President Obama Proposes Use of Bounty Hunters to Combat Health Fraud
On March 9, the White House announced that President Obama wants to use “high-tech bounty hunters” to uncover health care fraud. The plan was released prior to the President’s second public appearance of the week, and was part of a renewed effort to encourage Congressional Democrats to support the Administration's healthcare reform legislation. The announcement also came hours after major business groups unveiled a multimillion-dollar targeted ad campaign designed to challenge the administration by arguing that under the President’s plan, “health care costs will go even higher, making a bad economy worse.”

The repackaged bill that Obama announced last month emphasizes battling waste and fraud, and proposes increased use of technology to identify suspicious billing patterns and to track service providers with a history of problems. The “bounty hunters” that the President referred to on Tuesday are private auditors using sophisticated computer programs to scan Medicare and Medicaid billing data for patterns of wrongful claims. Under the proposal, the auditors would get to keep a portion of any funds recovered for the government. A pilot program run by Medicare in California, New York and Texas recouped $900 million for taxpayers from 2005-2008. The President predicts that his newest program will recoup at least $2 billion over the next three years, much of which would come from uncovering Medicare and Medicaid fraud schemes. In 2009, improper payments under these programs totaled an estimated $54 billion.

President Obama’s March 9 announcement was accompanied by a memorandum that directs Cabinet secretaries and agency heads to intensify their use of private auditors under current legal authority. During the same press release, the President also announced his support for a bipartisan bill that would expand the ways government agencies can pay for such audits using recovery funds. Senator John McCain (R-Ariz.) is one of the bill’s co-sponsors. For more information, please click here. Anne McNamara

Senate Passes Legislation Maintaining Physician Medicare Payment Levels Through October
On March 10, 2010, the U.S. Senate passed by a 62-36 vote the American Workers, State, and Business Relief Act of 2010, previously entitled the Tax Extenders Act of 2009 (“H.R. 4213”), which would extend current Medicare payment rates for physicians through September 30, 2010. An amendment to H.R. 4213, introduced by Senate Majority Leader Harry Reid (D-Nev.) and Senate Finance Committee Chairman Max Baucus (D-Mont.), included the 6-month extension as Section 601 of the legislation. The Department of Defense Appropriations Act of 2010 extended the physician fee update to the single conversion factor at 0% through February 28, 2010. The March 2, 2010 adoption of the Temporary Extension Act of 2010 (“H.R. 4691”) postponed the deadline for slated cuts in payment until March 31, 2010. Without adoption of H.R. 4213, the sustainable growth rate (“SGR”) formula, used in the calculation of Medicare physician payment, would require that rates be reduced by 21% at that time. H.R. 4213 Section 232 would also provide for a 6-month extension of the 6.2% increase in Federal Medical Assistance Percentage (“FMAP”) funding created under the American Recovery and Reinvestment Act of 2009. The bill will now return to the House of Representatives for consideration. The full text of H.R. 4213 and the amendment extending physician payment rates may be found here and here, respectively. Mark Faccenda

Doctors’ Eligibility for HIT Incentives Clarified
On March 10, the U.S. Senate passed the American Workers, State and Business Relief Act of 2010 (H.R. 4213), which if signed into law would clarify that physicians who work in hospital-based outpatient clinics could be eligible for health information technology (“HIT”) “meaningful use” incentives. See Section 810. Meaningful use incentives were initially authorized under the American Recovery and Reinvestment Act (“ARRA,” Pub. L. No. 111-5). The ARRA does not reward the purchase of information technology, but the “meaningful use” of that technology, by providing bonuses paid by Medicare and Medicaid to health care providers who can demonstrate “meaningful use” of “certified electronic health records The ARRA prohibits incentive payments to doctors who provide 90 percent or more of their services in a hospital setting. In its proposed meaningful use rule published in the January 13, 2010 Federal Register, the Centers for Medicare & Medicaid Services (“CMS”) said hospital-based doctors that meet the 90 percent threshold would not be eligible for EHR incentive funding. Lawmakers have argued in letters to Health and Human Services Secretary Kathleen Sebelius that they did not intend to disqualify certain physicians in outpatient settings and in certain other contract arrangements with hospitals and that any regulations implementing the law should reflect that intent. Lara Parkin

Fox Loses Drug Contract After Setting Obstacle Course for Enrollees
The Centers for Medicare & Medicaid Services (“CMS”) ended Fox Insurance Co.’s Medicare prescription-drug contract after an audit revealed that Fox had made it difficult for enrollees to access their medications. Among other problems found by CMS’s audit, Fox set unapproved criteria that made it hard for enrollees to get Medicare prescriptions, especially high-cost drugs for HIV, cancer, and seizures. According to CMS, often enrollees could not receive their prescription dugs without having unnecessary and invasive surgical procedures. The termination of Fox’s contract will not affect current enrollees, who are on a fallback plan until switching to a new plan. To read more, click here. Selina Spinos

Chicago Hospital Agrees to Pay $1.5 Million to Settle False Claims Allegations
On March 9, 2010, the Department of Justice announced that it reached a settlement with Rush University Medical Center, a Chicago-based academic medical center, to resolve allegations that the medical center violated the False Claims Act. The allegations focused on leasing arrangements the medical center entered into with two individual physicians and three physician practice groups that allegedly violated the Stark Law. The claims against Rush University Medical Center were initiated in 2004 by two whistleblowers, Dr. Robert Goldberg and June Beecham. The whistleblowers also brought suit against Midwest Orthopedics, LLC, Rush Surgicenter, Ltd., and Brian Cole, MD. Under the settlement agreement, the medical center will pay roughly $1.5 million, plus interest. The whistleblowers will receive $270,760. To read the government's press release, click here. Peter Leininger

UPCOMING EVENTS

March 24-25, 2010: John Kelly will be a speaker at the ACI's 10th Annual Forum on Fraud and Abuse in the Sale and Marketing of Drugs in New York City at The Helmsley Park Lane Hotel. He will be participating in a panel discussing how to conduct an internal investigation and effectively respond to the government. ACI has agreed to provide Fulbright clients with a generous discount. If you wish to attend this event and receive the discount, please contact Dana Rossi here. For additional information, click here.