes Prospective Patient Relationships as Protected Contracts

42 U.S.C. § 1981 prohibits discrimination affecting citizens rights to make contracts. In the credentialing field, § 1981 has been used to circumvent the immunities provided by the Health Care Quality Improvement Act (HCQIA) because HCQIA provides an express exception stating that it doesn’t apply to actions brought pursuant to Section 1981.

The premise is that adverse credentialing actions violate a physician’s right to make contracts. In states which recognize medical staff bylaws as contracts, that contractual opportunity is often the basis for a discrimination suit. However, in states that do not recognize medical staff bylaws as contracts, physicians must find other grounds.

In Sambasivan, Dr. Sambasivan alleged two grounds which the Washington State Appeals Court found sufficient to avoid summary judgment and allow a trial on the merits:

  • The hospital in question routinely granted physicians with clinical privileges the right to participate in call coverage arrangements pursuant to contracts that provide additional compensation; and
  • The court recognized that prospective patient relationships might also be contracts, and that denial of privileges would interfere with the physician’s opportunity to benefit from those contracts.

The Court specifically rejected the defense, asserted by the hospital, that Dr. Sambasivan could treat those patients at other hospitals, because Section 1981 protects a citizen’s right to enter into all contracts and the fact that a physician might have an alternative but comparable opportunity should not be recognized as a defense to discrimination actions.

CMS Proposes Rules to Improve Accountable Care Organizations (ACOs)

The Centers for Medicare and Medicaid Services (CMS) released a proposed rule intended to make ACOs and Medicare Shared Savings Plans more practical and attractive to potential providers. The proposed rule was released on December 1, 2014, along with a CMS Fact Sheet.

Longer Lead Time to Develop

In order to provide more development time, CMS is proposing to permit ACOs to participate in one additional agreement under track 1 (which was the shared savings without risking losses track), but at a lower sharing rate than the previous agreement to encourage progression along the performance risk continuum. The new option would be available to ACOs that had already met the quality performance standards in at least one of the first two years, and which have not generated losses that exceed the negative medical savings rate (MSR) in both of the first two years of the previous agreement.

Revised Beneficiary Assignment Protocols

Under the existing rules, beneficiaries are assigned to ACOs in two steps, after first identifying actual service by a primary care physicians, based on the plurality of primary care services furnished by either primary care physicians or by specialists physicians, nurse practitioners, physician assistants, and clinical nurse specialists. CMS is proposing to revise the second step of the assignment methodology to remove certain specialty types whose services are not likely to be indicative of primary care services. In addition, CMS is proposing to include nurse practitioners, physician assistants, and clinical nurse specialists primary care services in step one in order to recognize the primary care delivered by those professionals.

Encouraging ACOs to Take on Greater Performance Base Risk

CMS is looking for methodologies to allow ACOs to progress further along the performance risk continuum. CMS is seeking comment on a number of modifications including:

  • Proposing to implement an additional performance risk based model (track 3) for ACOs to participate in the shared savings program. Track 3 would offer a higher sharing rate than tracks 1 and 2 and would prospectively assign beneficiaries to the ACO rather than preliminarily assigning beneficiaries to ACOs and then doing a retrospective reconciliation.
  • Proposing to modify track 2 to increase it’s attractiveness by making the minimum savings and loss rates variable rather than current flat 2%.
  • Seeking comment on what other design elements would be necessary for organizations to consider taking on greater financial risk including allowing beneficiary assignment based upon beneficiary attestation and waiving certain fee for service payment and regulations relating to qualifying hospital stays for skilled nursing facility admission, telehealth, qualifications for home health services, and qualifications for post acute referrals.

Global Surgery and 2015 Medicare Physician Fee Schedule

On July 21, 2014, I posted the proposed Medicare Physician Fee Schedule, and described the intent by CMS to eliminate global surgery.

On November 13, 2014, CMS issued the final 2015 Medicare Physician Fee Schedule, and CMS incorporated the changes regarding global surgery.

Global Surgery

There are three primary categories of global surgery packages that are labeled based on the number of post-operative days included in the global period — 0-day, 10-day, and 90-day global codes:

  • 0-day — Includes the surgical procedure and pre-operative and post-operative physicians’ services on the day of the procedure, including visits related to the service;’
  • 10-day — includes the same services as the 0-day global code plus visits related to the procedure during the 10 days post-procedure; and
  • 90-day — Includes the same services as the 0-day global codes plus the pre-operative services furnished one day prior to the procedure and post-operative services during the 90 days post-procedure.

Concerned with inaccurate valuation and disparate payments associated with global surgery packages, CMS proposed transforming all 10- and 90-day global codes to 0-day global codes. Instead of receiving a single payment that includes follow-up care, physicians will bill for each individual post-surgery follow-up service. The transition for current 10-day global codes will begin in CY 2017 and the current 90-day global codes will begin in CY 2018. CMS will seek further input from stakeholders in the 2016 rulemaking cycle on this matter.

Pennsylvania Workers Compensation Prescription Drug Reimbursement Restrictions

On October 27, 2014, the Governor signed Pennsylvania General Assembly enacted House Bill 1846, which limits both the authority and the reimbursement of physicians and providers other than pharmacies for prescription drugs.  It provides as follows:

  • Physicians dispensing prescription drugs from their offices shall receive no more than 110% of the original average wholesale price (AWP) for such prescriptions.
  • No outpatient provider, other than a pharmacy, may receive reimbursement for greater than an initial 7 day supply of any controlled substance or any substance containing Hydrocodone for a workers compensation related service.
  • No outpatient provider, other than a pharmacy, may receive reimbursement for anything more than an initial 30 day supply of any other prescription drug.
  • No provider other than a pharmacy may receive any reimbursement for OTC drugs.

The statute also requires the cost savings for these limitations on prescription drug costs to be passed through to employers by requiring, with an 18 months of enactment, that the Pennsylvania Compensation Rating Bureau shall calculate the savings achieved through implementation of these provisions and use those savings for an immediate reduction in rates for 2016 workers compensation insurance.

The effective date will be, ironically for physicians, December 25, 2014.


District Court Approves Government’s Use of Sampling and Extrapolation to Prove False Claims Act Liability

In United States ex rel. Martin et al. v. Life Care Centers of American, Inc., the Court held that the government could extrapolate from a random sample in order to impose False Claims Act (FCA) liability against Life Care Centers of American Inc. (Life Care) for a substantially larger universe of claims.

In order to prove FCA liability, the government sought to use a random sample of 400 admissions from 82 Life Care facilities spread over approximately 6 year period and then extrapolate the resulting error rate to a sample universe of more than 50,000 patient admissions, comprising more than 150,000 claims. Life Care moved for partial summary judgment on the basis that the government could not satisfy its burden of proof based on statistical sampling and extrapolation.

The Court rejected Life Care’s arguments and denied its motion for summary judgment. The Court held that the general purpose of statistical sampling is to “provide a means of determining the likelihood that a large sample shares characteristics of a smaller sample”, noting that statistical sampling has “become commonplace in certain types of litigation,” and is generally accepted by courts. In the FCA context, the court held that “in view of the enormous logistical problems of [enforcement of government programs], statistical sampling is the only feasible method available.”

Pennsylvania Superior Court Rejects Peer Review Confidential for “Business Records”

In Kates v. Doylestown Hospital, the Pennsylvania Superior Court, in a non-precedential decision, held back the Pennsylvania Peer Review Protection Act does not provide confidentiality protection for certain records, stating:

Peer review necessarily involves evaluating the quality of care provided by medical professionals or evaluating the qualifications of medical care providers. 0045cept for those portions that we held could be redacted, the documents/communications at issue were not used or made for the determination of staff privileges or for credentialing purposes. These documents/communications were not used exclusively for quality assurance purposes by the Stroke Committee and are not incorporated exclusively within a physician’s credentialing file. See Dodson, supra. Furthermore, Doylestown Hospital cannot point to a definitive action initiating the peer review process prior to the time these documents were created. See Mazzucca [v. Methodist Hospital], 47 D. & C. 3d [55], 60 [(Phila.Cty. 1985)]. Quite simply, the emails, agenda and minutes we ordered discoverable are non-peer review business records and communications that are neither used, nor generated by the Stroke Committee for peer review purposes.

Face-to-Face Medicare Reimbursement Requirements for Home Health Certification

CMS has announced its concern regarding the level of compliance for documenting the face-to-face elements necessary for home health care certification.

Attached is an educational piece published by Novitas Solutions on its Part B website.

It lists the qualification criteria for home health benefits:

  • Be confined to a home;
  • Under the care of a physician;
  • Receiving services under a plan of care established and periodically reviewed by a physician;
  • Be in need of skilled nursing care on an intermittent basis or physical therapy or speech-language pathology; or
  • Have a continuing need for occupational therapy.

The article then proceeds to list the major documentation errors:

  • The encounter was related to the primary reason for home care;
  • How the patient’s condition supports the patient’s homebound status; or
  • How the patient’s condition supports the need for skilled services.

Finally, the article provides examples of appropriate documentation, which are contained in the article itself.