New Jersey - Volume XIII, Number 3 - March, 2004

COURT LOWERS BAR FOR PROVING DAMAGES IN MALPRACTICE CASES The New Jersey Supreme Court has ruled that an individual is entitled to damages resulting from the failure to diagnose cancer even if the plaintiff is unable to demonstrate that the cancer could have been effectively treated if diagnosed earlier. In so doing, the Supreme Court overturned an Appellate Division decision finding that the burden was on the plaintiff to prove that, but for the failure to diagnose, there was a substantial likelihood that the cancer could have been effectively treated when it first should have been discovered.

MEDICARE CHANGES REASSIGNMENT RULE FOR INDEPENDENT CONTRACTORS One of the provisions of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 changes the long-standing prohibition on an independent contractor physician reassigning Medicare reimbursement over to an entity (i.e., a person, group or facility) for services rendered by the contractor off-site. Effective March 12, 2004, Medicare may make payment to an entity for services provided by a physician or other person under a contractual arrangement with that entity, regardless of where the service is furnished. Medicare suggests that, as safeguards against past abuses of such arrangements, the contract between the entity and the physician provide for joint and several liability between the entity and the physician, for any Medicare overpayment relating to claims for the physician’s services, and further provide that the physician have unrestricted access to claims submitted by the entity for his services. While this change provides new opportunities for independent contractor arrangements, other regulatory provisions applicable to independent contractor relationships remain and should be considered before entering into such agreements.

MEDICARE MODIFIES CONTINGENCY PLAN FOR HIPAA ELECTRONIC TRANSACTIONS COMPLIANCE Medicare is modifying its HIPAA contingency plan that allowed physicians and other providers to continue to file non-HIPAA compliant electronic claims after the October 16, 2003 deadline. Effective July 1, 2004, claims submitted electronically and in a HIPAA-compliant format will continue to be considered as eligible for Medicare payment on the 14th day after the date of receipt. However, electronic claims submitted in a pre-HIPAA format will be considered as eligible for Medicare payment on the 27th day after receipt. Thus, while Medicare is continuing to allow claims in a pre-HIPAA format for a limited time to maintain provider payments, this modification of the Medicare contingency plan is intended to provide an economic incentive for moving to HIPAA formats quickly and should be seen as a step toward ending the contingency plan for all incoming Medicare claims.

INSURANCE FRAUD PROSECUTOR PROPOSES FRAUD BOUNTY RULE The NJ Office of Insurance Fraud Prosecutor has proposed a rule that would provide for a reward program for the reporting of suspected health care claims fraud, insurance fraud or any other criminal offense involving or related to an insurance transaction. A reward of up to $25,000 will be paid to persons providing information leading to the arrest, prosecution and conviction of persons who have committed such crimes. The rule provides multiple avenues for the initial reporting of fraud, including a toll-free hotline, website submission, and e-mail messages, followed by submission of a reward application form. Comments on the rule will be accepted through April 17th.

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