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1. CMS rule to reign-in outliers
2. DME telemarketing prompts Fraud Alert
3. Pay-per-view article: OIG offers advice on malpractice payments
4. FTC, DOJ begin hearings on competition in health care
5. Tip: The benefits of a central contract repository

Compliance Monitor, March 13, 2003

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1. CMS rule to reign-in outliers

The Centers for Medicare and Medicaid Services (CMS) meant business when they announced a crackdown on hospitals receiving suspiciously high outlier payments.

A proposed rule will appear in the Federal Register on March 5 that is designed to reduce outlier payments to hospitals. CMS Administrator Thomas Scully says these hospitals are "gaming the outlier system" by raising charges.

The proposed rule would

1. eliminate the use of a statewide average ratio cost-to-charges for some hospitals, as they compute their outlier payments
2. allow Medicare to use the most recent data available to calculate outliers
3. allow CMS to recover overpayments if the costs of a particular outlier case are less than a provider claimed

Some hospitals will likely receive more outlier payments under the new rule because it is designed to lower the existing threshold for outlier eligibility, according to CMS. The proposed rule does not change the $33,560 threshold, but CMS says the amount will be closely scrutinized during the rule's comment period.

To read the proposed rule, please visit the Federal Register and click on today's date.

The Office of Inspector General (OIG) offered a strong warning this week to durable medical equipment (DME) suppliers that have hired marketing firms to push their products to Medicare beneficiaries.

In a March 3 Fraud Alert, the OIG re-affirmed its stance that telemarketing calls of any kind, whether they're from DME suppliers directly or a company the supplier hired, are prohibited, except under three specific circumstances. Telemarketing calls to beneficiaries are acceptable only if

• a beneficiary has given written permission to a DME supplier to make telemarketing calls.
• the phone call is in relation to an item that the DME supplier has already given to the beneficiary.
• the supplier has provided at least one covered item to the beneficiary in the last 15 months.

Medicare will not reimburse DME suppliers for equipment sold during a prohibited telemarketing call, according to the OIG.

Click here to read the Fraud Alert on the OIG's web site.

OIG offers advice on malpractice payments

By Mark L. Mattioli

Lately it seems as though each day the newspapers feature physicians on strike to protest malpractice insurance. While these physicians are considering a move to neighboring states with slightly lower insurance premiums, the hospitals that rely on them for patient care are struggling to keep them in the area.

Go to "OIG offers advice on malpractice payments" for the rest of this article. The cost is $10. Subscribers toStrategies for Health Care Compliance have free access via their online subscriptions. Subscribers to the print edition can find this article in their February issues.

A $30 steal!

You can read this article—and much more—in the entire March issue of Strategies for Health Care Compliance. Your cost: Six stories for only $30! You'll learn how the OIG is focusing on billing and coding in 2003, and tips for implementing the 2003 changes to APCs. Plus, you'll receive a free sample conflict of interest policy for managing pharma-provider relationships. Choose between a PDF and HTML version for just $30. Online subscribers have free access to this issue; print newsletter subscribers can find it in their mailboxes.

The Federal Trade Commission (FTC) is concerned over what it calls "overt anticompetitive practices" that could hinder quality of care, drive up prices, and stifle innovation in the health care industry.

Seven months of hearings, which began on February 26, will serve as the focal point of a joint FTC/Department of Justice (DOJ) inquiry that will scrutinize every aspect of competition in health care. Hospital mergers, vertical integration among providers, consolidation among providers and insurers, and remedies for anticompetitive conduct will be among the issues discussed, according to the FTC.

According to the Boston Globe on March 1, the hearings got contentious early, with representatives from Tufts Health Plan accusing its sometime partner, Harvard's Partners HealthCare, of monopolizing health care in the northern and western suburbs of Massachusetts, in order to drive up insurance premiums. A Partners spokesperson expressed surprise over Tufts' position, saying that Partners never engaged in anti-competitive practices, and was collaborating with Tufts on a number of ventures.

Click here to read more about the FTC/DOJ hearings, click here.

Does it take you days to locate a contract, assuming you can even find it? Are contracts frequently overpaid? Are you having problems complying with federal procurement standards?

To avoid these challenges, create a centralized contract repository. Liability and risk increases without a central place to store and administer your contracts. There are numerous benefits, including the following from Dan Clayton, an internal audit manager at a large Denver hospital:

1. You can more easily maintain supporting documentation in a central contract repository. There are strict documentation rules governing competitive bids, sole source selection, and the use of federal research grants or other federal monies. If you maintain your documentation inconsistently, it can result in noncompliance with federal procurement standards.
2. A contract repository can reduce the time it takes to identify which department is holding the most recent version of a contract, including amendments, updates, modifications, and in-process negotiations.
3. A centralized contract control point can facilitate a consistent definition of terms. For example, you can specify when a purchase order should actually be a bilateral contract.
4. A central repository can prevent the loss of a critical service, or the outlay of high fees. For example, your legal department suddenly has an unexpected increase in emergency contract requests. Or, there is an increased demand to process emergency contracts that someone had neglected to follow-up on. A central control point can set up an advanced notification system to avoid these problems.
5. Without a central contract repository, your purchasing department may not see opportunities to leverage buying power across similar, more costly small contracts..
6. A central repository won't send contracts to multiple locations, thereby reducing paperwork. For example, some facilities send a copy of every contract to the purchasing, accounts payable, and legal departments. A centralized imaging system allows several departments to access the current contract image.

This column was written by Hank Vanderbeek, MPA, CIA, CFE. IRP, Inc.

For more tips, order Health Care Auditing Strategies, a monthly newsletter for auditing professionals.

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