Why Discharge Planners/Case Managers Need to Know About Legal Implications of Provision of Free Services to Patients

Elizabeth E. Hogue, Esq.

Office: 877-871-4062

Fax: 877-871-9739

E-Mail: ElizabethHogue@ElizabethHogue.net

Based upon their overriding commitment to patients, case managers or discharge planners may be tempted to “take up the slack” by urging post-acute providers to render free or voluntary services to patients. Case managers/discharge planners may state to post-acute providers that they will not receive additional referrals unless they agree to provide services to so-called “indigent patients,” some of whom may not have a payor source for their care.

Staff members who provide free services and organizations that allow staff members to do so run the risk of engaging in fraudulent conduct. Specifically; to the extent that free or voluntary services are perceived as an inducement to patients to initiate, continue, or re-initiate services with particular providers; organizations and practitioners may run the risk of violation of Medicare/Medicaid fraud and abuse prohibitions, especially the federal anti-kickback statute. Violations may also occur if provision of free services is an inducement for additional referrals, as described above. The Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services (DHHS), a primary source of enforcement activity, has clearly stated that the provision of free services to beneficiaries may constitute a violation of these prohibitions.

The OIG has also clearly delineated limits on free items and services that may be provided to patients. Providers may give patients only non-cash items of nominal value. Non-cash items, including free services, may not exceed $10.00 in value at a time and $50.00 in value during a calendar year. Most post-acute services, including even one visit to a patient’s home, clearly exceed these limits.

This position may strike discharge planners/case managers as confusing and perhaps contradictory. Since the point of enforcement is to prevent unnecessary costs, shouldn’t the government welcome the provision of free services to beneficiaries by providers that save money, since they are free? Nonetheless, the government’s point of view is that, when free services result in additional utilization of services, there is a potential fraud problem.

The question of whether free services induce beneficiaries to utilize services paid for by the Medicare/Medicaid and other federal and state healthcare programs that they otherwise would not have utilized is certainly a tricky one to answer. In the current environment of hypersensitivity to fraud and abuse, the best course of action for post-acute providers is likely to completely avoid the provision of free services to patients.

In response to these concerns, providers may wish to develop and implement a policy that permits provision of so-called “charity care” after the requirements of the policy have been met. At a minimum, such policies should require providers to bill patients three times before writing off the services as “charity care.” This practice is likely to help “shield” providers from allegations of fraud.

The good intentions and fine motivations of case managers/discharge planners must be acknowledged. The “bottom line,” however, is that the provision of free services is problematic in today’s healthcare environment and should be avoided for all of the above reasons.

©2010

Elizabeth E. Hogue, Esq. All rights reserved.

No portion of these materials may be reproduced in any form without the advance written permission of the author.

The Latest on the Red Flags Rule

Elizabeth E. Hogue, Esq.

Office: 877-871-4062

Fax: 877-871-9739

E-mail: ElizabethHogue@ElizabethHogue.net

The Federal Trade Commission (FTC) will begin enforcement of the Red Flags Rule on June 1, 2010. This Rule was created to ensure that certain types of organizations are doing everything in their power to identify, prevent, and reduce incidences of identity theft. Most health care providers are subject to this Rule that requires businesses to develop identity theft Programs tailored to the characteristics of their organizations. Although the FTC will not take any enforcement action before June 1, 2010, providers are still required to comply. (See information below regarding available materials.) There is, however, legislation pending in Congress that may change requirements to comply with the Rule.

Specifically, on October 8, 2009 H.R. 3763 was introduced into the House of Representatives. This proposed bill would amend the Fair Credit Reporting Act to exclude small businesses, including some health care providers, from Red Flags Rule requirements. This legislation was passed by the House of Representatives on October 21, 2009. It is currently being reviewed by the Senate Committee on Banking, Housing, and Urban Affairs. Section 1 of the proposed legislation provides as follows:

(4) EXCLUSION FOR CERTAIN SMALL BUSINESSES – For purposes of this subsection, the term ‘creditor’ shall not include—

(A) a health care practice with 20 or fewer employees;…or

(D) any other business, if the Commission determines, following an application for exclusion by such business, that such business—

i   knows all of its customers or clients individually;

ii   only performs services in or around the residences of its customers; or

iii   has not experienced incidents of identity theft and identity theft is rare for businesses of that type.

(5) DEFINITIONS – For purposes of this subsection:

(A) EMPLOYEE – With respect to a business, the term ‘employee’ means any individual who works for such a business and is paid either wages or a salary.

(B) HEALTH CARE PRACTICE –

(iv) IN GENERAL – The term ‘health care practice’ means a business that’s primary service is providing health care via health care professionals employed by the business.

(v) HEALTH CARE PROFESSIONAL – For purposes of subparagraph (A), the term ‘health care professional’ means an individual engaged in providing health care and licensed under State law, including physicians, dentists, podiatrists, chiropractors, physical therapists, occupational therapists, marriage and family therapists, optometrists, speech therapists, language therapists, hearing therapists, and veterinarians

If this proposed legislation is enacted, the Red Flags rule may not apply to some providers. Some providers may also qualify for an exclusion from the Rule, as indicated above.

There’s always something new in healthcare!

We have developed materials for you to use to meet the requirements of the Rule. The materials are appropriate for use by all providers, including home health agencies; private duty agencies; hospices; HME suppliers; and individual providers, such as therapists, ALF’s/ILF’s, physicians, etc. The materials include a comprehensive Policy, as required by the Rule, which should be used to provide training that is also mandated by the Rule. In addition, the materials include a resolution to be adopted by the governing body per the Rule.

The cost of these materials is $200.00. Please send a check made out to Elizabeth E. Hogue, Esq. to: Fulfillment, 107 Guilford, Summerville, SC 29483. We are unable to accept credit cards. Please be sure to include the name and e-mail address of the person who should receive the materials. We will e-mail them to the designated recipient upon receipt of payment.

©2010
Elizabeth E. Hogue, Esq. All rights reserved.
No portion of this material may be reproduced in any form without the advance written permission of the author.

Why Discharge Planners/Case Managers Need to Know About Legal Implications of Provision of Free Services to Patients

Elizabeth E. Hogue, Esq.

Office: 877-871-4062

Fax: 877-871-9739

E-Mail: ElizabethHogue@ElizabethHogue.net

Based upon their overriding commitment to patients, case managers or discharge planners may be tempted to “take up the slack” by urging post-acute providers to render free or voluntary services to patients. Case managers/discharge planners may state to post-acute providers that they will not receive additional referrals unless they agree to provide services to so-called “indigent patients,” some of whom may not have a payor source for their care.

Staff members who provide free services and organizations that allow staff members to do so run the risk of engaging in fraudulent conduct. Specifically; to the extent that free or voluntary services are perceived as an inducement to patients to initiate, continue, or re-initiate services with particular providers; organizations and practitioners may run the risk of violation of Medicare/Medicaid fraud and abuse prohibitions, especially the federal anti-kickback statute. Violations may also occur if provision of free services is an inducement for additional referrals, as described above. The Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services (DHHS), a primary source of enforcement activity, has clearly stated that the provision of free services to beneficiaries may constitute a violation of these prohibitions.

Part 1 – Health Care Reform: Physicians and Patients’ Right to Freedom of Choice of Providers

Elizabeth E. Hogue, Esq.

Office: 877-871-4062

Fax: 877-871-9739

E-mail: ElizabethHogue@ElizabethHogue.net

To date, only hospitals are required to present lists of some types of providers to patients so that they can choose which providers they want to render services to them. Likewise, statutes in some, but not all states, require physicians and other types of providers to give notice to patients if they have financial/ownership interests in providers to which they make referrals. As a result of health care reform, the “picture,” with regard to physicians and patients’ right to freedom of choice, is about to change.

Specifically, physicians who make referrals for certain types of imaging services are required to inform patients in writing at the time referrals are made that patients may obtain services from providers of their choice. Physicians are also required to provide patients with a list of providers who supply such services in areas in which patients reside. It appears that the Secretary of the U.S. Department of Health and Human Services (DHHS) may also have the discretion to apply this requirement to other designated health services (DHS) under the so-called Stark laws, including home health and HME services.

Physicians and Patients’ Right to Freedom of Choice

Elizabeth E. Hogue, Esq.

Office: 877-871-4062

Fax: 877-871-9739

E-mail: ElizabethHogue@ElizabethHogue.net

Providers are increasingly concerned that physicians may violate patients' right to freedom of choice of providers.
First, it is important to note that longterm care, home health, including some services provided by private duty agencies, home medical equipment (HME) and hospice services are provided under the supervision of physicians based upon specific orders from them. Because physicians supervise these types of services, they are at risk for legal liability, along with providers and staff members, if providers supervised by physicians do no meet applicable standards.
Consequently, physicians have a clear interest in assuring the quality of care rendered by other providers to their patients. Physicians may, therefore, choose to designate in their orders which providers will render services to their patients in order to help assure quality of care and manage their risks of liability.

Advance Practice Reform

I was recently asked, why allowing advance practice providers to order and supervise patients under homecare services was needed. Here was my response:

First everyone needs to be clear what the Federal Register states:

§ 484.18 Condition of participation: Acceptance of patients, plan of care, and medical supervision states, “Care follows a written plan of care established and periodically reviewed by a doctor of medicine, osteopathy, or podiatric medicine.”

This federal regulation supersedes any state nurse practice acts that would allow nurse practitioners to provide this oversight. There are multiple reasons why H.R. 4993 bill or S. 2814 needs to be passed. Senator Collins (D-Maine) did a wonderful job outlining some of these reasons in her statement in November of 2009. Her statement can be found in one of my previous blogs.

I see this legislation being a critical first step in reforming home health care and positioning the industry to be a critical player in overall healthcare reform. There are several possible changes that will occur over the next few years as a result of healthcare reform. These changes include value-based purchasing (A.K.A. pay for performance) and post-acute bundling. I envision nurse practitioners as key solutions for these challenges.

I predict that nurse practitioners will be on staff in many home health agencies during the next decade. They will be in charge of disease management programs, case managing complex patients, and providing direct care to patients. The direct care will consist of caring for those patients exhibiting acute exacerbations of their disease. Instead of going to the ER or delaying treatment while waiting for a physician appointment, the NP would see those patients at home and order the appropriate treatment. This would decrease healthcare costs while accelerating patient outcomes and increasing patients’ overall satisfaction.

An example would be a Chronic Congestive Heart Failure patient beginning to experience an acute exacerbation. Currently, most agencies would notify the physician who then would instruct the patient to go to the ER. The ER physician, not knowing this patient feels this patient need to be hospitalized to be diuresed. After the expensive ER visit and several days in the hospital, the patient is diuresed.

Instead say that nurse notified the NP on staff. They see the patient in home and complete an assessment. Complete any necessary lab work then orders diuretics for the patient while at home. The agency increased the visits over the next few days until the patient stabilizes. This would cost a fraction of the ER/hospitalization bill.

In order to achieve this first step towards higher quality patient care, H.R. 4993 needs to be passed now. As health care reform becomes clearer, many groups will be aiming to be on top of the heap. If these bills are not passed now, I worry that physician lobbyist groups will fight much more fiercely in the future to not allow advance practice providers to practice in the homecare setting as is the case now. The home health industry is in a terrific position to become a major player in health reform. In order to situate ourselves to be a major stakeholder with Healthcare Reform, we must pass H.R. 4993.