Tag: Medicare

Medicare Physician Fee Schedule Final Rule Issued for Calendar Year 2014

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The Calendar Year 2014 Medicare Physician Fee Schedule (“PFS”) final rule has been issued. The rule, over 1,000 pages in length, determines physician reimbursement for services provided to Medicare beneficiaries. Let’s take a look at just a few of the changes contained therein.

Payment Rates

Physicians will see a substantial decline in reimbursement – 20.1% – based on a statutory requirement which limits the amount of annual growth in physician payments. This requirement is known as the Sustainable Growth Rate (“SGR”). The President’s budget calls for averting these steep cuts, and since 2003, Congress has enacted legislation to prevent them. Congress is currently trying to create an alternative payment method which would include the permanent repeal of the SGR formula.

Primary Care and Chronic Care Management

CMS has stressed its support for advanced primary care physicians to address the needs of Medicare beneficiaries who have two or more significant chronic conditions. In 2015, Medicare will begin making separate additional payments to physicians for chronic care management services. Care management services include care plan development and implementation, patient and caregiver communication, and medication management. Medicare beneficiaries will be able to choose a physician or another eligible practitioner from a qualified practice to furnish chronic care management over 30-day periods.

Telehealth Services

Regulations describing eligible telehealth originating sites will now include health professional shortage areas (HPSAs) located in rural census tracts of urban areas as determined by the Office of Rural Health Policy. This change will result in more qualifying originating sites, which will improve access to telehealth services in shortage areas.

CMS is also developing a policy to determine geographic eligibility for originating sites on an annual basis in order to avoid mid-year changes to geographic designations, which often result in unexpected disruptions in telethealth services. In addition, CMS is updating the list of eligible Medicare telehealth services to include transitional care management services.

Application of Therapy Caps to Critical Access Hospitals

Prior to the passage of the American Taxpayers Relief Act of 2012, therapy caps were not applied to therapy services furnished in Critical Access Hospitals (“CAH”). The final rule, however, in conjunction with the American Taxpayers Relief Act, does subject CAH to therapy caps (currently set at $1,920 for 2014).

Physician Quality Reporting System (“PQRS”)

Eligible professionals will be able to submit quality measure data for the PQRS through qualified clinical data registries. These quality measures will be aligned across all reporting programs so that a physician need only report a measure once for all programs.

Most changes established by the PFS will take effect on January 1, 2014. CMS, however, will accept comments on the final rule until January 27, 2014.

 

Article by:

Anne-Tyler Morgan

Of:

McBrayer, McGinnis, Leslie and Kirkland, PLLC

Late Action to Avert “Fiscal Cliff” Includes Several Health Policy Changes

MintzLogo2010_BlackAs was widely expected over the month of December, the Obama Administration and Congress scrambled in the late hours of 2012 and on New Year’s Day devising a legislative package to prevent the United States from going over the “Fiscal Cliff,” a series of across-the-board tax increases and spending cuts that would have automatically implemented without intervening legislative action. Although the compromise they reached was far from the “Grand Bargain” that President Obama and many members of Congress were seeking, Vice President Biden and Senate leadership came to an agreement to avoid the cliff for the early part of 2013. The Senate approved the package, the American Taxpayer Relief Act (H.R. 8), by an overwhelmingly bipartisan vote of 89-8 in the early morning hours of New Year’s Day. Later that day, shortly before midnight, the House voted to approve the Senate package by a vote of 257-167, with 85 Republicans joining 172 Democrats in support.

The legislation contains some significant health policy changes, described in more detail below, although its primary purpose is to prevent steep tax increases for 99% of Americans and to delay the automatic “sequestration” spending cuts that were scheduled to go into effect due to an earlier agreement to raise the debt ceiling. In H.R. 8, which the Congressional Budget Office (CBO) estimates will cost around $4 trillion, the sequester is turned off for two months, allowing Congress more time to focus on a comprehensive deficit reduction solution. In addition, current tax rates are permanently extended for all Americans earning up to $400,000 for individuals and $450,000 for married couples. Several other major tax modifications, including some related to the estate tax and capital gains, were also included. Discussion about other aspects of the legislation, including changes to renewable energy programs, may be found here.

The health policy provisions included in the bill fall into two main categories: (1) extension of various health care programs and reimbursement streams under Medicare and other government initiatives, and (2) “offsets” and changes in other programs and payment methodologies to glean savings to cover the costs of the package. A summary of the major health care provisions are as follows.

Summary of Extensions of Health Care Programs/Reimbursement

The most sought-after extender provision in the Act is the so-called “Doc Fix” or physician payment adjustment for Medicare providers. If Congress had failed to act, as of January 1, 2013, reimbursement rates for physicians under the Medicare program would have dropped by about 26.5% based off of the application of the sustainable growth rate (SGR) formula that adjusts Medicare physician reimbursement annually. The effect of the SGR formula, if it is actually implemented, is to decrease, not increase, physician reimbursement. Although there is widespread support for a “permanent fix” to the SGR, the steep costs of not implementing its cumulative reductions leads Congress every year to seek a short-term solution. H.R. 8 freezes the Medicare physician reimbursement rate at its 2012 level until December 31, 2013 with a price tag of about $25 billion over ten years. (A more permanent, albeit expensive, solution for the Doc Fix may be considered in Congress as part of the upcoming debates starting this spring over the debt ceiling increase and continuing resolution.)

In addition to the Doc Fix, several other payment and program extensions were part of the legislative agreement. Some of the more notable provisions include:

  • Ambulance Add-On Payments: This provision continues the base rate payment add-ons for ground ambulance transports through December 31, 2013. Ambulance transports will receive a 2% add-on in urban areas, a 3% add-on for rural areas, and a 22.6% add-on for super-rural areas (a “super-rural area” is defined as a rural county that is among the lowest quartile of all rural counties by population density).
  • Payments for Outpatient Therapy Services: Payments for these services will be capped at $1,880 for any therapy services provided by non-hospital providers. The Act continues to use this limit, but also extends the “exceptions case process” by which providers can receive additional reimbursements if more therapy services are deemed to be medically necessary. The extension lasts until December 31, 2013.
  • Medicare-Dependent Hospital (MDH) Program: H.R. 8 extends the MDH program, which delivers increased reimbursements to small rural hospitals that depend on Medicare payments for a large share of their revenue. The MDH program also supports the development of rural health infrastructure. The extension lasts through the beginning of the next federal fiscal year on October 1, 2013. The Act also extends a payment add-on for low-volume hospitals, which are defined as having fewer than 1,600 Medicare discharges and being at least 15 miles away from the nearest “like-hospital.”
  • Work Geographic Adjustment: Under this provision the existing 1.0 floor on the “physician work” index continues through December 31, 2013, to reflect the geographic differences in cost of resources to provide physician services to Medicare beneficiaries.
  • Medicare Advantage Plans for Special Needs Beneficiaries: The Act extends through 2014 the authority of specialized Medicare Advantage plans to target the enrollment of special needs individuals.
  • Medicare Reasonable Cost Contracts: H.R. 8 allows Medicare Reasonable Cost Contracts to exist through 2014 in areas in which at least two Medicare Advantage coordinated care plans currently operate.
  • Performance Improvement under Medicare: The Act extends funding through 2013 for the Medicare Improvements and Providers Act of 2008 and for outreach and assistance for low-income programs.

Outside of the Medicare program, the Act also has a number of other extensions, including: extending the Qualifying Individual Program, which allows Medicaid to pay Medicare Part B premiums for beneficiaries with incomes between 120% and 135% of the poverty line, until December 31, 2013; extending the Transitional Medical Assistance program, which allows low-income residents to maintain their Medicaid coverage when they start new employment, through December 31, 2013; continuing the Medicaid and CHIP Express Lane option through September 30, 2014; and extending funding for Family-to-Family Health Information Centers and diabetes research, treatment, and prevention programs for American Indians and Alaska Natives.

Summary of Health Care Offsets

In order to offset the projected costs of the extender provisions in the bill, the Act implements cost reductions in Medicare and other government health programs. Most significantly, a provision adjusting the Documentation and Coding of Medicare payments will allow CMS to recoup overpayments that it determines had been made to hospitals, and not yet recovered, as a result of the transition to Medicare Severity Diagnosis Related Groups (DRGs). CMS had been concerned that providers were “over-coding” (providing better documentation and coding of medical records to achieve a higher-weighted DRG) to increase their reimbursements and had instituted a prospective recoupment program covering certain years. This program is now extended. Congress estimates savings of $10.5 billion over ten years. In a separate provision, the Act increases the statute of limitations for recovering overpayments from 3 to 5 years.

Some of the other more notable offsets include the following:

  • End Stage Renal Disease (ESRD) Payments: H.R. 8 makes several changes related to payments for ESRD. It is projected to save $4.9 billion by altering the bundled payment to account for behavioral and utilization changes of dialysis drugs. It also is projected to save $300 million by reducing reimbursement rates by 10% for ambulance services to ESRD individuals receiving non-emergency basic life support services.
  • Medicare Disproportionate Share Hospitals: To save an estimated $4.2 billion, the Act maintains the 75% reduction in the reimbursement rate for Medicare Disproportionate Share Hospitals contained in the Affordable Care Act, and will determine future allotments from this rebased level.
  • Coding Intensity Adjustment: Under current law, Medicare Advantage plans receive a coding intensity adjustment of 3.41%, which reduces those plans’ reimbursement rates so that they more closely match the reimbursement to Medicare fee-for-service plans. This rate factor, determined by the CMS, will be increased to save an estimated $2 billion.
  • Consumer Operated and Oriented Plans (CO-OPs): The Act rescinds all unobligated funds for the CO-OP Program and its plans, which are nonprofit health insurance providers, established by section 1332(g) of the Affordable Care Act. The provision does not take away any obligated CO-OP funds, but it does create a contingency fund consisting of 10% of the current unobligated funds. The contingency fund will be used to help currently approved and created co-ops and will result in an estimated savings of $2.3 billion.
  • CLASS Repeal: The Act repeals the Community Living Assistance Services and Supports (CLASS) program established by the ACA and championed by the late Sen. Ted Kennedy (D-MA). Although in October 2011 the Obama administration suspended the long-term care insurance program in which workers would have paid monthly premiums during their careers to create a cash-bank in case of disability later in life, many Democrats had hoped to revive the program someday. H.R. 8 repeals the CLASS Act, although doing so provided no savings. In its place, the Act creates a Commission on Long-Term Care to develop a plant for the establishment, implementation and financing of a system to make long-term care services and support available for individuals. The Commission has no scoring effect.
  • Medicare Improvement Fund: The Act eliminates the Medicare Improvement Fund for an estimated savings of $1.7 billion.
  • Multiple Therapy Procedure Payment Reduction: The Act reduces payments for physical and other therapy services when they are provided in the same day for an estimated savings of $1.8 billion.
  • Advanced Imaging Services Adjustment: The Act increases the utilization factor used in the setting of payment for imaging services in Medicare from 75% to 90%, which is projected to save $800 million.
  • Competitive Bidding Rates Applicable for all Diabetic Supplies: The Act applies competitive bidding payment rates to diabetic test strips purchased at retail pharmacies for an estimated savings of $600 million.
  • Radiology Services Adjustment: The Act reduces payments for stereotactic radiosurgery services paid for under the Medicare hospital outpatient system, which is expected to save $300 million.

Although the American Taxpayer Relief Act has prevented the country from going over the “fiscal cliff,” the 113thCongress will almost certainly continue to focus on health care cost containment and entitlement reform in the coming weeks and months. Mintz Levin and ML Strategies will continue to closely monitor the effect of fiscal policy on health care.

©1994-2012 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

New 3.8% Medicare Tax Impacts Pass-Through Entities

Hunter J. Brownlee of Fowler White Boggs P.A. recently wrote an article regarding the Medicare Tax Increase that was published in The National Law Review:

Effective for 2013, the Internal Revenue Code will impose a 3.8% tax on investment income and other unearned income. The purpose of the tax is to partially pay for the cost of health care reform.

This new 3.8% Medicare tax applies to individuals who have investment or unearned income and who have modified adjusted gross income above certain thresholds ($200,000 for single individuals or $250,000 for married individuals filing jointly).

Investment or unearned income includes:

  • Income from interest, dividends, annuities, royalties and rents, less allocable expenses, unless the income is earned in an active business.
  • Business income earned in a passive activity (for example, business income earned by a partnership or S corporation in which an individual invests, if the individual does not materially participate in the business activity).
  • Net taxable gains attributable to the sale of non-business property.

With respect to shareholders who are active in an S-corporation’s business, the 3.8% Medicare tax will have no effect because their share of the corporation’s active income will not be subject to the new tax. However, if a shareholder is not active in the business, the new tax will apply to pass-through income from the S-corporation.

The new 3.8% Medicare tax also affects limited liability companies (“LLC”) taxed as partnerships. Generally, if a member of an LLC takes the position that his distributive share of the LLC’s income is not subject to self-employment tax on the grounds that he is a limited partner and not active in the business, this income is likely subject to the 3.8% Medicare tax. However, if the member treats a portion of his distributive share of the LLC’s income as income from self-employment on the grounds that he is an active member, the 3.8% Medicare tax would not apply.

Gain from the sale of interests in pass-through entities, such as LLCs, partnerships and S-corporations, can be subject to the 3.8% Medicare tax, to the extent attributable to the entity’s non-business property. For example, if an individual owns an interest in a pass-through entity and sells that interest at a gain, the portion of the gain attributable to the entity’s passive portfolio investments and to business property used in the business in which the individual does not actively participate is subject to the 3.8% Medicare tax.

Finally, with respect to capital gains, the capital gains tax rate will be 20% in 2013 and the 3.8% Medicare tax may apply to certain high income individuals as discussed above.

©2002-2012 Fowler White Boggs P.A.

CMS Publishes Proposed Rule on Reporting and Returning Medicare Overpayments

The National Law Review recently published an article by Anne W. Hance, Amy Hooper Kearbey, Daniel H. Melvin, and Joan Polacheck of McDermott Will & Emery regarding Medicare Overpayments:

The Centers for Medicare & Medicaid Services released a proposed rule implementing section 6402(a) of the U.S. Patient Protection and Affordable Care Act regarding reporting and returning overpayments under the Medicare program.

On February 16, 2012, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule implementing section 6402(a) of the U.S. Patient Protection and Affordable Care Act (PPACA) regarding reporting and returning overpayments under the Medicare program.  The proposed rule will have meaningful implications for provider compliance programs.  Providers are encouraged to review the rule carefully and consider providing comments, which are due April 16, 2012.

Background

Section 6402(a) of PPACA established a new section 1128J(d) in the Social Security Act regarding reporting and returning Medicare and Medicaid overpayments.  Specifically, section 1128J(d) requires a person who has received an overpayment to report and return the overpayment by the later of (i) 60 days after the overpayment was identified or (ii) the date any corresponding cost report is due.  Significantly, the knowing and improper failure to return an overpayment is subject to liability under the Federal False Claims Act, which exposes the provider or supplier to treble damages and penalties.

The proposed rule implements section 1128J(d) as it relates to providers and suppliers of services under Medicare Parts A and B.

The Proposed Rule

What is an “overpayment” and when has it been “identified?”

CMS proposes to define an overpayment as  “… any funds that a person receives or retains under title XVIII of the [Social Security] Act to which the person, after applicable reconciliation, is not entitled under such title.”  The preamble provides a number of examples of overpayments, and clarifies the only overpayments by a cost reporting provider that can be delayed until the cost report is due are those payments that are reconciled by the cost report (e.g., graduate medical education payments), not overpayments arising from claims-related issues, such as upcoding.

A person would be considered to have “identified” an overpayment if the person has actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment.  Where a provider receives information about a potential overpayment, such as from an anonymous tip through a compliance hotline, the provider would have a duty to investigate the information.  If the reasonable inquiry identifies an overpayment, the provider would then have 60 days from that time to report and return the overpayment.  While CMS recognizes a provider may not be financially able to return the full amount of the overpayment within the 60-day period (directing such providers to use the existing Extended Repayment Schedule process), CMS does not address the critically important fact that providers will usually require more than 60 days to determine the actual amount of the overpayment for purposes of making a refund to the government.

With respect to overpayments that arise from violations of the Federal Anti-Kickback Statute, CMS acknowledges that in certain instances (e.g., where the alleged kickback involves a physician and manufacturer) the provider is unaware of the kickback scheme.  Even where the provider becomes aware of a potential kickback, the provider is often not in a position to evaluate whether an actual violation of the Anti-Kickback Statute has occurred.  Thus, the preamble to the proposed rule states “providers who are not a party to a kickback arrangement are unlikely in most instances to have ‘identified’ the overpayment that has resulted from the kickback arrangement and would therefore have no duty to report it or … repay it.”  However, CMS indicates that even if a provider is not a party to a kickback arrangement, it may have a duty to report if it has sufficient knowledge of the arrangement.  Although CMS indicates it would “refer the reported overpayment to OIG [Office of Inspector General] for appropriate action and would suspend the repayment obligation until the government has resolved the kickback matter,” the reporting obligation in effect requires the provider to become a whistleblower, or possibly risk false claims accusations from a third-party whistleblower even if not from the government directly.  Moreover, neither the proposed rule nor the Medicare contractors’ voluntary refund processes provide a process for a provider to report without payment in such circumstances.

Interaction with Stark Law and OIG Self-Disclosure Protocols

For overpayments that are the subject of a disclosure made pursuant to the Medicare Self-Referral Disclosure Protocol (SRDP) or the OIG Self-Disclosure Protocol (OIG SDP), CMS would suspend the 60-day deadline for returning the overpayment.  Under the proposed rule, a self-disclosure under the SRDP would not alleviate the provider’s obligation to report the overpayment.  However, a disclosure under the OIG SDP would be treated as a report for purpose of the reporting requirement.  CMS requests comments on alternative approaches to prevent providers who make disclosures under the SRDP from having to make multiple reports of identified overpayments.

Procedural Issues

CMS proposes overpayments be reported using the existing voluntary refund process, under which overpayments are reported using a form established by the Medicare contractor.

CMS also proposes a 10-year look-back period (i.e., the obligation to report and return an overpayment applies if the overpayment is discovered within 10 years of the date the overpayment was received).  To facilitate this look-back period, CMS proposes to amend its regulations that generally limit the claims reopening period to four years to allow for a 10-year reopening period for claims resulting in a reported overpayment.  CMS’s stated rationale is to align the look-back period with the outer limits of the False Claims Act statute of limitations.  This would mean SRDP disclosures would also be subject to the 10-year look-back period.

Future Guidance Regarding MAOs, Medicare Part D Plan Sponsors and MMCOs

The proposed rule only describes the reporting and returning requirements as they relate to Medicare Part A and B providers and suppliers, and expressly states the obligations of “other stakeholders,” including Medicare Advantage Organizations (MAOs), Medicare Part D Plan Sponsors (Plan Sponsors) and Medicaid managed care organizations (MMCOs), “will be addressed at a later date.”  Nonetheless, CMS reminds such stakeholders that they are still subject to the reporting and returning requirements of Section 1128J(d), and could face potential liability under the Federal False Claims Act and the Federal Civil Monetary Penalties law, as well as exclusion from federal health care programs for a failure to comply with these obligations.

The proposed rule also does not address any potential reporting and returning requirements that providers and suppliers may have under Medicare Parts C or D or the Medicaid Program, although such obligations may be addressed in providers and suppliers contracts with MAOs, Plan Sponsors and/or MMCOs.

Conclusion

The proposed rule has important implications for provider and supplier compliance programs and creates the potential for greater exposure under the Federal False Claims Act.  Providers and suppliers should review the rule carefully and consider providing comments to CMS.

© 2012 McDermott Will & Emery

Fraud, Prescription Drugs, and the Elderly

Recently posted in the National Law Review, Winner of the  Winter 2011 Student Legal Writing Contest,  Nicole J. Ettinger, law student at SUNY Buffalo Law School wrote an article about the elderly population is often a target for those who seek their financial resources:

Buffalo Law

The elderly population is often a target for those who seek their financial resources—from identity theft, to telemarketing schemes, to health care fraud.[1] The elderly population is seen by many in society as a vulnerable group as a whole; this is often because some in the elderly population may be suffering from dementia or other ailments that may cloud those individuals’ memories. Knowledge about how dementia affects an elderly person’s abilities to recall events or fully orient himself can create predatory opportunities for those who wish to take advantage of this common illness.[2] Those who prey on the elderly likely believe the elder has a substantial amount of money and would easily fall for scams.[3] One area of concern involving fraud against and involving the elderly is fraud in prescription drugs, specifically Medicare Part D.[4]

I. Background of Medicare Part D

Medicare Part D, implemented in 2006, came into being under the Medicare Modernization Act of 2003 [hereinafter “MMA”].[5] The MMA provided assistance for paying for prescription drugs for some elderly persons as before Part D, Medicare only covered prescriptions issued from a hospital or doctor’s office.[6] As long as one is eligible for Medicare Parts A or Part B, he is eligible for the optional[7] prescription drug plan, Medicare Part D.[8]

Like Medicare Parts A and B, Part D is administered through the federal government, but unlike A and B, the actual prescription services are delivered through various approved private insurers.[9] There are two types of Medicare Part D Plans: Prescription Drug Plans (PDP) and Medicare Advantage Plans (MA-PD).[10]  PDPs only provide prescription coverage while MA-PDs also provide the medical services that Medicare Part A and B provide, but through a private company.[11]

For Medicare eligible elders with a more limited income, the Low or Limited Income Subsidy, or Extra Help, is available to assist with some or all of Part D prescription costs.[12] A major benefit of the Extra Help program is that these recipients do not have to face the coverage gap, or “doughnut hole,” that comes with most Part D plans.[13] For an elderly individual or couple who do not apply for the Extra Help subsidy, the “doughnut hole” is a certain spending point, $3,6100.00 in 2010 and $2,480.00 in 2011,[14] after which the elderly individual is responsible for paying for the full costs[15] of his prescription medications. After the individual reaches a second spending benchmark—$4,550.00 in prescription drug costs for 2011—catastrophic coverage will be triggered.[16] During catastrophic coverage, the individual will pay for only 5% of drug costs.[17]

To assist with these difficult costs to the elderly, the Patient and Affordable Care Act [hereinafter PPACA] implements a plan for the hole to “close” in 2020.[18] The closure of the doughnut hole means that the individual will be responsible for paying for only 25% of his prescription costs for brand-name drugs, as 50% will be covered by the pharmaceutical company and 25% by a federal subsidy[19] and 25% for name brands.[20] The program starts the closure of the hole gradually, as it began in 2011 with a 50% discount for brand-name prescription medications and a 7% discount for generic prescription medications.[21] Despite the discount programs and forthcoming changes to the Medicare system,[22] the costs of prescription drugs are still a concern and a major financial burden for many elderly people.

Medicare Fraud

With the coming of the Part D program in 2006, some were concerned about the new and extended avenue for fraud—particularly against the elderly. When Part D first began, many predicted a dreary future for Part D, fraught with fraud, a plan some predicted to cause more trouble than it was worth.[23] Along with fraud related to billing, predictions included “enrollment based frauds, improper inducements to enroll, formulary manipulations, acceptance by plans or pharmacy benefit managers (PBMs) of improper inducements from manufacturers to have their drugs on formulary, improper reporting to the government of rebates received from manufacturers, and plan marketing programs.”[24]

Similarly, telemarketers and internet scammers may target the elderly who may not be as wary or meticulous in protecting their information and checking the legitimacy of the programs.[25] Elderly persons may find themselves enrolled in a Part D program with a premium that is too high for their income or one that excludes the prescription drugs they need from coverage.[26] While Medicare Part D was implemented five years ago, these concerns have not diminished.[27] While it is clear that such concerns have materialized, it is less clear how pervasive the fraud has become.[28]

The MMA requires Part D providers to implement a program to protect against fraud and other abuses of Medicare Part D.[29] While the Center for Medicaid & Medicare Services has its own lengthy suggestions, for the most part, each Part D plan is supposed to implement its fraud and abuse prevention through use of its own guidelines.[30] Some opine that flexibility for insurers to choose how to set up and implement their fraud, waste, and abuse monitoring programs provides a structure that “remains ripe for abuse” by these Part D insurers.[31]

One part of the Center for Medicare & Medicaid Services goals to reduce fraud in Part D is the implementation of the Medicare Drug Integrity Contractors program, or MEDICs, which “identif[y] and investigat[e] potential Part D fraud and abuse, develo[p] potential Part D fraud or abuse cases for referral to law enforcement agencies, ac[t] as a liaison to law enforcement, and serv[e] as an auditor of Sponsor and subcontractor Part D operations.”[32] MEDICs collect and investigate the kind of internal fraud that the Part D beneficiary may never be made aware of—such as submission of false claims for services not provided.[33]

The MEDICs rely heavily on reporting of potential fraud and abuse to their agency through complaints.[34] These complaints may come from the elderly individual himself or they can be reported by family members, healthcare providers, and other Medicare plans.[35] MEDICs are also supposed to complete their own internal analysis of potential fraud through “fulfilling requests for information from law enforcement agencies. . .; identifying program vulnerabilities; auditing the fraud, waste, and abuse programs that are part of plan sponsors’ compliance plans.”[36]

MEDICS are also supposed to apply internal methods of fraud and abuse analysis through “analyzing claims data, conducting Internet searches to identify leads, and analyzing complaint data for trends”[37] but this internal investigation has been limited.[38] Out of the 4,194 reports of potential fraud or abuse in 2008, 87% of these were reported from outside, non-MEDIC, sources.[39] For the cases identified through internal research, 93%, or 553 cases, were discovered through analyzing data trends.[40] Once MEDICs determine that the report of fraud and abuse may have legitimacy, they open an investigation. Out of the 4,194 reports in 2008, 1,320 of these cases were investigated.[41] For the cases that the MEDICs chose to investigate, the MEDICs referred sixty-five cases to the Office of the Inspector General and sent thirty-four “immediate advisements” to the Office of the Inspector General as well.[42] For the remaining cases, 257 were referred to state insurance commissioners and the final 39 were sent to CMS for review.[43]

While all of cases that come before the MEDICs are reviewed, not all are investigated. The MEDICs decide to complete an investigation where they find that the subject of their investigation[44] “engaged in a pattern of improper prescription writing or billing, submitted improper claims with actual knowledge of their falsity, or submitted improper claims with reckless disregard or deliberate ignorance of their truth or falsity.”[45]  The way that the investigations are completed is through a case review.[46] If after the MEDICs’ investigatory efforts, they determine potential fraud or abuse, the MEDICs are supposed to seek the assistance of the Office of the Inspector General to decide what should be done.[47] However, regardless of whether cases are referred for further investigation, the MEDICs are required to update CMS monthly with all referrals to outside agencies and their status.[48]

Out of the 1,320 cases investigated in 2008, 40% of identified fraud involved marketing schemes.[49] The marketing schemes involved behaviors ranging from unsolicited door-to-door marketing to individuals[50] to enrolling an elderly individual in a plan without his permission.[51] While the MEDICs report does not specify its definition of “permission,” it is likely that such tactics would include enrolling an individual who may say he agrees, but who does not have the capacity to enroll himself in a Plan without permission of that individual’s guardian or health care proxy.[52] Twenty-one percent of cases involved “drug diversion by beneficiaries”[53]and 15% involved inappropriate prescriptions, or billing for drugs not medically needed.[54]

While the MEDIC program appears to be organized and comprehensive from the outside, the MEDICs are limited in their ability to track and prevent Part D fraud.[55]The three national MEDICs programs reported that the limitations on their authority to access data as well as audit Plan sponsors limited their ability to enforce their mission of identifying and monitoring potential fraud and abuse.[56] For instance, as of 2008, the MEDICs could not gain access to much of the information they needed to complete their reports, as they were required to request information from the plan sponsors and could not receive this data from CMS directly.[57]

One other troubling finding from the MEDIC analysis is that plan sponsors are notrequired to refer identified cases of potential fraud to the MEDICs.[58] Thus, the information that the MEDICs received is what the Part D plans voluntarily provided and so the breadth of the MEDICs investigations were limited by the amount of data they could collect.[59] Perhaps “encouragement” is not sufficient to convince Part D plans to report concerns of fraud and abuse; the Office of the Inspector General suggests mandatory reporting to MEDICs, rather than recommended reporting so that the MEDICs will be made privy to a greater amount of incidents and will subsequently be able to provide greater protection against such fraud.[60]

Beyond the legal or budgetary limitations of the MEDIC programs, some still do not feel that Medicare’s plan for protecting the elderly population against fraud and abuse in Part D programs is sufficient.[61] In one instance of Part D fraud, seventy-four-year-old Mr. Aldridge’s Medicare Part D plan was switched to a Medicare Advantage plan after a Part D plan employee forged Mr. Aldrige’s signature to enroll him.[62] Mr. Aldrige’s doctors did not accept this new healthcare plan.[63] The unapproved switch cost Mr. Aldrige hundreds of thousands of dollars in out –of-pocket prescription drug costs before the problem was straightened out—while the salesman who allegedly committed the forgery that devastated Mr. Aldrige received a $300.00 commission for Mr. Aldrige’s enrollment.[64] Unfortunately, Mr. Aldrige’s story is not unique, there exist horror stories of people and plans who will enroll elderly individuals who lack capacity to contract,[65] who were not proficient in English,[66] those whose life-sustaining medications are not actually covered by the plan,[67] or by garnering enrollment by marketing in a way that  the elderly may wrongfully believe that Plans are government entities.[68]

One writer suggests that Medicare fraud, including Part D fraud, is still so rampant because federal enforcement measures are lacking.[69] CMS has not taken as strong hand on enforcement as needed.[70] In one situation, insurance companies suspended their marketing practices voluntarily after there were reports of fraud against the elderly in their plan, but these companies were permitted to continue their marketing plan just three months later.[71] Reflective of these sentiments is a 2008 survey by the National Association of Insurance Commissioners Senior Issues Task Force, which noted that out of the thirty-six states that participated in the survey, all but two of them had received complaints on the marketing of private Medicare plans within their state.[72]

i.  Medicare Part D Fraud and the Courts

One reason noted for the limited success in monitoring and preventing Medicare fraud and abuse is that the Medicare Modernization Act of 2003[73] preempts state legislation preventing fraud in the marketing and practice of Part D plans.[74]Therefore, if a state wishes to enforce its own stricter regulations against fraud, these efforts may be preempted by federal law.[75] In Uhm v. Humana Inc., a group of elderly individuals brought a class action suit against a PDP with whom they had all enrolled for their Medicare Part D coverage.[76] The elderly plaintiffs argued that due to this PDP plans’ advertising methods, they thought that their prescription drugs would be covered by the plan once Part D began in 2006.[77] However, when the plaintiffs requested information about their plan and requested copies of the forms needed to order their prescriptions, they did not get a response and had to purchase their prescriptions out of pocket—a great expense.[78]

The PDP argued that the plaintiffs’ state claims[79] were preempted by the MMA—the court agreed, reasoning that “the language of the MMA preemption clause is clear: if Part D establishes standards that cover plaintiffs’ claims, then those standards supersede state law, and plaintiffs’ state law claims are preempted.”[80] While the elderly plaintiffs called such a result “absurd,” the court defended by stating that all PDP plans still must report to CMS according to federal regulations and such grievances could result in large fines to the PDP plans.[81] This, however, is likely little consolation to elderly individuals who had to pay for their medication costs out of pocket, especially where it is possible that the MEDICs, who may receive such grievances, may have limited access to other complaints relating to the PDP plan and so may not be aware about the extent of fraud.[82]

Some fraud may seriously risk an elderly individual’s health. In one heinous case, a sole physician at a small clinic, in exchange for $1000 weekly, allowed the two operators of the clinic to use his provider number to order rare medications, which were not medically necessary for the clinic’s patients, but allowed the highest payment from Medicare.[83] The clinic dispensed some medication to their largely poor and elderly patients –despite that the medication was risky.[84] While it was discovered that the clinic was not legitimate, the clinic managed to receive nearly $650,000.00 from Medicare before detection.[85] Such scenarios result in many writers and activists suggesting plans for solutions.[86]

II.  Possible Solutions or improvements to Part D Fraud

One solution scholars have suggested for curbing fraud is to limit the number of plans available.[87] Second, scholars suggest that state laws should not be preempted, to allow for more stringent regulation of Part D plans by the state.[88]

The proposal to reduce the number of PDP and MA-PD plans available is premised on the notion that fewer plans will lead to less confusion, more efficient regulation, and greater standardization amongst the plans.[89] The proposal is worth consideration due to the many choices that are available out there, which may confuse and overwhelm any person seeking to find an appropriate  Part D plan. Further, fewer plans may limit the aggressive marketing tactics some Plans may feel they need to take to stand out from the many others.

The risk that comes with placing federal restrictions on the amount of plans available to Medicare Part D recipients—thus, the elderly and disabled—is that there is an unavoidable hint of paternalism.[90] The proponents of this proposal seek to combat this assumption by claiming that the government limiting the number of Part D plans is comparable to employers acting as a broker while choosing their employee health plans.[91] While this analogy may be disjointed, the proposal still has merit, despite the recognizable shroud of paternalism and possible concerns regarding restrictions on free markets.[92] A system with limited providers may not be a limit on freedom of choice, as the proposal explains that there should still be a sufficient number of options.[93] Some studies show that many elders report confusion and frustration surrounding Medicare Part D.[94] If this is the case, limitations would be helpful in easing the choosing process.[95] As the federal government would be responsible for narrowing the number of insurers issuing Part D, the government would also be responsible for evaluating the Plans’ quality.[96]

Such a system may be beneficial in reducing fraud, if it could be shown that part of the reason that fraud occurs is because there are so many plans in place. A system with limited choice of Part D providers may not directly reduce fraud, but appears that its side effects may lead to such a result. It may be the case that if fewer plans are offered, government oversight could be greater because there would be fewer plans to monitor and audit; further, the quality of plans may improve.[97] Further, beyond concerns of fraud, the other benefit that may come with such a plan would be “simplicity” for the elder in choosing a Part D plan.[98] If limited plans are available, the first time an elderly individual enrolls, he may feel less overwhelmed and more willing to research plans that fit his needs best where the amount to research does not seem so vast and frustrating.[99] While the true effect on providers is uncertain, another benefit of limited Plans may be that Part D plans marketing tactics may become less aggressive if the amount of Plans that are accepted to operate in each state are limited and enforced, so that there are not many plans jumping for a bite at the “apple” all at once. The theory is based on the idea that the plans providers will know that they have been accepted by the government as one of only a few providers in that state and thus, that their competition is limited to far fewer companies. Further, if that Plan attempts aggressive or suspicious marketing, due to the smaller “community” of plans, it is possible the other plans may be more likely to report them, providing for internal enforcement.

The second proposal to for reducing fraud is that federal laws and regulations shouldnot preempt stronger state laws protecting against fraud in Part D plans.[100]Currently the MMA explicitly preempts state laws and regulations relating to enforcement of state fraud and abuse plans because of the fact that Medicare is a federally operated program so, beyond state licensing or solvency laws, state laws are not applicable.[101] The reason that some argue that state laws should not be preempted is that state laws and regulations to monitor and enforce marketing requirements and limitations “offer faster and more responsive remedies” than federal programs.[102]

Such a plan to allow for state enforcement may be a very helpful solution where Medicare’s guidelines on some aspects of Medicare fraud, waste, and abuse programs are merely suggestions, rather than requirements. As discussed above, Part D plans are not mandated to report claims of fraud, waste, and abuse and additionally, the structure for implementing such plans are largely left to the Part D insurer.[103] This is corroborated by evidence presented that the federal government and Medicare do not always take strong efforts to enforce marketing standards. While the news shows recent “crackdowns” on Medicare fraud operations by health care providers,[104] it is not clear how strong the enforcement is for marketing, despite the federal regulations putting forth such standards.[105] At least when Medicare Part D first began, “CMS issued only ‘warning notices’ to plans violating marketing standards.”[106]

States’ ability to enforce their own stronger laws and regulations against Part D providers may be an  effective option for fraud reduction. If Plans, especially those only offered in one state, are held responsible to the states, active state boards such as within Attorney General’s Offices and bureaus of Consumer Fraud could serve as additional pairs of eyes on the providers.[107]

Part III: Conclusion

Proper information about Part D Plans’ abuse and fraud programs along with consumer protection education for the elderly and their caretakers can serve as important methods of protection.[108] For the former, this may include that Part D providers must provide their current and potential enrollees with clear, plain-English information regarding the Plan’s fraud and abuse programs and detailed information on how an enrollee could file a complaint or grievance.

Second, Medicare should fund consumer fraud education programs to be taught at nursing homes and assisted living facilities; for those who may be living alone, this information may provided from Medicare and distributed to the elderly individual’s doctors, families, or the elders themselves.  Additionally, the elderly individual should be taught basic fraud prevention strategies such as to never give out his personal information—especially to someone who calls over the phone or who stops by the individual’s home to enroll them in a plan.[109] Elderly individuals should also be advised not to give their Medicare card or information to anyone they may meet, especially if the person offers free equipment, medication, or prizes in exchange for private information.[110] While such suggestions may seem simplified when contrasted with the fraud reduction suggestions earlier in this paper and in many scholars’ writings, proper consumer protection education may be a first and important step in preventing against fraud until such programs might be implemented to target and monitor fraud from the inside, out.

[1] Fraud Target: Senior Citizens, Federal Bureau of Investigation,http://www.fbi.gov/scams-safety/fraud/seniors (last visited Apr. 28, 2011).

[2] Id. (“Con artists know the effects of age on memory, and they are counting on elderly victims not being able to supply enough detailed information to investigators. In addition, the victims’ realization that they have been swindled may take weeks—or more likely, months—after contact with the fraudster.”)

[3] Supra n.1.

[4] Alice G. Gosfield, Medicare and Medicaid Fraud and Abuse ,§ 1:2 (2010). “’[Defining] fraud and abuse,’ as it is customarily used, to cover misconduct in the delivery and financing of health care.”

[5] Public Law 108-173. See also, Centers for Medicare & Medicare Services, Medicare Prescription Drug Benefit Manual, Chapter 1 at 3. (2008), available athttps://www.cms.gov/PrescriptionDrugCovContra/Downloads/Chapter1.pdf (last visited Apr. 24, 2011).

[6] 42 USCA § 1395y (2002) See also, Medicare Part D: Prescription Drug Program, Evelyn Frank Legal Resources Program (updated Nov. 7, 2010), available athttp://wnylc.com/health/download/6/.

[7] Part D is mandatory for those who receive Medicare and Medicaid benefits, known as “dual eligibles.” See 42 C.F.R. § 423.34(a) (2005).

[8] 42 C.F.R. § 423.30(i)-(ii).

[9] Medicare Part D: Prescription Drug Program, Evelyn Frank Legal Resources Program, 5 (updated Nov. 7, 2010), available at http://wnylc.com/health/download/6/.

[10] See Centers for Medicare & Medicare Services, Medicare Prescription Drug Benefit Manual, Chapter 1 at 3. (2008), available athttps://www.cms.gov/PrescriptionDrugCovContra/Downloads/Chapter1.pdf (last visited Apr. 24, 2011).

[11] Id. at 7.

[12] See 42 CFR § 423.780. To receive Extra Help, the individual must be either eligible for Supplemental Security Income (SSI), Medicaid, Medicare Savings Program, or whose income and resources fall below certain benchmarks. See generally, POMS, 00815.023 Medicare Savings Programs Income Limits, available athttps://secure.ssa.gov/apps10/poms.nsf/lnx/0600815023. See also See 42 CFR §§  423.773, 423.780, POMS HI 03030.025 Resource Limits for Subsidy Eligibility,available at https://secure.ssa.gov/apps10/poms.nsf/lnx/0603030025.

[13] Eighty percent of Part D plans have a gap and do not offer any gap coverage. See Richard L. Kaplan, Analyzing the Impact of New Health Care Reform Legislation on Older Americans, 19 Elder L. J. 213, n. 13, (citing  Jack Hoadley, et. al, Medicare Part D 2010 Coverage Spotlight: The Coverage Gap, Exhibit 1, (2009))(citing Georgetown University/NORC at the University of Chicago’s analysis of CMS PDP Landscape Source Files, 2006-2010, for the Kaiser Family Foundation).

[14] The elderly individual first pays a $310.00 premium and then pays 25% of prescription costs up to $2480.00. POMS HI 03001.005, available at https://secure.ssa.gov/apps10/poms.nsf/lnx/0603001005, See also Pub. L. 118-148.

[15] Referred to as TrOOP, True Out of Pocket Costs. See Centers for Medicare and Medicaid Services, Prescription Drug Benefit Manual. Chapter 9, Part D Program to Control Fraud, Waste and Abuse.

[16] POMS HI 03001.005, available athttps://secure.ssa.gov/apps10/poms.nsf/lnx/0603001005; Announcement of Calendar Year (CY) 2011 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies and Final Call Letter, Center for Medicaid & Medicare Services (Apr, 5, 2010) available athttp://www.cms.gov/MedicareAdvtgSpecRateStats/Downloads/Announcement2011.pdf at 34.

[17] Id.

[18] See 42 USCA § 1395w-114a , Public Law 111-148.

[19] See 75 FR 29556 (2010)(“For purposes of sections 1860D-14A and 1860D-43 of the Social Security Act (the Act), as set forth in the Patient Protection and Affordable Care Act of 2010, Public Law 111-148 § 3301, and the Health Care and Education Reconciliation Act of 2010, Public Law 111-152, collectively known as the Affordable Care Act), see also, Social Security Act § 1860D-14A(b)(1)(B).

[20] See 75 FR 29556 (2010)

[21]  Patient Protection and Affordable Care Act, 42 USCA § 1395w-114a ; SSA-POMS, HI: 03001.001, available athttps://secure.ssa.gov/apps10/poms.nsf/lnx/0603001001.

[22] One study notes that after the 2006 implementation of Part D, in 2006, the mean yearly out of pocket costs for prescription medications decreased by 32% one year after Part D was put into effect. However, the study notes that this decrease in expenditures is for those who did not have any prescription coverage before Part D (decrease from an average of $963 to $517 between 2005 and 2006), while those who had some prescription coverage or were dual eligible people with Medicaid, Part D did not vary their out of pocket costs for medication very much (from $600 to $582 in 2006). See Christopher Millett, et. al, Impact of Medicare Part D on Seniors’ Out –of-pocket Expenditures on Medications, 170 Arch. Intern. Med. 16 (2010).

[23] See, e.g., Alice G. Gosfield, Medicaid and Medicare Fraud and Abuse, § 1.18- Medicare Part D (2010).

[24] Id.

[25] Fraud Target: Senior Citizens, Federal Bureau of Investigation,http://www.fbi.gov/scams-safety/fraud/seniors (last visited May 5, 2011).

[26] Infra n.103. But see, 42. C.F.R. § 423.38(c)(8)(i) (allowing for disenrollment if there was material representation of the benefits of the plan while marketing the plan to the individual).

[27] See, e.g., In February, 2011, police arrested one hundred and eleven health care professionals across nine different U.S. cities for Medicare fraud.  http://blog.lawinfo.com/2011/02/18/medicare-fraud-111-us-doctors-nurses-arrested/ (last visited Apr. 30, 2011).

[28] See  Rita Isnar, A Glimpse of the Future of Compliance Oversight by CMS: Part D Plans Case Study, Journal of Health Care Compliance, 13 No. 1 JHTHCC 51, (Jan-Feb. 2011), “Despite the requirements and emphasis placed on protecting the Part D benefit, few PDPs have met CMS’s requirements for addressing fraud detection, correction, and prevention by developing an effective compliance program.”

[29] See 42 C.F.R. § 423.504(b)(4)(vi)(H).

[30] 42 U.S.C. § 1395w-104; 42 C.F.R. § 423.505(b)(4)(vi)(H), CMS Manual, Part D Program to Control Fraud, Waste and Abuse, ch. 13, at 3-4.

[31] Supra n.4 at 1189.

[32] CMS Manual, Part D Program to Control Fraud, Waste and Abuse, ch. 13, at 10,

[33] Department of Health and Human Services, Office of the Inspector General,Medicare Drug Integrity Contractors’ Identification of Potential Part D Fraud and Abuse at 5 (Oct. 2009) (all data analyzed in this 2009 report is from 2008).

[34] External complaints are the primary source of fraud reports to the MEDICS. Id. at 3.

[35] Id.

[36] Id. at 2.

[37] Id.

[38] Id. at 8.

[39] Id.

[40] Id.

[41] Id. at ii.

[42] Id. at ii.

[43] Id.

[44] Id. at 5. MEDICs do not only investigate plan providers, but also investigate pharmacies, providers, and even the Medicare enrollee.

[45] Id.

[46] Id. at 4.

[47] Id. (citing Center for Medicare Services, MEDIC Statement of Work, § 6.2 (2d. Ed., Sept. 28, 2007).

[48] Id. at 5.

[49] Id. at 19, Table A-1: Top Five Types of Potential Fraud and Abuse Investigated and Referred to the Office of the Inspector General in Fiscal Year 2008.

[50] See 42 CFR § 422.2268(d). As this paper will soon discuss, Part D plans are prohibited from unsolicited marketing of their plans. See,Federal Trade Commission,Medicare Part D Solicitations: Word to the Wise about Fraud (Apr. 1, 2006)(“Providers may come to your home only if you have invited them to do so.”).

[51] Id.

[52] See, Bloomberg News, Insurers Suspend the Marketing of Some Medicare Plans, printed in New York Times (Jun. 16, 2007) available athttp://www.nytimes.com/2007/06/16/business/16health.html?ref=coventryhealthcareinc (last visited Apr. 22, 2011) (“ Agents also forged signatures, signed up the dead and enrolled mentally disabled people without consulting their guardians.”).

[53] Drug Diversion included visiting multiple physicians to receive more than one prescription for medication, transferring prescription medication to an individual other than the person to whom the medication was prescribed, illegally selling prescription drugs, and forging a prescription. Id. at 19, Table A-1: Top Five Types of Potential Fraud and Abuse Investigated and Referred to the Office of the Inspector General in Fiscal Year 2008.

[54] Id. at 9.

[55] Id. at ii (Executive Summary), supra n.

[56] Id. at i.

[57] Id.

[58]CFR 42 § 423.504(b)(4)(vi)(G)(3) (2010); Medicare Drug Integrity Contractors’ Identification of Potential Part D Fraud and Abuse at iii.

[59] Id. at iii (“One MEDIC office stated it received relatively few referrals compared to the number of plan sponsors in its jurisdiction. The two other MEDICs indicated that while some plans referred incidents of potential fraud and abuse, other plans had never referred any such incidents.”).

[60] Id. at iv.

[61] See Borer, supra n.6.

[62] Id. at 1.

[63] Id.

[64] Id.

[65] Supra n. 80.

[66] Borer, 92 Minn. L. Rev 1165 at 1.

[67] See, e.g., Masey v. Humana, Inc., 2007 WL 2363077 (M.D. Fla.) (Part D plan allegedly characterized their advertisements so that woman believed that her chemotherapy drugs and then had to pay out of pocket when the Plan denied coverage for these prescriptions).

[68] See, Commonwealth of Pennsylvania v. Peoples Benefit Services, Inc., 923 A.2d 1230 (2007)( Non-government approved Part D plan marketed to elderly using symbols and names that the Commonwealth claimed would induce the elderly to enroll because they may believe that this plan was associated with—and approved by— the government).

[69] Supra n.94.

[70] Id.

[71] Id. at 4; supra n.81.

[72] See National Association of Insurance Commissioners Senior Issues Task Force, Second State Survey on Medicare Marketing Issues (Feb. 5, 2008), available athttp://www.naic.org/documents/committees_b_senior_issues_medpp_survey_2n….

[73] 42 U.S.C. § 1395w-26(b)(3) (2003) .

[74] Id. (“The standards established under this part shall supersede any State law or regulation (other than State licensing laws or State laws relating to plan solvency) with respect to MA plans which are offered by MA organizations under this part.”).

[75] 42 U.S.C. § 1395w-26(b)(3) (2003), CMS Prescription Drug Benefit Manual, ch. 9, Program to Control Waste, Fraud, and Abuse at 15.

[76] 2006 WL 1587443.

[77] Id.

[78] Id.

[79] Plaintiffs’ causes of action included “claim breach of contract, violation of state consumer protection statutes, unjust enrichment, fraud, and fraud in the inducement.”Id.

[80] Id.

[81]Id.

[82] Supra part II, see also Department of Health and Human Services, Officer of Inspector General, Medicare Drug Integrity Contractor’s Identification of Potential Part D Fraud and Abuse (Oct. 2009).

[83] See United States v. Silber, 2010 WL 5174588.

[84] Id.

[85] Id. at *1.

[86] See section III of this paper.

[87] See, e.g., Thomas Rice, 35 J. Health Pol. Pol’y & L. 961 (2011).

[88] See, e.g., Borer, 92 Minn. L. Rev. 1165.

[89] Id.

[90]Id. at 963-64. Rice, however, discusses Schwartz’s piece which explains that too many choices in any market may lead to people making poor choices because the plethora of options is “so cognitively burdensome.” Rice also cites studies that have shown that “when more choices are available, the likelihood of investing in retirement vehicles such as 401(k) plans decline, and the quality of choices made among investors is worse.”

[91] Id. at 962.

[92] While such a program may be somewhat paternalistic, it is necessary to note that the entire system of fraud protection could be said to fall within the paternalistic category as well by arguing that the elderly and disabled are a more vulnerable class which may need added protections, as opposed to private, non-Medicare plans.

[93] Id. at 970. Rice suggests between six and fifteen plans, but that the number depends on the state.

[94] Rice, Reducing the Number of Drug Plans for Seniors at 966.

[95] Id.

[96]Id.

[97] This was noted in a comparable program involving competitive bidding for Medicaid providers in Arizona. See Id. at 977.

[98] Id. at 987.

[99] Id. at 989. Individuals frustration with choosing a Medicare program may be the reason why many elders will remain in their Part D program, rather than switching, even when their plan changes the medications it covers or increases its premium.See, Id. at 965.

[100] Borer, 92 Minn. L. Rev. 1165 (2008).

[101] See, 42 U.S.C. § 1395w-112(g); Borer, Modernizing Medicare at 1179. Note, CMS agrees that state laws on marketing of Part D plans are preempted by federal law. See Borer, n. 124 (citing CMS, Questiins and Answers on Preemption, available at http://www.ins.state.ny.us/orgo2008/rg70720.htm.).

[102] Id. at 1185.

[103] See supra, section II, see also¸ Id. at 1188, “Depending on plans to self-police themselves is a dangerous strategy on its face and does not work in practice.”

[104] Supra n.56.

[105] See generally, 42 CFR § § 423.2262.

[106]Borer, 92 Minn. L. Rev. at 1188.

[107] Id. at 1199. Borer points out that the fact that Attorney Generals are elected positions, they will respond to individuals  complaints about problematic Plans or marketing tactics.

[108] Fraud Target: Senior Citizens, Federal Bureau of Investigation,http://www.fbi.gov/scams-safety/fraud/seniors (last visited May 5, 2011.)

[109] Department of Health and Human Services, Information Partners Can Use on: Preventing Fraud (Oct. 6, 2006).

[110] Federal Trade Commission, FTC Consumer Alert: Medicare Part D Solicitations: Words to the Wise About Fraud.

© Copyright 2011

 

 

Imminent Withholding of Medicare Physician Payments Appears Likely

Recently posted in the National Law Review an article by attorney Frank R. Ciesla of Giordano, Halleran & Ciesla, P.C. regarding the Medicare payment rate which are scheduled to go into effect January 1, 2012:

 

 

As of today, there still has not been a resolution of the threatened reductions to the Medicare payment rate which are scheduled to go into effect ten (10) days from now .  As you are aware, the Medicare Sustainable Growth Rate will require reducing payments by over 27% as of January 1, 2012.

While the news seems to be focused on the deadlock in regard to the payroll tax cut and extension of unemployment benefits, the issue regarding physician compensation is as vital, not only to the physicians, but to the Medicare population, as either of the other two issues.  The pending Republican proposal for resolving the physician payment issue is focused on reducing payment to other healthcare providers.  This appears to be unacceptable to the Democratic contingent in both the House and the Senate.

As of this point in time, Medicare will withhold all Medicare physician payments for services rendered during the first ten (10) days of 2012, until there is either:  (1) a resolution of the issue; or (2) implementation of the reduction because the Sustainable Growth Rate issue has  not been resolved.  Clearly, the providers of healthcare to the Medicare population are being held hostage in this crisis.

See our prior blog as to steps you can take regarding your continued provision of services to Medicare patients.

© 2011 Giordano, Halleran & Ciesla, P.C. All Rights Reserved

Medicare Part B premiums for 2012 lower than projected

Recently posted in the National Law Review an article by U.S. Department of Human & Health Services regarding Medicare Part B premiums:

Health & Human Services

Affordable Care Act helps keep Medicare affordable 

The U.S. Department of Health and Human Services (HHS) announced that Medicare Part B premiums in 2012 will be lower than previously projected and the Part B deductible will decrease by $22. While the Medicare Trustees predicted monthly premiums would be $106.60, premiums will instead be $99.90. Earlier this year, HHS announced that average Medicare Advantage premiums would decrease by four percent and premiums paid for Medicare’s prescription drug plans would remain virtually unchanged.

Thanks to the Affordable Care Act, people with Medicare also receive free preventive services and a 50 percent discount on covered prescription drugs when they enter the prescription drug “donut hole.”  This year, 1.8 million people with Medicare have received cheaper prescription drugs, while nearly 20.5 million Medicare beneficiaries have received a free Annual Wellness Visit or other free preventive services like cancer screenings.

“The Affordable Care Act is helping to keep Medicare strong and affordable,” said HHS Secretary Kathleen Sebelius. “People with Medicare are seeing higher quality benefits, better health care choices, and lower costs. Health reform is also strengthening the Medicare Hospital Insurance Trust Fund and cracking down on Medicare fraud.”

Medicare Part B covers physicians’ services, outpatient hospital services, certain home health services, durable medical equipment, and other items. In 2012, the “standard” Medicare Part B premium will be $99.90. This is a $15.50 decrease over the standard 2011 premium of $115.40 paid by new enrollees and higher income Medicare beneficiaries and by Medicaid on behalf of low-income enrollees.

The majority of people with Medicare have paid $96.40 per month for Part B since 2008, due to a law that freezes Part B premiums in years where beneficiaries do not receive cost-of-living (COLA) increases in their Social Security checks. In 2012, these people with Medicare will pay the standard Part B premium of $99.90, amounting to a monthly change of $3.50 for most people with Medicare. This increase will be offset for almost all seniors and people with disabilities by the additional income they will receive thanks to the Social Security cost-of-living adjustment (COLA). For example, the average COLA for retired workers will be about $43 a month, which is substantially greater than the $3.50 premium increase for affected beneficiaries. Additionally, the Medicare Part B deductible will be $140, a decrease of $22 from 2011.

“Thanks in part to the Affordable Care Act, people with Medicare are going to have more money in their pockets next year,” said Centers for Medicare & Medicaid Services (CMS) Administrator Donald Berwick, M.D. “With new tools provided by the Affordable Care Act, we are improving how we pay providers, helping patients get the care they need, and spending our health care dollars more wisely.”

Today, CMS also announced modest increases in Medicare Part A monthly premiums as well as the deductible under Part A. Monthly premiums for Medicare Part A, which pays for inpatient hospitals, skilled nursing facilities, and some home health care, are paid by just the 1 percent of beneficiaries who do not otherwise qualify for Medicare. Medicare Part A monthly premiums will be $451 for 2012, an increase of $1 from 2011. The Part A deductible paid by beneficiaries when admitted as a hospital inpatient will be $1,156 in 2012, an increase of $24 from this year’s $1,132 deductible. These changes are well below increases in previous years and general inflation.

For more information on how seniors are getting more value out of Medicare, please visit:http://www.healthcare.gov/news/factsheets/2011/10/medicare10272011a.html

For more information about the Medicare premiums and deductibles for 2012, please visit:https://www.cms.gov/apps/media/fact_sheets.asp

© Copyright 2011 U.S. Department of Human & Health Services