Pioneer Accountable Care Organizations Report Mixed Results

By Matthew J. Effken. The federal government is touting a recently published study by L&M Policy Research that concludes the 32 “Pioneer” Accountable Care Organizations saved taxpayers $384 million in Medicare expenditures during the years 2012 and 2013. The savings average out to approximately $300 per participating beneficiary per year compared to other Medicare fee-for-service participants.

Accountable care organizations are made up of doctors, hospitals, and other healthcare providers that work together to provide coordinated care to Medicare fee-for-service beneficiaries. To the extent an ACO’s efforts reduce Medicare spending based on certain benchmarks, they split the savings with the government. Pioneer ACOs also agree to share losses, by refunding a portion of excess spending to Medicare.

Health and Human Services Secretary Sylvia Matthews Burwell highlighted the results in a recent speech to the American Hospital Association. The Secretary linked the ACO results to the agency’s goal to have 85 percent of Medicare fee-for-service payments to be tied to value by 2016 and 90 percent by 2018.

Not all indications in the report are positive, however. The amount of annual savings in the second year of the program was less than half of that in the first year, indicating that returns may diminish over time. Also, some Pioneer ACOs experienced losses and a significant portion merely broke even. In an alternative report, the Center for American Progress concluded that net federal savings were only 0.23 percent of the benchmark in year one and 0.67 of the benchmark in year two. Of the 32 original participants in Pioneer ACO model, only 19 currently remain in the program. However, some have opted to participate in other ACO programs, such as the Medicare Shared Savings Program, where the organizations are not subject to downside risk.

The L&M study is available at: Additional references for this article may be found at and

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More Insurance Coverage For Telemedicine


By Matthew J. Effken. Telemedicine continues to be a growing part of the healthcare delivery system in the United States. According to the American Telemedicine Association, more than 10 million consumers directly benefited from using telemedicine last year, and a recent Harris Poll survey found that 27 percent consumers would choose telehealth options if they were available.

Now, claims-paying giant United Healthcare is expanding its in-network health insurance coverage to include video-based visits with approved doctors using real time audio and video links. Initially, coverage is limited to self-funded employers, but it will expand to United Healthcare employer-sponsored and individual plan participants in 2016.

Members can video chat directly with a doctor associated with one of three on-line healthcare providers that offer live on-line consultations with physicians via mobile phone, tablets or computer applications. The appeal of this option comes from 24/7 availability and reduced costs. A typical charge for a video consultations is around $50, which is already significantly less expensive that a visit to a doctor’s officer or urgent care facility. As a covered service, the patient cost may be reduced to the amount of the co-pay, making Telemedicine more affordable for more people.

More information is available at the following link:

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DHHS Office of Inspector General Signals Willingness to Sanction Individual Physicians Under the Anti-Kickback Statute

By Matthew J. Effken.  The U.S. Department of Health and Human Services Office of Inspector General (OIG) has released a new fraud alert that shows a willingness to impose financial sanctions directly on individual physicians under the Anti-Kickback Statute, and also encourages whistle-blowers to report physicians who participate in questionable compensation arrangements.

The fraud alert highlights the potential risks to physicians of entering into questionable medical directorships and staffing arrangements. The alert notes that the OIG has recently reached settlements with 12 individual physicians in cases involving compensation for medical directorships where the services either were not actually rendered or were compensated at greater than fair market value.

Some settlements also involved cases where physicians’ office staff salaries were paid for by affiliated health care entities, thereby relieving the physicians of a financial burden they otherwise would have incurred. In all cases, the payments were alleged to be remuneration to the physicians based on the volume or value of referrals.

The OIG appears to be signaling that they will not hesitate to impose financial penalties on individual physicians, not just larger corporate entities, when the agency finds a violation of the Anti-Kickback statute. The fraud alert also serves as a reminder that parties on both sides of a problematic transaction are subject to civil and criminal liability when the Anti-Kickback statute is violated.

In addition, the fraud alert reaffirms the rule that a compensation arrangement may violate the Anti-Kickback statute if just “one purpose” of the arrangement –not the only purpose or the main purpose–is to provide compensation for past or future referrals of Federal healthcare program business.

Finally, the fraud alert encourages potential whistle-blowers to report physicians who may be violating the Anti-Kickback Statute and includes both a web-link and toll-free hotline number to make such reporting easier.

The OIG Fraud Alert on physician compensation is available at the following link:

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CMS Releases Revised Regulations for Accountable Care Organizations Participating in the Medicare Shared Savings Program

By Matthew J. Effken.  The Centers for Medicare and Medicaid Services has released newly revised federal regulations designed to encourage greater participation in the Medicare Shared Savings Program (MSSP) by Accountable Care Organizations. Under MSSP, healthcare providers that participate in an ACO receive traditional Medicare fee-for-service payments, but also may be eligible to receive shared savings payments by meeting specified quality and cost-savings benchmarks.

The revised regulations sweeten the financial incentives available to ACOs by providing an additional 3‑year period before so-called Track 1 MSSP participants may incur financial penalties for failing to meet program benchmarks. Organizations participating in the higher risk Track 2 program, where ACOs share in both savings and losses, will see the potential for greater incentive payments for meeting targets.

A third track is also being added, which will provide the potential for even higher incentive payments to participating ACOs based on a savings sharing rate of up to 75 percent, in exchange for accepting more downside risk. CMS is also considering revisions to the process of setting program benchmarks and assigning Medicare beneficiaries to ACOs, in response to comments received from participating organizations. CMS will seek comments on a revised benchmarking methodology later this summer.

CMS says there are already over 7 million Medicare beneficiaries served by the more than 400 Accountable Care Organizations that currently participate in MSSP. CMS estimates that the revisions to the MSSP program will result in an additional $240 million of net federal savings, primarily by increasing the number of ACOs willing to continue their participation in the program beyond the initial three year commitment. Shared savings payments to be made to participating ACOs are estimated to be approximately $1.13 billion from 2016 through 2018, which translates to a net private benefit to the ACOs of $278 million, after accounting for start-up costs and shared losses.

The CMS release and revised regulations are available at the following link:

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Study Indicates Telemedicine Consults May Save Money For Rural Emergency Departments Compared to Telephone Consults

By Matthew J. Effken. A recent study by researchers at the University of California-Davis has determined that pediatric telemedicine consultations saved money for rural emergency departments when compared to telephone consultations. The study found that even though installation and maintenance of telemedicine systems can be costly, such costs were more than made up for by reducing the number of patient transfers between hospitals.

According to the researchers, telemedicine consultations reduced the number of patients being transferred by 31 percent when compared to telephone consultations. Especially when taking into account the reduction in transfers by air ambulance, the researchers found telemedicine consultations provided an average savings of $4,462 per use.

The researchers worked with health economists to determine that the telemedicine consultations included in the study cost an average of $3,641 per use. Their analysis takes into account the substantial investment in equipment, software and IT resources necessary for a rural hospital to support telemedicine consultations. It also includes the costs urban hospitals must pay to have subspecialists on call to provide assistance.

The data for the study came from tracking interactions between the Pediatric Critical Care Telemedicine Program at UC Davis and eight rural California emergency departments between 2003 and 2009. The researchers looked at five conditions they deemed appropriate for treatment at rural hospitals: asthma, bronchiolitis, dehydration, fever and pneumonia.

The study was published in the journal Medical Decision Making.   Additional information regarding the study is available at the following link:

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Nebraska Law to Require Employers to Provide Reasonable Accommodations to Pregnant Employees

Legislative Bill 627, enacted on April 13, 2015, modifies the employment laws of Nebraska to require employers to provide reasonable accommodation to pregnant employees and creates protections intended to prevent pregnancy related discrimination.

The new law requires specific reasonable accommodations for pregnant employees similar to those that are required for workers with disabilities.  Reasonable accommodations may including providing a stool or other seating for a pregnant employee to alleviate swelling of the legs caused by standing for long periods, modifying or changing break and work schedules, or providing a temporary transfer to less strenuous work for which the employee is qualified. The requirements only apply to the extent the employee is still able to perform the essential functions of the position with reasonable accommodation. The definition of an essential function of the position is deferential to the employer, and weight is given to the formal job requirement and description.

The scope of the law also requires reasonable accommodations for employees following childbirth and pregnancy related medical conditions.

The new law also makes it illegal to discriminate in the hiring, advancement, discharge, compensation, training, or general terms of employment of a pregnant woman.

The final version of the law as approved by the Governor may be found at the following link:

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Healthcare Organization Boards’ Responsibilities for Compliance Plan Oversight

The governing board of any health care organization has critical oversight responsibilities for the organization’s compliance plan.  To help boards meet these responsibilities, the U.S. Department of Health and Human Services Office of Inspector General (OIG) has issued a new practical guide outlining health care boards’ compliance obligations.   The guide, entitled “Practical Guidance for Health Care Governing Boards on Compliance Oversight” was created by the OIG in collaboration with the American Health Lawyers Association (AHLA), the Association of Healthcare Internal Auditors (AHIA) and the Health Care Compliance Association (HCCA).

While not intended to set particular standards of conduct, the guide attempts to provide practical guidance to help governing boards of health care organizations understand and address their compliance responsibilities.   The guide emphasizes the practical, with sections on the OIG’s expectations for board oversight of compliance programs and the interrelationship of audit, compliance and legal functions.  The guide also addresses mechanisms for identifying risks and reporting issues to the board, along with methods of encouraging accountability to achieve compliance objectives.

Although not every compliance measure addressed in the guide may be appropriate for every organization, every board may benefit from additional insight to the regulators’ compliance expectations.  The guide can be found at the following link:

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EEOC Proposes Rule Regarding Incentives in Employer Wellness Program

On April 20, 2015, the Equal Employment Opportunity Commission (EEOC) published a proposed rule regarding employer wellness programs. Employer wellness programs have been under scrutiny for potential violations of the Americans with Disability Act (ADA) and the Health Insurance Portability and Accountability Act (HIPAA) because of questions regarding the “voluntary” nature of participation.

Previous EEOC regulations define voluntary as when “an employer neither requires participation nor penalizes employees who do not participate.” The EEOC is proposing the regulation to add clarity regarding the size of the incentive that may be offered for participation in the wellness program. The proposed rule limits the incentive to 30% of the total cost of employee-only coverage.

The proposed rule will be open to comment for 60 days from April 20. The proposed rule may be found at the following link:

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Private Parties May Not Sue States over Medicaid Reimbursement Rates

On March 31, 2015, the United States Supreme Court decided Armstrong v. Exceptional Child Ctr., Inc.. At issue was whether a provider of Medicaid-covered services may sue, as a private party, a state over their reimbursement rates. The providers sought to sue states over rates that they believed were too low and not in compliance with Section 30(a) of the Medicaid Act.

Section 30(a) states that reimbursement rates should be “consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.”

The providers argued that the language of the act, coupled with the Supremacy Clause of the United States Constitution, means that providers can sue to enforce the federal law. In doing so, the providers believed they could force states to increase their Medicaid reimbursement rates. The Supreme Court rejected this notion and found that it is up to the Department of Health and Human Services to remedy the state’s rates.

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Beware of Potential Tax Return Fraud

Many doctors and health practitioners around the nation are experiencing tax return fraud issues. Tax return fraud occurs when another person or entity fraudulently files a tax return for another individual, looking to receive the victim’s refund. Across the nation, over the past two tax years, this has been a growing problem targeting doctors and similar health professionals. In Nebraska, it appears that this could also be a growing trend.

If you attempt to file a return and the Internal Revenue Service rejects it because a return has already been filed under your Social Security number, this signals tax return fraud. In this event, please contact an attorney for guidance.

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