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Improper Billing of “P-Stim” Devices is Focus of Recent FCA Settlements

Improper billing for electro-acupuncture using a “P-Stim” device (or peri-auricular stimulation device) has been the subject of two False Claims Act (FCA) settlements already in 2021, following a trend of such enforcement actions within the past year. And there are more to come.

These prosecutions involve providers billing federal healthcare programs for acupuncture using P-Stim devices under HCPCS Code L8649. Unlike P-Stim devices, though, which are attached to the ears of a patient using needles and adhesives without surgery or anesthesia, HCPSCS Code L8649 applies to a product that is surgically implanted into a patient using anesthesia. Medicare, TRICARE and the Federal Employees Health Benefit Program (FEHBP) do not reimburse for acupuncture devices like P-Stim, nor do they reimburse for P-Stim as a neurostimulator or an implantation of neurostimulator electrodes. In addition to P-Stim, the brand names for these devices include ANSiStim, E-pulse, Stivax and NeuroStim.

Source: Improper Billing of “P-Stim” Devices is Focus of Recent FCA Settlements

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Texas Company Agrees to Reimburse Medicare for Improper Billing Related to Neurostimulators

Spinal Decompression Clinic of Texas (“SDCT”) has agreed to pay $330,898.00 to resolve liability under the False Claims Act for the alleged improper billing of electro-acupuncture device neurostimulators.

SDCT received reimbursement from Medicare in the amount of $177,051.15 for these procedures. SDCT, however, did not perform these surgeries, and instead applied P-Stim devices in an office setting, without surgery or anesthesia. P-Stim is an electric acupuncture device that, pursuant to manufacturer’s instructions, is affixed behind a patient’s ear using an adhesive. Needles are inserted into the patient’s ear and affixed using another adhesive. Once activated, the device then provides intermittent stimulation by electrical pulses. It is a single use, battery-powered device designed to be worn for approximately four days until its battery runs out, at which time the device is thrown away.

Medicare does not reimburse for acupuncture or for acupuncture devices such as P-Stim, nor does Medicare reimburse for P-Stim as a neurostimulator or as implantation of neurostimulator electrodes.

Source: Texas Company Agrees to Reimburse Medicare for Improper Billing Related to Neurostimulators

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New HHS Advisory Opinion Confirms Complete Federal Preemption for PREP Act Cases and Applicability of the Act’s Defenses in Non-Use Situations

The US Department of Health and Human Services (“HHS”) issued an Advisory Opinion (“21-01”) Friday, reinforcing how the Public Readiness and Emergency Preparedness Act (“PREP Act” or the “Act”) (1) provides complete preemptive federal jurisdiction and invites jurisdictional discovery; and (2) applies to cases where the alleged harm results from failure to use (and even refusal to use) a covered countermeasure when that failure arises out of the conscious allocation and prioritization of the countermeasures.

Advisory Opinion 21-01 expands on the language of the amended Declaration to clarify that the PREP Act provides complete preemptive federal jurisdiction for cases in which it is a defense. Once invoked, the PREP Act provides complete preemptive federal jurisdiction, and the federal court retains the case to decide whether the immunity and preemption provisions apply; if they do not apply, then the court would try the case as it would a diversity case.

Advisory Opinion 21-01 further clarifies that the PREP Act protections apply in cases where the complainant alleges harm from the defendant’s complete failure—or even refusal—to use covered countermeasures, particularly in those cases where such a failure arises from the conscious allocation of scarce resources among potential countermeasure recipients.

Source: New HHS Advisory Opinion Confirms Complete Federal Preemption for PREP Act Cases and Applicability of the Act’s Defenses in Non-Use Situations

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HHS Issues Advisory Opinion on Contract Pharmacies Under the 340B Program

HHS/OIG released an advisory opinion concluding that drug manufacturers are obligated to deliver discounts under the 340B Drug Pricing Program on covered outpatient drugs when contract pharmacies are acting as agents of 340B covered entities.

Many covered entities enter into written agreements with pharmacies (contract pharmacies) to distribute their covered outpatient drugs to the entities’ patients. The covered entity orders and pays for the 340B drugs, which are then shipped from the manufacturer to the contract pharmacy. The contract pharmacy then sends the drug to the patient. The covered entity purchases the drug, and the contract pharmacy provides the pharmacy services to dispense the drug to a patient.

In the advisory opinion, the HHS Office of the General Counsel asserts that the plain meaning of Section 340B requires manufacturers to sell covered drugs to covered entities at or below the ceiling price.

Source: HHS Issues Advisory Opinion on Contract Pharmacies Under the 340B Program

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CMS finalizes “reasonable and necessary” definition, expedited breakthrough device coverage process

On January 14, 2021, the Centers for Medicare & Medicaid Services (CMS) published a final rule that, for the first time, adopts a regulatory standard for determining whether a particular item or service is “reasonable and necessary” under section 1862(a)(1)(A) of the Social Security Act (SSA) and sets the stage for commercial insurance coverage to be considered in assessing such coverage in prescribed circumstances. In addition, the final rule establishes a “Medicare Coverage of Innovative Technology” (MCIT) pathway, which is a voluntary and expedited mechanism to obtain national Medicare coverage for medical devices designated with “breakthrough” device status by the Food and Drug Administration (FDA).

Source: CMS finalizes “reasonable and necessary” definition, expedited breakthrough device coverage process

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Large Health System Agrees To Pay $200,000 as Part of OCR’s Fourteenth Right of Access Initiative Settlement

In its first enforcement action of 2021, on January 12th, the United States Department of Health and Human Services (“HHS”), Office for Civil Rights (“OCR”) announced it settled with Banner Health its fourteenth enforcement action as part of its HIPAA Right of Access Initiative (the “Initiative”). OCR announced the Initiative in 2019 to ensure individuals can easily and timely access their health information at a reasonable cost under the Health Insurance Portability and Accountability Act (“HIPAA”) Privacy Rule. In 2020, OCR announced eleven settlements as part of the Initiative including most recently against a primary care provider. The Initiative has resulted in settlements with all sizes of providers.

Source: Large Health System Agrees To Pay $200,000 as Part of OCR’s Fourteenth Right of Access Initiative Settlement

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HIPAA Safe Harbor Bill Becomes Law; Requires HHS to Incentivize Security

On January 5, the President signed the HR 7898, HIPAA Safe Harbor Bill, into law, which amends the HITECH Act to require HHS to incentivize best practice security.

The legislation directs HHS to take into account a covered entity’s or business associate’s use of industry-standard security practices within the course of 12 months, when investigating and undertaking HIPAA enforcement actions, or other regulatory purposes.

The law also expressly noted that the HITECH changes do not give HHS the authority to increase fines or the extent of an audit, when an entity is found to be out of compliance with the recognized security standards.

The law also corrected technical elements of the 21st Century Cures Act related to the information blocking enforcement authority of HHS’ OIG. Specifically, under the new law, OIG is authorized to obtain information, assistance, and other support from federal agencies when investigating claims of information blocking by the developers or entities that offer health information technologies.

Source: HIPAA Safe Harbor Bill Becomes Law; Requires HHS to Incentivize Security

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Texas, Pennsylvania hospitals lose lawsuit challenging Medicare payments

The lawsuit was brought by Moses Taylor Hospital in Scranton, Pa., and Tomball (Texas) Regional Center. The hospitals said HHS wrongly calculated their Medicare disproportionate share hospital payments for fiscal year 2015, using the wrong data. As a result, the hospitals appealed the DSH payment decision to the HHS provider reimbursement review board, where it was dismissed. In its dismissal, the review board said it lacked jurisdiction to consider the hospitals’ objections to their payments.

Source: Texas, Pennsylvania hospitals lose lawsuit challenging Medicare payments

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The United States and Tennessee Resolve False Claims Act Claims Relating to “P-Stim” Devices

A physician and two chiropractors agreed to pay the United States and Tennessee a total of $1.72 million to resolve liability under the False Claims Act for the alleged improper billing for electro-acupuncture using a peri-auricular stimulation device known as “P-Stim” that does not qualify for reimbursement under Medicare.

From May 2016 through November 2018, Dr. Anderson, Total Family, and Chiro2Med billed for, and were reimbursed by the United States for acupuncture using P-Stim devices under HCPCS Code L8679, which instead requires implantation of a neurostimulator with anesthesia in a surgical setting by a physician, typically a surgeon. Dr. Anderson, Total Family, and Chiro2Med separately billed for, and were reimbursed by, Medicare and/or TennCare for these devices over a two year period.

Dr. Anderson agreed to pay $1 million over five years, Dr. Spencer and Total Family agreed to pay $700,000 over five years and Dr. Shea and Chiro2Med agreed to pay $20,000 over five years.

Source: The United States And Tennessee Resolve Claims With Three Providers For False Claims Act Liability Relating To “P-Stim” Devices For A Total Of $1.72 Million

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Revisions to Stark Law Rules Covering Physician Profit Sharing and Bonuses

The new provision allows a member of a group practice to receive profits from DHS directly attributable to the physician’s participation in a value-based enterprise.

CMS clearly has made the determination that participation in such enterprises is so essential that it is allowing a direct tie between a physician’s participation and the profits derived from DHS.

CMS also clarified that if a group has five or fewer physicians, overall profits means the profits from DHS from the entire group; but if a group has more than five physicians, the group may designate a component of at least five physicians to aggregate the profits for the purpose of distribution.

Although other portions of the Final Rule go into effect January 1, 2021, the profit sharing and productivity bonus provisions do not go into effect until January 1, 2022.

Source: Revisions to Stark Law Rules Covering Physician Profit Sharing and Bonuses