Little Health Law Blog

Health Services Company Owners Plead Guilty to Healthcare Fraud

September 21, 2013 | Little Health Law

On September 5, 2013, owners of Trust Care Health Services, Inc. (Trust Care) pled guilty in a Florida federal court to federal healthcare fraud charges. Roberto Marrero, Sandra Fernandez and Enrique Rodriguez, owned and operated Trust Care. Trust Care was a Florida corporation, incorporated in 2005 that did business as a home healthcare services business in the Miami and South Florida area. Trust Care provided home health and physical therapy services to Medicare beneficiaries.

Trust Care was an authorized Medicare provider, approved to submit claims to Medicare. The Government’s allegations of Medicare fraud were based on the Government’s contention that physical therapy and home health services were billed to Medicare but not medically necessary, or not provided, or both.

According to the indictment, the defendants and co-conspirators paid patient recruiters to provide Trust Care with patients to whom defendants sold healthcare services that were not medically necessary and/or not provided. Kickbacks and bribes were also paid to obtain for Trust Care prescriptions, medical certifications and other documents needed to facilitate the scheme. Specifically, the government alleged:

It was the purpose of the conspiracy for the defendants and their conspirators to unlawfully enrich themselves by: (1) paying and accepting kickbacks and bribes for referring Medicare beneficiaries to Trust Care so that their Medicare beneficiary numbers would serve as the bases of claims filed for home health care; and (2) submitting and causing the submission of claims to Medicare for home health services that the defendants and their conspirators purported to provide to those beneficiaries.

Indictment, para. 3.
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WILL THE AFFORDABLE CARE ACT BE AFFORDABLE FOR EMPLOYERS?

August 31, 2013 | Little Health Law

The price Americans will pay for Affordable Care Act (ACA) changes may include lost wages and job benefits due to the price tag of ACA compliance for employers. It may seem to many like a good and noble thing to require insurers to insure everyone irrespective of health conditions and the attending financial risks and costs the insurer must assume; to make all individuals buy health insurance, irrespective of whether they want or need it; and to force employers to provide what the government decides says is the right kind of health insurance to employees. But nothing is free or without consequence, especially sweeping legislation intended to overhaul healthcare. Unfortunately, while the ACA will undoubtedly benefit many Americans, the true costs of the ACA will prove unaffordable for many employers and likely result in lost wages and job benefits for many Americans.

For example, the University of Virginia and United Parcel Service recently informed employees that it would no longer offer healthcare coverage to employee spouses able to obtain insurance from other sources. UVA announced what it described as “major changes” in their health plan options to employees and explained the changes were necessary based on UVA’s projections that the ACA will result in $7.3 million in additional costs associated with its health plans in 2014 alone. UVA is attempting to defray the cost of complying with the ACA by cutting health benefits to many spouses. UPS indicated that costs of complying with the ACA contributed to its need to drop spouse coverage, which will affect as many as 15,000 employees. UPS explained that due in part to the ACA, it is “increasingly difficult to continue providing the same level of health care benefits to our employees at an affordable cost.” Other employers have limited non-management workers’ hours to 29.5 for the purpose of circumventing ACA requirements that are triggered by having 50 or more “full time” employees (i.e. 30 hours or more, under the ACA). For example, Forever 21 recently announced to its employees that effective August 31 they would not be full-time employees.
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Medicare Fraud Strike Force Uncovers $2.6 Million Medicare Fraud Scheme by DME Owner

August 29, 2013 | Little Health Law

The Medicare Strike Force of the FBI and HHS-OIG continues efforts to eliminate fraudulent healthcare providers from the healthcare arena. The Strike Force recently obtained a guilty plea by the former owner of a California durable medical equipment supply company (DME) business based on an alleged scheme to defraud Medicare of millions. Akinola Afolabi, 54, of Long Beach, California, pled guilty to one count of healthcare fraud and now faces up to 10 years in prison and a $250,000 fine. Afolabi’s sentencing by the U.S. District Court in the Central District of California will take place on November 25, 2013.

According to the government’s allegations in that case, Afolabi owned Emanuel Medical Supply Company. Emanuel was a DME supply company that sold, among other things, power wheelchairs and related supplies. The federal government alleged that Afolabi used Emanuel to provide medically unnecessary power wheelchairs and other DME to Medicare beneficiaries in California, during a three year period. Afolabi is alleged to have used “marketers,” among other means, to obtain Medicare beneficiaries’ contact information, which Afolabi submitted to the government to make false Medicare claims. Afolabi paid the marketers to refer Medicare beneficiaries to Emanuel. Afolabi then falsely certified to Medicare that each claim submitted was for medically necessary DME that was actually provided to the beneficiary, according to the government. During the subject time frame, Afolabi submitted to Medicare approximately $2.6 million in alleged fraudulent claims for the wheelchairs and related services, and Medicare paid out almost $1.5 million.

The Medicare Strike Force continues to combat healthcare fraud. Eliminating healthcare fraud and obtaining recoveries from bad actors remain a major push for the federal government as a means of reducing the cost of healthcare for our Country. Since 2007, the Strike Force has charged over 1,500 defendants who have together submitted more than $5 billion in Medicare claims.
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WILL THE AFFORDABLE CARE ACT BE IMPLEMENTED?

July 31, 2013 | Little Health Law

The U.S. House voted recently to delay the so-called “individual mandate” of the Affordable Care Act (ACA). On July 17, 2013, the House passed the Fairness for American Families Act, H.R. 2668, sponsored by Rep. Todd Young (R-IN). Passage of H.R. 2668 sets the stage for a political show down about whether to implement some, all or none of the ACA. Swords are drawn. The ACA survived the political fight for its passage. It survived the legal fight about its constitutionality. But can it survive the fight about whether, or to what extent, to actually implement it?

The H.R. 2668 Digest expresses concern that implementation of the ACA will “have significant consequences on patients, our nation’s healthcare system, taxpayers, job holders, job creators, individuals, families, and the economy.” According to the Digest, “the 190 million hours per year that American families will be forced to spend complying with [ACA] requirements; the likelihood that seven million people will lose their employer based insurance, the increase in health insurance premiums by as much as 400 percent for individuals and 100 percent for the small group market; the $716 billion cuts to Medicare; the $628 billion expansion of Medicaid to mostly childless adults, the 159 new government boars, including IPAB, and the 800,000 job losses that the CBO anticipated.

According the supporters of H.R. 2668, the following are key points and dates on healthcare:

Higher Costs and Taxes

• Limitation on flexible savings account contributions to $2,500 per year (indexed to CPI)
• Imposition of a 0.9 percent Medicare Part A wage tax and a 3.8 percent tax on unearned, non-active business income for those earning over $200,000 or $250,000 for families (not indexed to inflation)
• Imposition of a 2.3 percent excise tax on medical devices • Increase in the income threshold for claiming tax deductions for medical expenses from 7.5 percent to 10 percent • Elimination of the existing deduction for employers who maintain prescription drug plans • Cuts to Medicare payments to hospitals for treating low-income seniors • Increase in Medicaid payment rates to primary care physicians for primary care services to 100 percent of the Medicare payment rate for 2013 and 2014 • Start of open enrollment in Health Insurance Marketplace – October 1, 2013
More Government, Higher Costs

• Implementation of Health Insurance Marketplace (Exchanges) – 17 states plus DC will implement their own exchanges, 7 in partnership with federal government, remaining 26 states will be run by the federal government – January 1, 2014 • Prohibition on annual limits or coverage restrictions on pre-existing conditions (guaranteed issue/renewability)
• Extension of prohibition on excessive waiting periods to existing health plans • Imposition of modified community ratings: family versus individual; geography; 3:1 ratio for age and 1.5:1 for smoking • Imposition of government-defined “essential benefits” and coverage levels on insurance plans • Limitation on out-of-pocket cost sharing (tied to limits in HSAs). Limits are $6,250 for individuals and $12,700 for families (indexed for COLA)
• Implementation of premium subsidies for insurance purchased in the Health Insurance Marketplace — amounts of subsidies are dependent on income and available up to 400 percent of the federal poverty line • Requirement that federal government offer at least two multi-state plans in every state
Higher Taxes

• Imposition of new health insurance industry tax (increase will be $8 billion in 2014, $11.3 billion in 2015 and 2016, $13.9 billion in 2017, and $14.3 billion in 2018 and indexed to medical cost growth afterwards • Imposition of individual mandate. Individuals who fail to obtain acceptable insurance will incur a penalty tax of the greater: $695 or 2.5 percent of income. For families without approved coverage, penalties are capped at $2,250 until 2016 and then indexed for inflation
Higher Costs/Lost Coverage/Lost Jobs/Employer Mandates
• Imposition of the Employer mandate. Employers with 50 full time employees or more who fail to offer “affordable” coverage must pay a $3,000 penalty for every low-income employee that receives a subsidy through the Exchange, even if coverage is already provided • Imposition of $2,000 tax penalty on employers who employ more than 50 full time employees and don’t provide insurance coverage. Penalty assessed for every full time employee. Up to 30 full time employees are exempt when calculating penalty • Require employers with more than 200 employees to auto-enroll employees in health coverage, with opt-out options Decrease Access/Weakened Safety Net • Continued cuts to Medicare home health reimbursement • Implementation of IPAB recommendations • Cuts to Medicare payments to Disproportionate Share Hospitals • Cuts to federal Medicaid payments for Disproportionate Share Hospitals from $18.1 billion to $14.1 billion • Expansion of Medicaid coverage to 22 million childless adults up to 138 percent of the federal poverty line – diminishing resources for vulnerable populations. States will receive 100 percent of the FMAP 2014-2016, 95 percent in 2017, 94 percent in 2018, and 90 percent after
See H.R. 2668 Digest.
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THE PHYSICIAN HIRE: EMPLOYEE OR INDEPENDENT CONTRACTOR?

July 20, 2013 | Little Health Law

The trend for physicians to work for a hospital or hospital system continues. Once a physician finds a job opportunity, one of the first details the physician and the hiring entity may discuss is the nature of the relationship. Will the doctor be an employee or an independent contractor?

Often the hiring entity desires to avoid certain burdens that typically attend employment, such as malpractice liability, employment benefits (e.g. pension, health insurance), and payroll taxes. There are certain reasons the physician may perceive his best interests are served by independent contractor status as well, such as (perceived) tax advantages to having his own corporation or a greater sense of independence in practicing his trade.

The hiring entity and the physician should be mindful, however, that establishing an independent contractor relationship is not automatic from legal standpoint, their desire and their written agreement notwithstanding. In fact, most doctors hired cannot be properly classified as independent contractors. Whether the relationship is “employment” or “independent contractor” must be determined ad hoc according to the particular, details of the relationship.

What determines the issue?

In the Joint Committee on Taxation’s publication Present Law and Background Relating to Worker Classification for Federal Tax Purposes (JCX-26-07), May 7, 2007, 20 factors the IRS analyzes to determine whether sufficient direction and control exist to support an employer-employee relationship are set forth. Those factors are:

1. Instructions: If the person for whom the services are performed has the right to require compliance with instructions, this indicates employee status.

2. Training: Worker training (e.g., by requiring attendance at training sessions)
indicates that the person for whom services are performed wants the services performed in a particular manner (which indicates employee status).

3. Integration: Integration of the worker’s services into the business operations of the person for whom services are performed is an indication of employee status.

4. Services rendered personally: If the services are required to be performed personally, this is an indication that the person for whom services are performed is interested in the methods used to accomplish the work (which indicates employee status).

5. Hiring, supervision, and paying assistants: If the person for whom services are performed hires, supervises or pays assistants, this generally indicates employee status. However, if the worker hires and supervises others under a contract pursuant to which the worker agrees to provide material and labor and is only responsible for the result, this indicates independent contractor status.

6. Continuing relationship: A continuing relationship between the worker and the person for whom the services are performed indicates employee status.

7. Set hours of work: The establishment of set hours for the worker indicates employee status.

8. Full time required: If the worker must devote substantially full time to the business of the person for whom services are performed, this indicates employee status. An independent contractor is free to work when and for whom he or she chooses.

9. Doing work on employer’s premises: If the work is performed on the premises of the person for whom the services are performed, this indicates employee status,
especially if the work could be done elsewhere.

10. Order or sequence test: If a worker must perform services in the order or sequence set by the person for whom services are performed, that shows the worker is not free to follow his or her own pattern of work, and indicates employee status.
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RISING OPPOSITION TO ACA IMPLEMENTATION

July 17, 2013 | Little Health Law

Steve Brenton, President of the Wisconsin Hospital Association, released a forceful judgment of the Obama Administration’s decision to delay by at least one year implementation of the Affordable Care Act’s (ACA) employer mandate, calling it a “dogs breakfast.” As reported in the Milwaukee Business Journal, Brenton cited five very negative consequences he believes the delay will achieve:

– The delay energizes ACA opponents and reinforces to an already skeptical public the view that implementation will likely be uneven at best and a ‘third world experience’ at worst”;

– The delay “raises obvious questions” about the possibility of delaying other provisions, including the individual mandate, which Brenton said seems likely to be another casualty in the coming months;

– The delay will cost the federal treasury $10 billion in fines and penalties according to Congressional Budget Office projections;

– What he called a “meltdown of mandates” lessens the probability that new coverage will climb to anywhere near the numbers the Obama administration predicted in 2009 when touting the law and;

– The decision adversely impacts the viability of the insurance exchanges, which are foundational to the ACA.

The ACA requires companies that have 50 or more full-time equivalent employees to provide health insurance coverage that is “affordable” to their employees and meets minimum value standards. Under ACA rules, coverage is “affordable” if an employee’s share of premium costs for employee-only coverage is less than 9.5% of yearly household income. The minimum value standard is met if the health plan’s share of the total costs of covered services is at least 60%. The reporting requirements for employers (to demonstrate whether and how they meet these and other ACA requirements) have left company decision makers shaking their heads in frustration about how to meet the law’s requirements. The delay is intended to give government officials more time to sort it all out, apparently. According to Mark J. Mazur of the U.S. Department of the Treasury, by virtue of the delay, employers will not be required to make any shared responsibility payments until 2015.

Kathryn Johnson of the IRS Office of Associate Chief Counsel (Tax Exempt & Government Entities) authored a guidance document to provide “transition relief through 2014 for the information reporting and Shared Responsibility Provisions. The guidance document states that “proposed” rules for reporting requirements are expected to be published this Summer, and further explains:

This relief will provide additional time for time for dialogue with stakeholders in an effort to simplify the reporting requirements consistent with effective implementation of the law. It will also provide employers, insurers, and other reporting entities additional time to develop their systems for assembling and reporting the needed data. Employers, insurers, and other reporting entities are encouraged to voluntarily comply with these information reporting provisions for 2014 (once the reporting rules have been issued) in preparation for the full application of the provisions for 2015. However, information reporting under §§ 6055 and 6056 will be optional for 2014; accordingly, no penalties will be applied for failure to comply with these information reporting provisions for 2014.

July 16, 2013. Efficiency in practice, an InHealth Company, features Kevin Little’s Guidelines for Physician Review of Health Plan Contracts.

July 16, 2013 | Little Health Law

Efficiency in practice, an InHealth Company, features Kevin Little’s Guidelines for Physician Review of Health Plan Contracts.

Real Health Care Reform: Reduce Our Need for Third-Party Payers

July 3, 2013 | Little Health Law

Nationwide there is much consternation and debate about what sort of “healthcare reform” might cure our health care system’s many ills, its growing price tag in particular. Of course, there is no shortage of answers and opinions about possible solutions or improvements. To be sure, the issue is highly complex, so there is room for much concern and debate. But since quality of health care is indisputably better than ever, it is important to focus on what actually needs to be reformed. The health care itself is good – what needs to be reformed is how we pay for and how we reduce the need for health care.

That the root cause of many of our health care system’s woes is a broken third-party payer system is difficult to deny. Rather than healthcare provider and patient conducting a simple economic transaction – one party provides care, the other party receives and pays for it – our healthcare system’s current payment methodology requires involvement of a third party insurer (or other “payer”) with a powerful financial interest in the provision of health care, no real ability to evaluate the patient and her health needs, yet strong influence in decisions affecting how or what health care is provided. While the patient wants (and expects) the doctor to provide medical judgment and care, she wants (and expects) someone else (the payer) to pay for it.

Before World War II, this horrible dynamic — a third party paying medical bills and influencing medical decisions — did not exist as it does today. With the advent of “health care insurance” as an employer-sponsored benefit to compete for employees, the American consumer’s mentality about health care began a transformation that led to the current consumer’s mindset: “who will give me health care”? Or, “where is the health insurance to which I am entitled?” This entitlement thinking drives the third party payer system and increases health care consumption.
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July 1, 2013. Medical Association of Georgia presents for its 7,000 member physicians Guidelines for Physician Review of Health Plan Contracts, prepared by Kevin S. Little.

July 1, 2013 | Little Health Law

Medical Association of Georgia presents for its 7,000 member physicians Guidelines for Physician Review of Health Plan Contracts, prepared by Kevin S. Little.

The EHR Improvements Act: a Bill to Exempt Solo and Retirement-Age Physicians From Meaningful Use Medicare Penalty

June 27, 2013 | Little Health Law

The “EHR Improvements Act,” a bill (HR 1309) recently introduced by Rep. Diane Black (R-TN), would, if passed, mean that doctors close to retirement age might not incur Medicare payment cuts as a result of failing to implement an electronic health record (EHRs) system. Additionally, the bill would make solo practitioners exempt from the penalty for three years.

The issue addressed by the bill derives from the 2009 federal economic stimulus package. The American Recovery and Reinvestment Act of 2009 included new funding for health information technology. That funding included $17 billion to support incentives for doctors who adopt EHRs and can demonstrate they are using “certified” EHR in a “meaningful” way. The Medicare EHR incentive program was intended to incentivize health care providers to implement “meaningful use” of EHRs. The program, which began January 3, 2011, affords health care providers a way to receive up to $44,000 over five years in incentive payments. On the other hand, doctors who fail to meet meaningful use requirements will incur a penalty by way of a 1% reduction in Medicare reimbursement, per year, up to a maximum penalty of 5%. This penalty would create a substantial hardship for many physicians, particularly in small practices. The EHR Improvements act is apparently designed to mitigate that hardship.

According to the National Center for Health Statistics (NCHS) at the Centers for Disease Control and Prevention, data shows that older and solo physicians are lagging behind in EHRs adoption. According to NCHS’s research, about 50% of physicians age 50 and older have adopted EHRs; about 64% of doctors younger than 50 have used EHRs. NCHS’s research also shows that 29% of solo practitioners had adopted EHRs by 2011, whereas 60% of two-doctor practices had implemented EHRs; the EHR adoption rate climbs to 86% for practices with at least 11 doctors. One of the principal reasons for this outcome appears to be simple cost-benefit analysis: switching to EHRs is enormously expensive for most practices, so much so that the financial incentives for implementing EHRs (including the penalty for not adopting EHRs) do not offset the cost of converting to EHRs.
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