CBO Estimates Physician Reimbursement Reform Costs at $330 Billion

In a letter dated August 24, 2010, the Congressional Budget Office (“CBO”) estimated the cost of reforming the Medicare physician reimbursement system to be $330 billion over calendar years 2011 through 2020. The letter “addressed the costs of a proposal to prevent payment reductions under Medicare’s physician fee schedule.” The proposed calendar year (“CY”) 2011 Medicare Physician Fee Schedule contains a 6.1% reduction in physician reimbursement rates in addition to the 21% reduction already set forth under sustainable growth rate (“SGR”) requirements. While the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (the “Act”) maintains through November 30, 2010 physician reimbursement rates at a 2.2% increase over previous levels, without further legislative remedy, the reductions proposed by CMS and mandated by SGR could be implemented at that point. CBO had previously estimated the cost of maintaining CY 2009 payment rates adjusted for inflation over the 2011 through 2019 time period at $278 billion. That estimate had not accounted for changes made by adoption of the Act. A copy of CBO’s letter may be found here. Mark Faccenda

CMS Imposes Stronger Protections on Medical Equipment Suppliers

The Centers for Medicare & Medicaid Services (“CMS”) has issued a final rule for durable medical equipment, prosthetics, orthotics, and supplies (“DMEPOS”) that aims to reduce fraud. This rule adds new enrollment standards and strengthens current standards that suppliers must meet to furnish equipment or supplies to Medicare beneficiaries.

 

With limited exceptions, the final rule (1) requires DMEPOS suppliers to obtain oxygen from a state-licensed suppliers, (2) ensures that DMEPOS suppliers document the orders and referrals of physicians or non-physician practitioners, (3) requires DMEPOS suppliers to remain open to the public for at least 30 hours a week, and (4) forbids DMEPOS suppliers from sharing a practice location with certain other Medicare providers and suppliers.

 

The final rule also addresses current enrollment requirements, such as clarifying the standards that DMEPOS suppliers must maintain at their physical facilities, and expanding the ban on telephone solicitation of a Medicare beneficiary. Under the new rule, DMEPOS suppliers cannot use in-person contacts, emails, instant messaging, or internet-coercive advertising to contact a Medicare beneficiary. To read CMS’s press release, click here. Selina Spinos

Falsified Medicare Enrollment Forms Result in Overpayment

On August 19, 2010, the Eleventh Circuit Federal Court of Appeals upheld the Middle District of Florida’s determination that the Secretary of Health and Human Services properly concluded that payments to a Florida medical center were an overpayment subject to recovery by the agency. On its enrollment application, the medical center had failed to disclose that its president and 51 percent owner was excluded from the Medicare program due to his conviction for committing a Medicare-related crime. The Court found that the “recoupment did not seek to punish [the medical center] for its misrepresentation” in violation of the excessive fines clause of the Eighth Amendment. “Instead, it sought to recover money to which [the medical center] was never entitled.” The decision is available on the Eleventh Circuit’s website, here. Lara Parkin

Court of Appeals Holds for Hospital in Indirect Medical Education Payments Dispute

On August 25, 2010, the U.S. Court of Appeals for the Seventh Circuit held that a hospital was entitled to $2.8 million in indirect medical education ("IME") payments for costs incurred by residents conducting educational research unrelated to patient care. The University of Chicago Medical Center v. Kathleen Sebelius, No. 09-3429 (7th Cir., Aug. 25, 2010). In fiscal year 1996, the hospital included in its Medicare IME fulltime equivalent count time residents spent on pure research. The Administrator of the Centers for Medicare and Medicaid Services ("CMS") excluded this time from the resident count, determining that under the Medicare reasonable cost system and subsequently under the prospective payment system, indirect costs unrelated to patient care were never reimbursed under Medicare, even though the applicable Medicare regulation at the time did not exclude time spent by residents in research activities. It was not until 2001 that CMS revised the regulation to excluded research activities not associated with the treatment or diagnosis of a particular patient. The district court overturned the Administrator's decision. The seventh circuit upheld the district court's decision, holding that the hospital should have received reimbursement as part of its IME adjustment for pure research in 1996. Tom Dowdell

UPCOMING EVENTS

September 27-28, 2010: John Kelly will be a speaker at the ACI conference regarding Government Investigations for Life Sciences, held at The Union League in Philadelphia, PA. He will be participating in a panel discussion entitled "Developing a Critical Action Plan ." ACI has agreed to provide Fulbright clients with a $400 discount. To receive the discount, please contact Dana Rossi here. For additional details regarding the event, please contact Christen Dammer here.