New Jersey - Volume XII, Number 5 - May, 2003

NEXT STEP: HIPAA ELECTRONIC TRANSACTIONS & CODE SETS

Having implemented the HIPAA Privacy rule April 14th, entities covered by HIPAA must now turn their attention to compliance with the HIPAA Electronic Transactions and Code Sets, which require that transactions such as claims, payment and remittance advice, claim status, eligibility, and referral and authorization transactions conducted electronically comply with the HIPAA-mandated formats, beginning October 16, 2003. Compliance is the health care provider’s responsibility, whether or not the practice contracts with a third-party biller or clearinghouse to conduct these transactions. Testing of the practice’s software and computer systems--ensuring that the software is capable of sending and receiving the electronic transactions in the standard HIPAA format–should have begun April 16, 2003. Speak with your vendor, billing agent, clearinghouse, and payors about their testing process and whether they are on target for compliance. The New Jersey Department of Banking & Insurance (“DOBI”), concerned that many providers will not meet the deadline and, thus, have non-compliant claims denied, formed a task force which has established a Common Companion Guide for using HIPAA transactions. The Guide, and more information, can be found at the DOBI website: www.state.nj.us/dobi/hint.htm.

OIG BULLETIN TARGETS SUSPECT CONTRACTUAL JOINT VENTURES

The U.S. Department of Health & Human Services’ Office of Inspector General (“OIG”), “concerned that contractual joint venture arrangements are proliferating,” has issued an advisory bulletin cautioning Medicare and Medicaid providers against entering into joint venture arrangements that reward the provider for improper patient referrals in violation of the federal anti-kickback statute, in particular where substantially all of the operations of a new line of business are contracted out to a would-be competitor. The bulletin lists characteristics of a suspect arrangement: 1) the owner is expanding into a related business wholly dependent on patient referrals from the existing business; 2) the new business primarily serves the owner’s existing patient base; 3) the owner neither operates nor commits substantial resources to the new business; 4) the manager/supplier is an established provider of the same services as the owner’s new line of business and would otherwise be a competitor of the new business; and 5) payments to the owner are based on the owner’s referrals to the new business. Where the owner’s role in the business is this passive, the OIG believes that the owner’s remuneration is simply a kickback from its new business partner for captive referrals. Practitioners participating in–or contemplating– a venture that could be implicated by the bulletin should contact KACS for counsel.

OIG’S CHIEF LEGAL COUNSEL SAYS HEALTH CARE FRAUD STILL AN ENFORCEMENT PRIORITY; COMPLIANCE EFFORTS HERE TO STAY

At a recent Health Care Compliance Association institute, OIG Chief Counsel Lewis Morris cautioned that, due to endless regulatory changes, aggressive enforcement efforts, whistle-blowers, and a crisis in corporate governance, the health care industry remains high on the priority list for OIG enforcement efforts. Among OIG’s top targets are physicians engaged in kickback violations, such as physicians being prosecuted in the TAP Pharmaceuticals case for accepting and billing for free samples. These statements, along with the certainty that HHS’ Office for Civil Rights will not long tolerate non-compliance with HIPAA Privacy and the forthcoming HIPAA Security rules, urge renewed attention to compliance efforts. Contact Denise Sanders at KACS for help in assessing your risk under this multitude of regulations and in establishing an effective compliance program. 

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