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Anthem Now Requiring Pre-approval for Hospital MRIs, CT Scans
The insurer no longer allows outpatient imaging in hospitals. Hospitals may feel the financial loss.
In a bid to cut costs, Anthem is now informing consumers that it must pre-approve any hospital-based MRIs and CT-scans, and that approval won’t come easily.
The insurer’s new policy forbids hospital imaging services on an outpatient basis and requires proof that inpatient imaging is medically necessary.
The Anthem change in policy is likely to be a financial blow to hospitals, which have seen outpatient imaging as a profit center in recent years.
Anthem announced recently that outpatient MRIs and CT scans must be performed at lower-priced facilities, citing its commitment to the Institute for Healthcare Improvement (IHI) Triple Aim Initiative, which calls for improving the patient experience, improving population health, and reducing costs.
The insurer says clinical research has shown the safety of imaging services in free-standing facilities, so the additional cost of a hospital setting is unnecessary.
“Anthem’s primary concern is to provide access to quality and safe healthcare for our members. We are also committed to reducing overall medical cost where possible when the safety of the member is not put at risk,” the company says.
Anthem notes that imaging costs can vary widely without any effect on quality of care, with scans costing as little as $350 and as much as $2,000.
The company also notified providers of the change in policy, explaining that physicians must obtain pre-certification approval for inpatient hospital imaging. Anthem told consumers that it will provide assistance in finding imaging facilities other than hospitals.
The change in policy could reduce a member’s out-of-pocket costs, Anthem notes.
“If the member has a benefit plan where he or she pays a percentage of the cost, it is possible that his or her percentage of out-of-pocket cost may be reduced,” Anthem says. “This is because the cost to undergo a CT or MRI scan administered in a freestanding imaging facility may be less than what a hospital-based facility would charge. If the member has a facility copay, there may not be a reduction in a member’s out of pocket cost.”
However, the policy still stands even if using a freestanding facility would not reduce the consumer’s out-of-pocket cost, the insurer explains. The approval or denial of the site of service is based only on medical necessity.
In the unlikely event that the physician ignores the policy and the patient receives imaging services in a hospital outpatient setting, the hospital would be responsible for the cost, Anthem says. The patient would not be held responsible unless he or she signed a statement acknowledging the deviation from Anthem policy and agreed to be financially responsible.
Dallas lab company accused of paying kickbacks fights to keep its federal licenses
Erik Bugen, defendant in medical kickback scam case.
An embattled Dallas laboratory company accused of masterminding a $100 million fraud through bribes and kickbacks is fighting to keep its licenses to stay in business, according to a federal civil lawsuit.
Lawyers for Next Health and Medicus Laboratories filed a lawsuit on Aug. 18 against state and federal officials and agencies, seeking a temporary restraining order and injunction to stop them from suspending or revoking the company’s federal laboratory licenses.
Such a move would effectively put them out of business, the lawsuit says. Federal inspectors said they found regulatory violations without offering specifics, according to Next Health’s lawsuit.
That’s not the company’s only concern.
Two of Next Health’s principals, Andrew Hillman and Semyon Narosov, are currently facing federal bribery and kickback charges along with 19 others in connection with the former doctor-owned hospital chain Forest Park Medical Center. Prosecutors say the hospital paid about $40 million in bribes and kickbacks in exchange for patient referrals that generated $200 million in paid claims.
The $100 million fraud allegation against Next Health comes from a lawsuit UnitedHealthcare filed in February against the company, with allegations similar to those in the criminal case. The insurer alleges that Next Health paid bribes and kickbacks to doctors and other providers between 2011 and 2016 for overpriced and unnecessary drug and genetic tests.
Legal observers say laboratories are under intense federal scrutiny due to concerns that some are paying doctors to order genetic and drug tests that aren’t medically necessary.
Four Austin men, for example, were indicted in Dallas in July, accused of paying kickbacks to physicians for ordering bogus urine tests at North Texas labs. Another Texas lab company, Sky Toxicology, is fighting similar allegations from UnitedHealthcare in a lawsuit in San Antonio. Sky lawyer David Navarro said, “We intend to pursue our claims and vigorously defend against United’s counterclaims.”
Jeffrey Baird, a health care attorney in Amarillo, said many new testing labs have opened across the nation over the past two years. He said he advises his clients not to pay marketers any commissions to find specimens for testing due to the federal anti-kickback law.
“Anytime somebody figures out that a government program is paying money for something, you’re going to have folks try to figure out how to access that money,” he said.
Once federal authorities shut down one abusive practice, fraudsters figure out another way to bill for unnecessary medical services, he added. “It’s whack-a-mole. It’s almost this cat-and-mouse game,” Baird said.
Next Health is the majority owner of Medicus, a clinical testing laboratory that became a Medicare provider in 2010, court records say. UnitedHealthcare says in its lawsuit that Hillman and Narosov control Next Health.
Medicus in 2014 paid $5 million to settle a federal civil complaint that it defrauded Medicare over urine testing services. Next Health says Medicus has stopped certain testing “out of an abundance of caution” and also ceased operations at four other labs it owns because of the latest controversy.
Government overreach?
Next Health and Medicus allege that state and federal officials have a “premeditated intent to shut down the plaintiff’s business operations” and are not following their own rules and procedures.
Company representatives could not be reached for comment. But in court documents, they say they were not given time to correct “alleged deficiencies.”
A team of state and federal inspectors arrived at Medicus’ laboratory in April for a five-day inspection, reportedly in response to an anonymous complaint, the lawsuit said. The team also inspected five other labs owned in part by Next Health, the lawsuit said.
Next Health’s chief compliance officer, who accompanied the inspectors, noticed a copy of an email left in plain sight from one team member to others, saying the labs had received ample media attention and that the inspectors needed to find a way to pursue a “complaint investigation,” the lawsuit said.
“Defendants’ employees and agents were instructed to make findings that would close down plaintiffs’ operations before they even went to plaintiff’s laboratories,” the suit says.
The email is proof, the lawsuit says, that the inspection was not due to a complaint but part of an effort to shut down Medicus’ lab and prevent Next Health from running any other labs “through a regulatory ban.”
A May 10 letter from the Centers for Medicare & Medicaid Services to Next Health and Medicus officials — appended in the lawsuit — said inspectors found problems with testing.
“Your laboratory demonstrated systemic and pervasive problems throughout the laboratory which has led to the findings of immediate jeopardy,” the letter says.
A finding of immediate jeopardy allows CMS to suspend, limit or revoke a laboratory’s license to operate without a hearing or opportunity for the lab to refute the allegations, the lawsuit says.
A CMS representative said the agency does not comment on pending lawsuits.
Federal charges
It’s not the first time Hillman has been in trouble with the law over alleged health care fraud.
In 2005, Hillman and his high school friend, Jason White, were indicted on mail fraud and health care fraud charges for an alleged scheme to defraud workers’ compensation insurance companies by getting them to pay for unnecessary medical equipment.
The following year, the U.S. attorney’s office in Dallas dropped the charges against Hillman after White took blame for the fraud and said Hillman had nothing to do with it, according to court records. That came after White had already pleaded guilty to conspiring with Hillman to commit the fraud, court records show.
Hillman was indicted for a second time in November — in the Forest Park Medical case — along with Narosov, a licensed physical therapist.
The indictment says the hospital paid Hillman and Narosov about $190,000 in kickbacks and bribes for referring patients to Forest Park Medical for surgeries and other procedures.
Both men have pleaded not guilty in that case and have filed a motion to dismiss the indictment. Attorneys for Hillman and Narosov said in court filings that their clients are not part of the alleged conspiracy and that the five-year statute of limitations bars charges against their clients in the case.
Narosov’s lawyer declined to comment. Hillman and Next Health and their lawyers could not be reached for comment.
Gift cards for urine
One of Next Health’s former marketing contractors was implicated in an unrelated criminal case involving an alleged laboratory kickback scheme.
Erik Bugen, of Austin, was indicted in July. Prosecutors say a company he co-founded, the ADAR Group, drummed up unnecessary tests for different labs and got the military’s health care system, Tricare, to pay for them. Soldiers were given Wal-Mart gift cards in exchange for providing saliva and urine, the criminal filing said.
Bugen has pleaded not guilty. He and his lawyer could not be reached.
The ADAR Group also found specimens for Next Health by giving people $50 gift cards to urinate in cups at Whataburger restrooms, according to the UnitedHealthcare lawsuit. Next Health labs conducted the tests under the guise of a “wellness study,” the lawsuit alleges.
Next Health lawyers have filed a motion to dismiss the lawsuit, saying UnitedHealthcare has failed to show any evidence of fraud.
“UHC has failed to allege any facts demonstrating a ‘meeting of the minds’ necessary to establish a claim for ‘conspiracy to commit fraud,’” said Ernest Martin Jr., one of the Next Health’s attorneys, in the filing.
Martin said doctors referring specimens for testing at the Next Health labs “exercise independent professional judgment in determining what testing services are appropriate and necessary.”
Why the ‘free market’ for drugs doesn’t work and what we can do about it
The United States faces a major problem with prescription drug prices. Even as the prices of most goods and services have barely budged in recent years, the cost of drugs has surged.
During the presidential campaign, both Hillary Clinton and Donald Trump cited the high cost of prescription drugs as an issue that needed to be addressed. Most recently, the president-elect took direct aim at the pharmaceutical industry, saying it’s “getting away with murder” and arguing “new bidding procedures” are necessary to lower drug prices.
Trump didn’t get into specifics about what that would mean, but the most often suggested way to lower drug prices has been to expand the ability of major government buyers, such as Medicare, to negotiate prices.
While such negotiations could result in lower prices, we believe, based on our experience as economists and public policy experts, an alternative using public utility pricing would work better and ensure the discovery and distribution of important new medications.
‘Medically necessary’
The recent drug price data are indeed frightening.
In 2015 spending on prescription drugs rose by 8.5 percent to US$309.5 billion, compared with a rise of just 1.1 percent for consumer goods and services. Spending for specialty drugs increased by an even heftier 15 percent, on average. Individual examples that made big headlines, such as Turing Pharmaceuticals raising the price of Daraprim (a lifesaving drug for people with weakened immune systems) from $13.50 to $750 a tablet, are even more extreme.
In a competitive market, prices of a product are forced down to their costs plus a fair profit. Drug companies, on the other hand, can get away with raising prices without losing customers because the demand for certain medications is insensitive to their cost. If a drug will save your life, you’ll probably pay whatever the cost, if you can.
The problem may soon get worse. Last May, Washington state’s Medicaid program was ordered to provide the hepatitis C drugs Sovaldi and Harvoni after a court ruled they were “medically necessary.” The Washington State Health Care Authority had previously provided Harvoni – which costs $94,500 for an eight-week course of treatment – and Sovaldi – $84,000 for 12 weeks – to only the sickest patients.
Since then, other participants in Medicaid and private insurance plans have filed similar suits. Some states, including Florida, Massachusetts and New York, have already altered their Medicaid programs to pay for such life-preserving expensive drugs.
If “medically necessary” rulings become more common, producers of these drugs will have no need to worry that higher prices will reduce sales. They will be able to charge whatever they want and increase revenue and profit without hurting unit sales because insurance providers will need to make such drugs available to their policy holders.
A proposed solution
So what can be done to fix the problem?
Allowing more government agencies to negotiate prices is one option. While this has lowered the prices paid by the Veterans Administration, it may not be the best way to go in a market like the one for many innovative new specialty drugs in which consumers have no good substitutes to choose from.
Economists have shown that negotiated outcomes are not always the most efficient ones. As an example, if the government were to push drug producers too hard in negotiations, the public could get a great deal on prices in the short term but that could end up discouraging the development and testing of new drugs, which would hurt everyone in the long run.
A better approach is to start with a public utilities method, which is frequently used when there is a natural monopoly in production, such as for water or power. In these cases, state and local governments typically allow a company to have a monopoly over the market but also establish regulatory commissions to determine “fair” prices. Such prices take into account current costs, the need for investment in production facilities and the need to earn a rate of return on capital invested.
A wrinkle with drug developers is that they can incur substantial costs in their quest for new medications, including dead-end ideas and extensive testing. A 2014 report put the cost to develop a new drug at $2.6 billion, while others put it at around half that.
Under our proposal, an independent federal panel consisting of scientists, medical professionals, public health experts and economists – perhaps working as part of the FDA approval process and called on when the price of a drug is above a specific threshold – would determine the maximum price a government buyer such as Medicare or Medicaid could pay for a new drug. It could also do the same for existing treatments – for example, it could have turned down Turing’s huge Daraprim price hike.
A key element of this idea is that the panel would develop methods to identify and set maximum prices for existing and prospective drugs that cure a serious illness, improve the quality of life, limit contagion or otherwise provide large benefits to society. These procedures would need to make sure that producers of these important new drugs are sufficiently rewarded for those costly efforts.
A defensible drug-pricing system
Tough negotiations can help lower how much the government has to pay for its purchases, yet they’re not always the optimal way to achieve intended long-term results. With drugs, we definitely need to lower prices but we also need to ensure drug companies can “win” as well to avoid compromising their ability to develop lifesaving medicines.
While economists generally oppose government intervention in a “free market,” the current situation cries out for change. It is time to establish a defensible system for pricing drugs, one that both protects the public from price-gouging and encourages the development of new drugs.
Transgender bias case against Dignity Health could set off religious freedom clash
Dignity Health has answered a federal discrimination lawsuit filed by a transgender nurse by arguing that civil rights law does not require its self-insured employer health plan to cover gender reassignment-related care. It says Title VII of the Civil Rights Act does not cover transgender status as a protected classification.
The San Francisco-based hospital chain also argued last month in response to the closely watched suit—one of the first of its kind in the country—that HHS’ May rule barring categorical exclusion of coverage for gender transition services does not take effect until Jan. 1, 2017. Prior to that, it argues, federal law does not require an employer to provide health coverage for “sex transformation” treatment.
In addition, the new federal anti-bias rule does not bar self-insured employer health plans from excluding benefits for services that are not medically necessary, according to Dignity’s motion for dismissal. It said “the medical efficacy of sex transformation surgery remains the subject of debate.”
But lawyers for the American Civil Liberties Union who are representing nurse Josef Robinson say both Title VII and the new HHS rule interpreting Section 1557of the Affordable Care Act clearly require employers and health plans to cover treatment related to gender dysphoria. That’s the name for the condition where people feel they are not the gender they were assigned at birth.
Legal experts expect more such lawsuits following HHS’ issuance of the anti-bias rule in May.
Fraud Concerns Emerge As Compounding Drug Sales Skyrocket
Government spending on “compounded” drugs that are handmade by retail pharmacists has skyrocketed, drawing the attention of federal investigators who are raising fraud and overbilling concerns.
Spending on these medications in Medicare’s Part D program, for example, rose 56 percent last year, with some of the costliest products, including topical pain creams, priced at hundreds or thousands of dollars per tube. The federal workers’ compensation program has also seen a recent spike in spending.
The spending jump, along with a sharp increase in the number of patients getting the compounded drugs “may indicate an emerging fraud trend,” said Miriam Anderson, who helped oversee a June report on the Medicare spending by the inspector general’s office at the Department of Health and Human Services.
Some of the prescriptions may not have been medically necessary — or even dispensed at all, notes the report, which also details recent fraud cases brought by U.S. attorneys in several states.
Fierce Exclusive: Therapy benchmarks serve as a red flag for SNF false claims
A recent $125 million settlement, plus access to RUG utilization data, could lead to more investigations into corporate directives
HENRY KOTULA 