Category: Zack Buck

Update: Another Wave of ICD Settlements

buckz Leave a comment

By Zack Buck

There has been an update to a story I recently blogged about here.

As announced by the Department of Justice (DOJ) on Wednesday, another 51 hospitals have settled allegations that the hospitals placed implantable cardioverter defibrillators (ICDs) in the chests of patients without complying with Medicare’s mandatory waiting periods.  These 51 settlements amount to $23 million, meaning that the DOJ’s ICD review has now has resulted in settlements with more than 500 hospitals totaling more than $280 million.

According to the DOJ, this is the final stage of the investigation, concluding an initiative that has highlighted the tension that exists between fraud enforcement, medical necessity, and reimbursement standards (recent articles here, here, and here).

High Deductibles and Consumer-Based Health Care

buckz 1 Comment

By Zack Buck

Last week, the New York Times highlighted a recent study by Zarek C. Brot-Goldberg, et al., with fascinating implications for cost control within American health care. The paper, entitled, What Does A Deductible Do? The Impact of Cost-Sharing on Health Prices, Quantities, and Spending Dynamics, and posted by the National Bureau of Economic Research, shares that while deductibles do cause patients to use less health care, the type of health care that patients cut represents both high-quality, high-value care as well as low-value, wasteful care.

The study tracks the results of an insurance switch by a large employer—from a plan that provided free health care to a high deductible plan for its employees—and noted that the switch reduced overall spending by about 12 percent. However, while spending dropped, beneficiaries were cutting the wrong type of health care. The authors concluded that there was “no evidence of consumers learning to price shop after two years in high-deductible coverage,” finding that the beneficiaries “reduced low-value medical services and medically important ones at about the same rate, raising questions about their long-term health.” According to the authors, “90 percent of all spending reductions occur[red] in months that began under the deductible.”

Read More

Cost Control’s Growing Complexity

buckz Leave a comment

By Zack Buck

A paper entitled “The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured” has a number of health policy experts talking this week. Authors Zack Cooper, Stuart Craig, Martin Gaynor, and John Van Reenen—as part of the Health Care Pricing Project—present new findings demonstrating that geographic areas with low Medicare costs and geographic areas with low private insurance costs are nearly completely unrelated. That is, locales with comparatively low Medicare costs are not necessarily areas with comparatively low costs for care paid for by private insurers. Though stunning, this lack of relation between the two metrics does make sense; the report notes that Medicare’s costs are largely driven by the amount of provided care and services, whereas care paid for by private insurance is largely affected by the price at which the care is set by each hospital. (Kevin Quealy and Margot Sanger-Katz of the New York Times have a number of interesting graphs and charts that reflect the study’s findings here.)

Indeed, before the study, and because of a dearth of private insurance pricing data, many simply believed that locales that were cheaper for Medicare were cheaper for private insurance—that is, areas that were great stewards of Medicare funds were likely efficient for private insurers as well. But this new paper demonstrates that this is not true. The two metrics are completely separate.

At the risk of overstating it, this finding could drastically change the paradigm for controlling health care costs going forward. The paper got the attention of Atul Gawande, who noted its importance in an article for The New Yorker. There, Gawande revisits the story of McAllen, Texas, which focused on exploding Medicare costs largely driven by large volume. (I even look at the McAllen story in a forthcoming article here because of its fascinating impact on cost control for Medicare.)

Read More

The Record-Breaking Resolution of a Groundbreaking Fraud Investigation

buckz Leave a comment

By Zack Buck

After more than four years of investigation, and 70 separate agreements, the Department of Justice (DOJ) announced news Friday of a massive $257 million settlement, covering a record-breaking 457 hospitals, for the alleged fraudulent placement of implantable cardioverter defibrillators (ICDs) between 2003-2010. I have previously written about the twists and turns of this particular nationwide investigation—the most prominent example of the medical necessity-based health care fraud investigations—here, here, and here.

Why ICDs initially caught the attention of the DOJ seemed to be the fact that ICDs are highly expensive—costing Medicare about $25,000 per implantation—and, following a whistleblower’s lawsuit in 2008, the DOJ commenced a review of “thousands” of ICD placements nationwide. As I have written about before, hospitals across the country—including renowned hospitals such as the Cleveland Clinic—were included in the initial review, but not all of ended up on the settlement list (a full list of settling hospitals is available here).

Although the full details of the settlement have not yet been made public, there seems to have been a difference between all of the hospitals that placed ICDs outside of Medicare’s timing guidelines and those that the DOJ felt were particularly egregious (apparently less than half of the hospitals on the original investigation list ended up as part of this settlement). This is important because it may indicate a difference—in the DOJ’s thinking—between Medicare’s coverage standard, and its “medical necessity” standard for purposes of fraud enforcement.

Read More

Fiduciary Duty and the Payer-Provider Relationship

buckz Leave a comment

By Zack Buck

Even though the Centers for Medicare and Medicaid Services (CMS) has set an ambitious goal to move the reimbursement paradigm away from a fee-for-service model for half of all Medicare services by 2018, incentives built into the delivery of American health care that encourage and result in overtreatment remain. One recent illustration of the reimbursement incentives facing physicians to administer either more care, or more expensive care, is the Lucentis-Avastin example I blogged about here earlier this year.

My newest article, forthcoming in the California Law Review in 2016, examines another legal tool that could be employed to recalibrate the incentives in Medicare: fiduciary duty. Others have characterized the patient-physician relationship as being fiduciary in nature; this piece advocates for the extension of the metaphor to the payer-physician relationship. This move would introduce much-needed pressures on providers to limit or avoid excessive or expensive care by placing a duty of loyalty on providers owed to the payers of Medicare’s services–American taxpayers. This move would respect provider autonomy but provide remedies for overtreatment without substantially growing the regulatory scheme or expanding oversight costs. The abstract is available here.

Doubling Down on Prosecutorial Discretion

buckz Leave a comment

By Zack Buck

Health care entities should be “on high alert” following the Southern District of New York’s decision in Kane v. Continuum Health Partners that I blogged about here earlier this month.

The case, which serves as the first and most consequential interpretation of when an overpayment is “identified” for purposes of False Claims Act (FCA) liability, provides a measure of much-needed guidance for attorneys and compliance officers in an area that is rife with confusion. But not too much.

Read More

Clarity for an “Unforgiving” and “Potentially Unworkable” Rule

buckz Leave a comment

By Zack Buck

In a case previously blogged about here, last week, the Southern District of New York denied Defendants’ motion to dismiss in U.S. ex rel. Kane v. Continuum Health Partners, No. 11-2325, in a major decision for health care entities unclear on the parameters of overpayment liability under the False Claims Act (FCA).

The case centers on Continuum Health Partners, Inc. (Continuum)—which operated three New York City area hospitals—and its erroneous receipt of overpayments from the New York Medicaid program based on a software glitch. The overpayments began in 2009; by September 2010, the New York State Comptroller had notified Continuum. Continuum tapped Robert Kane, an employee, to review the billing data and identify all claims that were incorrect. On February 4, 2011, Kane emailed a spreadsheet to superiors that contained 900 claims that may have been erroneously billed. The spreadsheet was “overly inclusive” and “approximately half of the claims listed therein were never actually overpaid.” On February 8, Kane was terminated.

Read More

A Test For Overpayment Liability

buckz Leave a comment

By Zack Buck

The eyes of practitioners, compliance officers, and providers have been trained on the Southern District of New York as many await a decision on a motion to dismiss in Kane v. Continuum Health Partners, No. 11-2325. Kane has grabbed recent attention because of what it could represent: a new era in fraud enforcement.

The facts are straightforward. Throughout 2009 and 2010, three hospitals operating under the Continuum Health Partners umbrella (which is now Mount Sinai Health System) submitted erroneous Medicaid claims seeking reimbursement due to what has been described as a “computer glitch.” The New York Comptroller’s Office notified Continuum of the incorrect claims in the fall of 2010, and Continuum launched an internal investigation.

Relator Robert Kane was asked to investigate any erroneously submitted claims. By early 2011, he had created a spreadsheet containing around 900 claims he thought were erroneously submitted. He emailed the spreadsheet to superiors on February 4, 2011. On February 8, 2011, Kane’s employment was terminated.

Read More

The Robust But Unsatisfying State Of Health Care Fraud Enforcement

buckz Leave a comment

By Zack Buck

Earlier this spring, the U.S. Department of Health and Human Services and Department of Justice reported they had recovered nearly $28 billion as a result of anti-health care fraud efforts in FY 2014. The federal False Claims Act played a substantial role in achieving these recoveries: the government recovered $2.3 billion in FCA settlements and judgments, and opened nearly 800 new civil health fraud investigations, in FY 2014 alone. Further, the agencies noted that these anti-fraud efforts—bolstered by increased funding and authority under the Affordable Care Act—are continuing to abandon the “pay and chase” method of fraud enforcement, relying instead on prevention and “real-time data analysis.”

Interestingly, it is no longer just the federal government driving the enforcement regime. Increasingly, facing Medicaid shortfalls, states are getting involved—and, according to practitioners, state enforcement is “exploding.” For example, in New York, its Office of Medicaid Inspector General recovered more than $1.7 billion from FY 2011 to 2013. States have also had success in litigating claims to trial, most recently illustrated by the notable South Carolina Supreme Court verdict against pharmaceutical giant Johnson and Johnson. Further, Vermont is likely to become the newest state to establish its own state false claims act, another wide-ranging and powerful statute that mirrors the federal FCA.

Read More

Medicare’s Costly Drug Problem

buckz Leave a comment

By Zack Buck

Last week, Dr. Salomon Melgen, an ophthalmologist who practices in North Palm Beach, Florida, was indicted on Medicare fraud charges. Melgen was charged with a variety of crimes, with prosecutors alleging he falsely diagnosed patients and falsified their files. Melgen’s name may be familiar. Last year, he was reported to be the provider with the highest total of Medicare Part B reimbursements in 2012, reportedly reimbursed by Medicare for more than $20 million, a substantial percentage of which was directly based upon his prescriptions for, and administration of, the drug Lucentis.

But the allegations against Melgen highlight a deeper challenge facing Medicare.

Read More